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The Zacks Transportation sector has declined 10.1% year over year, facing challenges such as rising fuel and labor costs, inflation-induced interest rates, and a downturn in freight demand. The sector’s performance contrasts with the S&P 500’s 9.3% growth during the same period. Recent geopolitical events, including U.S. strikes on Iran, have elevated oil prices, raising concerns about a broader supply shock that could negatively impact the U.S. economy.
Despite these challenges, some transportation companies are increasing their dividends, showcasing resilience in a turbulent market. Expeditors International of Washington, Inc. raised its dividend by 5.5% to $0.77 per share, while FedEx Corporation announced a 5.1% increase to $1.45 per share. Delta Air Lines, Inc. increased its dividend by 25% to $0.1875 per share. These companies have managed payout ratios of 24%, 31%, and 10%, respectively.
Investors are encouraged to consider dividend-growth transportation stocks, as they offer a dual advantage of reliable income and potential long-term capital appreciation. Shortlisted stocks based on a payout ratio of less than 60% and a yield above 1% could provide stability amid the current market volatility.
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