Close Menu
Invest Intellect
    Facebook X (Twitter) Instagram
    Invest Intellect
    Facebook X (Twitter) Instagram Pinterest
    • Home
    • Commodities
    • Cryptocurrency
    • Fintech
    • Investments
    • Precious Metal
    • Property
    • Stock Market
    Invest Intellect
    Home»Stock Market»Better Dividend Stock: Whirlpool vs. UPS
    Stock Market

    Better Dividend Stock: Whirlpool vs. UPS

    May 5, 20255 Mins Read


    • The sustainability of both stocks’ dividends is in question.

    • Whirlpool has significant debt and near-term headwinds to overcome.

    • UPS also faces near-term headwinds, and that will pressure its dividend cover.

    The 6.8% dividend yield of UPS (NYSE: UPS) stock and the 9.1% dividend yield of Whirlpool (NYSE: WHR) stock are obviously attractive for passive income-seeking investors. However, there’s no such thing as a free lunch, and their yields reflect some doubt in the marketplace around the sustainability of their dividends. That said, which stock is better, and what risks do you need to know about before buying the stock?

    Both Whirlpool’s and UPS’ shares are down heavily this year, as they’ve both suffered a deterioration in their trading conditions.

    Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

    WHR Chart
    WHR data by YCharts.

    For Whirlpool, it comes down to a combination of stubbornly high interest rates and competitor behavior in light of President Donald Trump’s reelection. Relatively high interest rates curtail the housing market and, in turn, discretionary demand (which tends to be higher-margin than replacement demand) for housing appliances. Consequently, Whirlpool’s first-quarter organic sales rose just 2.2% year over year, with organic sales flat in its key major domestic appliance North America business.

    Whirlpool’s sales were also highly likely affected by competitor behavior in the fourth quarter of 2024 and the first quarter of 2025. CEO Marc Bitzer said on the recent earnings call: “Asian appliance producers significantly increased imports into the U.S. ahead of the tariffs in the first quarter and fourth quarter, essentially loading the U.S. industry. This market disruption will likely continue into Q2 as competitors attempt to sell through their inventory.”

    With the first and second quarters negatively affected by such actions, 30-year mortgage rates still above 6.5%, and general uncertainty in the economy concerning tariffs, this casts some doubt on management’s decision to maintain its full-year guidance.

    People in a home goods store.
    Image source: Getty Images.

    Whirlpool’s full-year guidance implies that its dividend is sustainable. For example, the guidance calls for sales of $15.8 billion with an ongoing earnings before interest and tax (EBIT) margin of 6.8%, implying an ongoing EBIT of $1.07 billion, dropping down to $500 million to $600 million in free cash flow (FCF). That’s more than enough to cover the the $384 million in dividends that Whirlpool paid last year.

    That said, there’s a significant risk to the dividend if Whirlpool falters this year. The company has $4.8 billion in long-term debt and $1.85 billion in debt maturing this year, of which it plans to pay down $700 million and refinance $1.1 billion to $1.2 billion. Any significant deterioration in the FCF outlook may cause management to cut the dividend to shore up its balance sheet, not least in paying down debt.

    Continuing the theme of looking at dividend sustainability, UPS management is clear on three things regarding the matter:

    • Its longstanding aim is to pay out 50% of its earnings in dividends, and it’s committed to sustaining and growing the dividend

    • The current dividend of $6.56 per share is barely covered by the Wall Street analyst consensus for UPS earnings in 2025 of $7.11, implying a payout ratio of 92%

    • Management expects $5.7 billion in FCF in 2025, barely covering the $5.5 billion cash dividend

    Whether you look at the payout ratio in terms of earnings (as management does) or FCF, UPS’ ability to pay its dividend is beginning to look stretched. At the same time, UPS management is trying to finesse a 50% reduction in Amazon.com delivery volume by the second half of 2026, while dealing with a deteriorating demand environment. This could cloud UPS’ ability to generate earnings and cash flow over the near term.

    Person holding fan of cash.
    Image source: Getty Images.

    In its key U.S. domestic market, the decline in its average daily volume (ADV) in February and March was “higher than we expected,” according to CEO Carol Tome on the earnings call. Moreover, UPS guidance for the second quarter calls for a U.S. domestic year-over-year ADV decline of 9%. Management declined to update its full-year guidance.

    On balance, UPS’ dividend looks more sustainable than Whirlpool’s, so it wins the contest. UPS has $19.5 billion in long-term debt, which looks manageable compared to guidance for $5.7 billion in FCF in 2025. Whirlpool’s $4.8 billion in long-term debt is far higher than its estimated FCF of $500 million to $600 million in 2025.

    However, there’s a good chance both could cut their dividends by the end of the year. That doesn’t mean they are unattractive stocks; it just means anyone buying in for the dividend alone needs to prepare for potential disappointment.

    Before you buy stock in United Parcel Service, consider this:

    The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and United Parcel Service wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

    Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $623,685!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $701,781!*

    Now, it’s worth noting Stock Advisor’s total average return is 906% — a market-crushing outperformance compared to 164% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

    See the 10 stocks »

    *Stock Advisor returns as of April 28, 2025

    John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends United Parcel Service and Whirlpool. The Motley Fool has a disclosure policy.

    Better Dividend Stock: Whirlpool vs. UPS was originally published by The Motley Fool



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

    Related Posts

    Here Are My Top 3 High-Yield Energy Dividend Stocks to Buy Now

    Stock Market

    3 Highly-Rated Dividend Stocks You’ve Probably Never Heard Of (But Should)

    Stock Market

    Le président d’Ecofin Global Utilities annoncé son départ lors de la prochaine assemblée générale

    Stock Market

    United Utilities Group PLC : RBC Capital Markets de acheteur à neutre sur le titre

    Stock Market

    une boutique Voi va ouvrir au Havre

    Stock Market

    10 Best Dividend Stocks for a Bear Market

    Stock Market
    Leave A Reply Cancel Reply

    Top Picks
    Commodities

    Siddaramaiah asks Andhra CM to revoke ban on Karnataka’s Totapuri mangoes | Latest News India

    Commodities

    A Powys woman has been chosen for this year’s Royal Welsh Agricultural Society’s Rural Leadership Programme

    Stock Market

    L&T Technology Services and PS Technology partner to transform railways with advanced Simulation Mobility Technologies

    Editors Picks

    Commodities Will Be Distributed in Russell on July 23

    July 15, 2024

    Next generation Zengin System delayed to 2028 | by Norbert Gehrke | Tokyo FinTech | Oct, 2024

    October 20, 2024

    Agricultural productivity growth sluggish since 2000: ABARES

    July 24, 2024

    Stellar’s 10 Years of Transformation | CoinDesk Live at Stellar Meridian 2024 Video

    October 15, 2024
    What's Hot

    Klarna : le guide vers une nouvelle vague d’IPO fintech -Le 24 mars 2025 à 15:35

    March 24, 2025

    Rare Sea Creature Hoards Toxic Metals as a Fascinating Survival Strategy : ScienceAlert

    October 19, 2024

    Fintech App Stacks Can Empower Small Business Success, Xero Report Finds

    August 23, 2024
    Our Picks

    Weak Dollar Lifts Base Metals As Unstable Week Wraps Up

    October 11, 2024

    Bill would require utilities to report data on household service shutoffs

    April 9, 2025

    Central Bank of Russia does not support launch of cryptocurrency-related instruments until they exit ‘gray zone’

    March 13, 2025
    Weekly Top

    Rencontre avec Tabahi, seul groupe de thrash metal du Pakistan

    June 20, 2025

    Silver Viper finalise l’acquisition du projet aurifère-cuivrique Cimarron

    June 20, 2025

    Russia Developing Cross-Border Digital Payment with BRICS

    June 20, 2025
    Editor's Pick

    Silver Palace : un Genshin Impact à la sauce victorienne – Actu

    May 13, 2025

    Vahine Fierro stoppée en demi-finale de la Gold Coast Pro

    May 9, 2025

    Digital Currency Group (DCG) crée une division de crypto-minage Fortitude de Foundry

    January 28, 2025
    © 2025 Invest Intellect
    • Contact us
    • Privacy Policy
    • Terms and Conditions

    Type above and press Enter to search. Press Esc to cancel.