Royal Mail PLC (LON:RMG) (LSE:RMG.L) has released a Q3 trading update to the stock market today. The dividend stock’s revenue was flat in the first nine months of the year after it delivered 138 million parcels in December alone. This sales performance was in line with its expectations, with 9% revenue growth in GLS offsetting a 2% decline in UKPIL revenue.
UK parcel revenue increased by 3% with volumes up 2%. Growth was largely driven by Royal Mail account parcels. Parcelforce Worldwide volumes declined by 1%, which reflected the more competitive express parcels market.
In Letters, addressed letter volumes decreased by 6% and revenue was 5% lower. This was mostly due to the impact of overall business uncertainty in the UK, in particular on advertising and business letters.
In GLS, volumes were up 8% and revenue increased by 9%. It benefitted from the timing of Easter and other public holidays across Europe. Revenue growth was achieved across all key markets with the exception of Ireland.
Royal Mail shares have a dividend yield of 5.1%. That’s in line with other dividend stocks such as National Grid plc (LON:NG) (LSE:NG.L), GlaxoSmithKline plc (LON:GSK) (LSE:GSK.L), Lloyds Banking Group PLC (LON:LLOY) (LSE:LLOY.L) and Aviva plc (LON:AV) (LSE:AV.L). National Grid has a dividend yield of 4.8%, Aviva’s dividend yield is 5.3%, Lloyds has a dividend yield of 5.5% and GlaxoSmithKline’s dividend yield is 5.1%.
In my opinion, Royal Mail is an appealing income stock. Its revenue may have been flat in the first nine months of the year, but it is performing in line with stock market expectations. Its GLS division could improve its outlook as a dividend investment and although the UK economy faces an uncertain future due to Brexit, I believe it could perform well versus other UK shares over the long run. Therefore, I am optimistic about Royal Mail’s prospects as a dividend stock in future years.