STOCK

[mathematics]

Originally Posted by sendagain

Let's see: our competitors stock has gone up about 100% since UPS went public. Our stock is a little bit over 20% of the opening price when it became an IPO about seven years ago. In the last 4 1/2 years, we have made a whopping return of 5%. Our dividend pays about 2% a year, which if you held your money in a money market fund, would be paying close to 5%. I've been hanging on for awhile now, but they better perform soon or I'm out.

everyone seems to forget that you have an automatic gain of 10% plus the dividend yield % if the stock price doesn't go up at all. can you get 12% per year (again, with the stock price staying flat) in a money market account? or with any type of government bond or muni bond (government bond because we are talking about 99.9% guarantees with returns)?

[BigBrownSanta]

Originally Posted by mathematics

everyone seems to forget that you have an automatic gain of 10% plus the dividend yield % if the stock price doesn't go up at all. can you get 12% per year (again, with the stock price staying flat) in a money market account? or with any type of government bond or muni bond (government bond because we are talking about 99.9% guarantees with returns)?

The 10% is not automatic and it's a 5% annual return if the share price stays constant. BTW, putting your money into an online bank such as INGDirect will get you 5% without any risk, it's FDIC insured and you can withdraw it at any time without special permission from UPS.

Also, the idea of investing in stock is capital appreciation and if the share price stays constant, there is no appreciation.

The best scenario would be for the share price to increase and the stock to split. That way you get more shares to earn dividends.

So far, UPS stock has done neither...
increase in value nor split.

It's a weak investment.

[yurgref]

Originally Posted by BigBrownSanta

the idea of investing in stock is capital appreciation and if the share price stays constant, there is no appreciation

There is also one other reason to invest in stock - The ability to throw of income in the form of Dividends and UPS has a consistent history over the last 20 plus years of increasing or maintaining dividends

I still stand by my previous post the Best way to make money right now is NOT buying UPS and instead Maxing out your 401k FIRST and only after you have done that, put any extra cash into the company stock

[BigBrownSanta]

They also have a history of splitting stock, but that hasn't happened since they went public.

The price appears to be headed for a new record high this peak. If you purchase this quarter, you'll be buying at a premium price.

[1989]

Originally Posted by BigBrownSanta

They also have a history of splitting stock, but that hasn't happened since they went public.

The price appears to be headed for a new record high this peak. If you purchase this quarter, you'll be buying at a premium price.

Not true, You get the lower of the 2 prices on Oct 1 or Dec 31. minus 10%.

[mathematics]

"...the bottom line is UPS is now largely at labor peace until at least 2011, and the market likes companies that have made peace with their workers. Now UPS can now focus on growing its international business. The stock has significant upside and is a strong buy."

no one is saying this is the only place to put money, but at a 10% discount + dividends, i'm certainly in this for the very long term. put all the money you like in your ING account; i'd rather take the pre-tax deduction and make more money with the UPS stock.

[1989]

Originally Posted by mathematics

"...the bottom line is UPS is now largely at labor peace until at least 2011, and the market likes companies that have made peace with their workers. Now UPS can now focus on growing its international business. The stock has significant upside and is a strong buy."

no one is saying this is the only place to put money, but at a 10% discount + dividends, i'm certainly in this for the very long term. put all the money you like in your ING account; i'd rather take the pre-tax deduction and make more money with the UPS stock.

I don't think the stock deductions are pre-tax...only your 401k is. If you choose.

[BigBrownSanta]

Originally Posted by mathematics

i'd rather take the pre-tax deduction and make more money with the UPS stock.

That's interesting. How are you doing that? Through the 401(k) managed accounts option?

[Leftinbuilding]

Originally Posted by BigBrownSanta

They also have a history of splitting stock, but that hasn't happened since they went public.

The price appears to be headed for a new record high this peak. If you purchase this quarter, you'll be buying at a premium price.

I am, admittedly, a stock market novice. What are the criteria for a split? Do splits happen arbitrarily, or are there target prices etc? How (if you can) do you anticipate a split? What determines the value of a split? 2 for 1, 3 for 1 etc? Splain it to me Lucy.

[moreluck]

A stock split is essentially when a company increases the number of shares. For example, if you owned 25 shares of XYZ at $15 per share, and there was a 2-1 stock split, you would then own 50 shares worth $7.50 each. Why do companies issue splits if you still have the same amount of money?

Liquidity. Some companies believe that their stock should be inexpensive so more people can buy it. This creates a condition where more of the company's stock is bought and sold [this is called "increased liquidity"]. The problem, in theory, is that the increased activity will also leads to bigger gains and drops in the stock, making it more volatile.
Many investors believe splits are a good thing. (Their thinking goes "Well, if the stock was at $15, and now it's at $7.50, it has to go back up to where it was!) This is wrong. The stock is where it was... remember that each share now represents half of the equity in the company that it did before the split. That means that each share is entitled to half the dividend, half the earnings, and half of the assets that it once was. A few corporations have been famous for their no-split policies. The Washington Post has traded well into the $600 per share range, and Berkshire Hathaway [which was at $8 a share in the 1960's] has traded around $71,000. This has created the welcome condition of a stable shareholder base.

[satellitedriver]

Originally Posted by mathematics

everyone seems to forget that you have an automatic gain of 10% plus the dividend yield % if the stock price doesn't go up at all. can you get 12% per year (again, with the stock price staying flat) in a money market account? or with any type of government bond or muni bond (government bond because we are talking about 99.9% guarantees with returns)?

There is no automatic gain of 10%. You cannot sell your stock for 2 yrs, so the gain is 5% per year, if the stock stays flat, as it has since the IPO. The dividend of 2.5% only matches inflation.
In all of my portfolio, UPS stock is one of the least profitable.
I buy discount UPS stock, but only as a piggybank stock.
When I retire, I intend to sell all my UPS stock and spend it on something fun.
I have never considered it as part of my long term portfolio.
PAX

[satellitedriver]

Here is a general overview by Mark Krantz ( USA Today columnist)

UPS shares survived bear market, but have struggled lately
Q: What is the problem at United Parcel Service (UPS)? The stock just doesn't move and the dividends are nothing to brag about.
A: Everyone knows the brown trucks of United Parcel Service. But when UPS went public in 1999, investors were so swept up with the Internet they didn't pay much attention to this leading transportation company.

During UPS's first 18 months as a public company, shares languished for a variety of reasons, from fears of high energy costs to fears of the reduced need for transportation due to the recession.

But, since those fears subsided, it's been off to the races for UPS. Shares rocketed more than 57% from the bottom in March 2003 through its peak in late 2004.

But that's ancient history, right? You're probably annoyed by the sudden troubles to hit UPS stock this year. As of early September, it's dropped more than 19%, a vicious selloff when the broad Standard & Poor's 500 index lost just 0.5%. And the dividend yield of 1.9% is pretty low, especially if you can get 2% from a money market fund and take essentially no risk.

There are several reasons why UPS stock has struggled:

• Shares of most transportation companies have struggled. It's not just UPS that is in the dog house. Shares of Federal Express had fallen 18% as of early September as well.

Even the Dow Jones transportation index, a broad basket of many types of transportation stocks, was down 3.8% for the year. Not as bad as UPS or FedEx, but it goes to the point that the industry group is out of favor.

• UPS' stock held up relatively well during the bear market. Even while tech investors were losing their shirts, UPS was a place of relative safety.

Since going public in late 1999, the stock has only fallen about 1.2% through early September. That's remarkable resilience if you consider that the S&P 500 fell about 10% during the same period. So it stands to reason that if UPS held up better during the bust, it shouldn't recover as much from the bottom.

Is it time to give up on UPS? That depends on your investment goals and strategies.

I'd just like to point out that Standard & Poor's stock analyst Jim Corridore rates the stock a "buy" and has a price target of $84 on it. Corridore says in a report the company will boost revenue in 2005 by up to 14% thanks to rate increases of up to 3% and sharply higher international shipments.

The S&P analyst also thinks UPS can regain some of the market share it has lost.

But then there are those gasoline prices....

[LeddySS98]

I started buying the ups stock option at my 6 month point when i was on preload. $25 a week starting in April 2006... since then i've bumped up my weekly amount to $75/week...

So far i've put 4,200 into the stock program and at the current price of $76.62 I've got a balance of 5,036.72. I have'nt broken it down into quarters or anything, but i'm sitting at just shy of 20% right now... so whats so bad about that?:confused1

[BigBrownSanta]

I don't claim to be a stock market guru. Thanks to moreluck, I stand corrected. I was unaware the dividends were split also.

I own shares of UPS stock myself. I stopped purchasing stock for 2 reasons. The first reason is because about 2 years ago UPS didn't meet their earnings expectation and the price dropped about $8+ in 2 days. The second reason is because UPS implemented a new policy that made it mandatory to hold your stock for a minimum of 2 years (before that you could sell your stock at market value minus 10%).

satellitedriver, I remember that time period mentioned in your post. I was amazed that the share price kept going up while the market was declining. I thought I had made a really good decision. It didn't last long though, and the share price has kind of floated around $70 since then.

LeddySS98, you think you have 5,036.72 worth of stock, but really you have zero until the 2 year waiting period has passed (June of 2008).

There are many other ways to get a 5% annual return that are safer and more accessible if you have an emergency.

[mathematics]

Originally Posted by BigBrownSanta

That's interesting. How are you doing that? Through the 401(k) managed accounts option?

this is from my personal check stub...

Deductions

BFTAX FLEX $20.58

401(k) DED 25% $253.27

DESPP Regular $200

United Way '07 $6.25

As you can see, the DESPP is a pre-tax deduction

[mathematics]

Originally Posted by satellitedriver

There is no automatic gain of 10%. You cannot sell your stock for 2 yrs, so the gain is 5% per year, if the stock stays flat, as it has since the IPO. The dividend of 2.5% only matches inflation.
In all of my portfolio, UPS stock is one of the least profitable.
I buy discount UPS stock, but only as a piggybank stock.
When I retire, I intend to sell all my UPS stock and spend it on something fun.
I have never considered it as part of my long term portfolio.
PAX

you're keeping it until reirement, but it's not part of your long-term portfolio? :confused1

[LeddySS98]

Actually i THINK there is a way to pull your money out before the 2 year limit so if I REALLY needed it i could get to it...Yes there would be a penalty of some sort or maybe you dont get the 10% discount but how is that any different than put your money in a 2 year CD? If you pull it out early you pay penalties.

Two years is'nt THAT long a time really, put the money away forget about it, and then years later you have it... I guess it's not a NORMAL way of doing the stock market, but if you treat it as a IRA account or even a 5yr CD....

It's a chance i guess... maybe i'll be on here in 2 years telling you i should have listened. The world is suppose to end on Dec 21, 2012 also so if that's the case it wont matter where you put your money

[upsgrunt]

Originally Posted by LeddySS98

Actually i THINK there is a way to pull your money out before the 2 year limit so if I REALLY needed it i could get to it...Yes there would be a penalty of some sort or maybe you dont get the 10% discount but how is that any different than put your money in a 2 year CD? If you pull it out early you pay penalties.

Two years is'nt THAT long a time really, put the money away forget about it, and then years later you have it... I guess it's not a NORMAL way of doing the stock market, but if you treat it as a IRA account or even a 5yr CD....

It's a chance i guess... maybe i'll be on here in 2 years telling you i should have listened. The world is suppose to end on Dec 21, 2012 also so if that's the case it wont matter where you put your money

Hey Leddy,
Where's your source for that end of the world date? Just interesting to me, that's all.

[BigBrownSanta]