UPS looks cheaper than Lockheed Martin for dividends

UPS and Lockheed Martin are two companies offering high dividend yields that are better than the average of the S&P 500. However, investors may wonder which stock is the better deal. Currently, UPS appears cheaper in terms of its price-to-earnings (P/E) ratio. However, it is considered more expensive when looking at its price-to-free-cash-flow (P/FCF) ratio. UPS faces some challenges due to recent weakness reported by other transportation and industrial companies, likely influenced by tariffs. This may impact UPS's earnings and ability to maintain its dividend payout, which stands at 5.6%. On the other hand, Lockheed Martin has a dividend yield of 2.8%. Its earnings are expected to cover the dividend well. The company also has a significant backlog of $176 billion, ensuring more stable earnings in the near term. For 2025, UPS is estimated to have earnings per share (EPS) of $7.87, with a P/E ratio of 14.6. Its free cash flow is predicted at $5.7 billion. Lockheed Martin, meanwhile, is expected to have a much higher EPS of $27.22 and a P/E ratio of 16.2, with a free cash flow of $6.7 billion. Looking ahead, UPS may have growth opportunities by expanding into healthcare and serving small and medium-sized businesses. The company also plans to reduce reliance on Amazon, which may improve its profitability. In contrast, Lockheed Martin could be challenged by potential cuts to the defense budget, which may affect its long-term growth.