United Parcel Service, Inc.
UPS · Industrials
$103.34
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This Under-the-Radar Dividend Stock Yields 6.2%. Is It a Buy?
UPS offers a high 6.2% dividend yield but faces sustainability concerns with a 91% forward payout ratio. While the company's turnaround efforts are progressing and analysts forecast 7% average earnings growth through 2029, dividend cut fears persist. The stock could appreciate to $140+ if valuations converge with competitors, making it potentially attractive for income investors willing to wait for the turnaround.
UPS (UPS) Up 1% Since Last Earnings Report: Can It Continue?
UPS reported strong Q2 earnings with adjusted EPS of $1.76 (beating consensus by 6.7%) and revenues of $22.83 billion (5% above estimate). The company raised full-year guidance and generated $1.57 billion in free cash flow. However, analyst estimates have trended downward by 6.4% since the earnings report, and the stock received a Zacks Rank #3 (Hold) rating with an F momentum score despite positive operational improvements.
UPS Stopped Carrying 2 Million Amazon Packages a Day. Amazon Still Has to Move Them.
UPS completed its 18-month reduction of Amazon volume, eliminating 2 million packages daily and $4.5 billion in expenses. Amazon absorbed most of this volume into its own delivery network, which now handles 6.7 billion U.S. parcels annually—making it the country's largest parcel carrier. However, Amazon's shipping costs surged 19% to $27.9 billion in Q2, outpacing its 15% online sales growth, reflecting the significant investment required to maintain its delivery infrastructure and fast shipping promises.
UPS Fired Amazon. Was It The Smart Move?
UPS's decision to reduce Amazon delivery volume by 50% aligns with its 'better, not bigger' strategy to focus on higher-margin business segments. However, the stock has declined 10.5% since the announcement due to margin concerns. While management raised earnings guidance, operating margins actually decreased, and fuel surcharges appear to be the primary driver of revenue growth rather than operational improvements.
UPS Is Walking Away From Amazon. Is That a Smart Move?
UPS is reducing its Amazon-related shipping volume by over 50% through 2026, phasing out standard last-mile delivery services. While Amazon was UPS's largest customer, these shipments generated lower profits and clogged sorting facilities. UPS is pivoting toward higher-margin orders from small-to-medium businesses and healthcare customers. The company expects 3% revenue growth and 1% adjusted EPS growth in 2026, marking the first synchronized growth since 2022.