Should Investors Pick FedEx Corporation (FDX) or United Parcel Service, Inc. (UPS)?

Frankly, United Parcel Service, Inc. (NYSE:UPS) has a lot more to offer investors, namely stronger financial performance and a healthy 3% dividend that puts it squarely in the group of blue-chip dividend payers.

FedEx needed to double its dividend (or more) for anybody to seriously consider it a strong dividend stock. That didn’t happen, unfortunately, and as a result FedEx yields just 0.6% including its dividend increase. At this point, that low of a yield makes me ask the question, why even bother? FedEx clearly isn’t serious about being a strong dividend payer, so what good does 0.6% do for shareholders?

Institutional income investors surely aren’t going to rush to buy the stock just because it yields a puny 60 basis points. FedEx would be better off not paying a dividend and focusing its efforts on getting its business back on track.

As a result, investors looking for a healthy dividend yield and firmer performance in an otherwise shaky global economic recovery should prefer UPS to its rival FedEx.

Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends FedEx and United Parcel Service.

The article Should Investors Pick FedEx or UPS? originally appeared on Fool.com and is written by Robert Ciura.

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