Why did FedEx stock rally today? Investors eyed the big dividend hike

Jun. 14, 2022 3:47 PM ETFedEx Corporation (FDX)By: Clark Schultz, SA News Editor5 Comments

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FedEx Corporation (NYSE:FDX +14.5%) soared on Tuesday after the shipper boosted its quarterly dividend by more than 50% and added two directors to its board as part of an agreement with activist investor D.E. Shaw.

The rally for FDX shares was the biggest in 29 years and helped lift other transport stocks.

After taking in the update, BofA raised its price objective on FDX to $265 from $231. Analyst Ken Hoexter and team said the entrance of an activist in aiding change to the FDX board structure, return focus, and distributions is a culmination of investor frustration on performance. FDX is noted to have seen multi-decade lows in Ground margins, while Express margins are expected to be flat year-over-year at 7.4% despite peer UPS recognizing record international margins.

The dividend yield on FedEx (FDX) is now just over 2% after factoring in the share price pop and payout hike. That current yield is higher than more than half the stocks in the S&P 500 Index.

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