Better Dividend Stock: UPS vs. Ford

Reward matters in investing, but so does risk. It's not hard to see the potential reward for investors in high-yield stocks like Ford (NYSE: F) and (NYSE: UPS). Investors hope to profit from a 7.1% and 6.5% dividend yield, respectively, while waiting for the two companies to turn around their operating performance. Still, what about the risk of both companies cutting their dividends? Here's a look at which company is best positioned when considering reward and risk.

The table below explains the problem well. UPS aims to pay out about 50% of its earnings in dividends, with Ford aiming for 40% to 50% of its free cash flow (FCF) in dividends. Focusing on FCF, it's clear that the initial guidance given by both companies in late January/early February didn't imply much cover for potential dividends in 2025.

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Source Fool.com