Better High-Yield Dividend Stock: UPS vs. Energy Transfer Roxanna Maglangit Mon, October 12, 2026 at 4:08 PM EDT 5 min read UPS +0.81% AMZN -1.11% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
UPS yields 7.0% and Energy Transfer yields 6.8%, so $10,000 pays $700 or $680 a year today.
UPS paid out 99% of its free cash flow as dividends over the 12 months to June 2026, and analysts expect 96% for fiscal 2026.
Energy Transfer's distributable cash flow covered its distribution 1.78x in fiscal 2025, with 2.11x expected for fiscal 2026, though it carries far more debt than UPS.
UPS's fiscal 2025 dividend raise was 0.6% and Energy Transfer's was 4.7%, and Energy Transfer targets 3% to 5% a year.
On July 28, United Parcel Service (UPS:NYSE) said it had finished pushing lower-yielding Amazon volume out of its network, and raised its 2026 outlook. A week later, Energy Transfer (ET) posted record volumes and raised its own.
Both stocks also yield close to 7%. But a big yield is only as good as the cash behind it.
CEO Carol Tomé told investors on the July 28 call that "this reconfiguration was never the destination. It was the foundation." Second-quarter 2026 revenue rose 7.6% to $22.8 billion, from $21.2 billion a year earlier, and management raised its full-year revenue outlook to about $91.2 billion.
The dividend is a tighter fit. UPS paid out a stretched 99% of its free cash flow over the 12 months to June 30, 2026. Consensus puts fiscal 2026 at 96%, as free cash flow climbs 18%, from $4.77 billion in fiscal 2025 to $5.64 billion. That estimate looks solid: 10 analysts make it, and management targets about $5.5 billion. But management also plans around $5.4 billion of dividends this year, which leaves almost nothing over.
Dividends paid outran free cash flow in fiscal 2023 and again in fiscal 2025, when $5.40 billion went out against $4.77 billion…
…and the raises have slowed. Fiscal 2025's raise was 0.6%, well off the 10.2% a year from fiscal 2020 to fiscal 2025, and there's been none since: the dividend has been $1.64 a quarter since February 2025. With so little left over, the dividend leans on the turnaround delivering.
Where UPS is stretching to cover its dividend, Energy Transfer has cash to spare. Second-quarter 2026 adjusted EBITDA rose 31% to $5.07 billion, from $3.87 billion a year earlier, on record NGL volumes. It's an MLP, so it pays distributions on units, with a K-1 at tax time.
Distributable cash flow covered the distribution a comfortable 1.78x in fiscal 2025, at $2.38 a unit against $1.34. Consensus sees 2.11x for fiscal 2026, as distributable cash flow per unit rises 21% to $2.89. The raised guidance backs that up, and last year's consensus came within 2% of the actual.
Coverage has topped 1x every year since fiscal 2018, though the chart also shows the cut, from $1.22 a unit in fiscal 2019 to $0.63 in fiscal 2021…
…and the climb from that $0.63 back to $1.34 in fiscal 2025. The latest raise is "the Partnership's nineteenth consecutive increase to its quarterly cash distribution." CEO Thomas Long says management is "targeting a long-term annual distribution growth rate of 3% to 5% and maintaining our leverage targets of 4 to 4.5x EBITDA." Fiscal 2025's 4.7% raise sat inside that range.
The risk is debt. Over the last twelve months, net debt was 3.98x EBITDA, and EBIT covered interest a thinner 3.01x. On Oct. 6, Energy Transfer agreed to buy Vaquero Midstream for about $2.625 billion, $1.95 billion of it in cash, a deal it expects to add to distributable cash flow per unit right away.
Energy Transfer is the better high-yield dividend stock, because its payout has room to keep growing.
UPS pays more today: $700 a year on $10,000, against $680. At each company's fiscal 2020–2025 growth rate, UPS would still lead in year 10. It would pay about $1,675, a 16.8% yield on your original $10,000, against about $1,338. But those rates don't describe either dividend now. At fiscal 2025's pace, Energy Transfer's income passes UPS's in about 2027. In year 10, it pays about $1,027, against about $740 from UPS.
That pace is what decides it. A dividend eating 99% of free cash flow has little room to grow. A distribution covered 1.78x can keep rising inside a 3% to 5% target.
This isn't to say UPS's dividend is in trouble. It carries far less debt, its free cash flow is expected to climb, and Tomé's turnaround is already showing up in the numbers. It's just that a dividend is paid from cash flow, and right now Energy Transfer has much more of it to spare.
Of course, if UPS hits its free cash flow target and its board starts raising again, this one gets a lot closer.
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