Explore the latest developments concerning Is This 7.5%-Yielding.
Is This 7.5%-Yielding Dividend Too Good to Be True?
Shares of UPS (UPS +2.18%) have been on a downward spiral, losing nearly a third of their value in the last year and over 60% from their early 2022 peak. The sharp decline has driven up its dividend yield to 7.5%, far above the S&P 500's 1.2% and rival FedEx's 2.4%.
Here's a look at whether UPS's alluring payout is a dividend yield trap or an unbelievable income opportunity.
UPS has been battling a couple of notable headwinds over the past few years. It's dealing with a challenging global economic environment due to ever-evolving trade policies. Tariffs are increasing international shipping costs, impacting the company's volumes. Additionally, the company is scaling back its relationship with its top customer, Amazon, to focus on more profitable business segments. The e-commerce giant provided 11% of the company's revenue in 2024 and around a quarter of its volumes. UPS wants to reduce its Amazon-related shipping volumes by more than 50% by the second half of next year.
United Parcel Service, Inc. (UPS): A Bull Case Theory
We came across a bullish thesis on United Parcel Service, Inc. on wallstreetbets subreddit by Schemesymcplots. In this article, we will summarize the bullsâ thesis on UPS. United Parcel Service, Inc.'s share was trading at $85.98 as of October 7th. UPSâs trailing and forward P/E were 12.73 and 11.64 respectively according to Yahoo Finance.
Berkshire Hathaway, led by Warren Buffett, appears to be quietly building a significant position in United Parcel Service (UPS), a beaten-down industrial leader, with the Q2 13F filing expected to reveal the move imminently. UPS has underperformed in 2025, down 30% year-to-date, weighed by labor disruptions, soft volumes, and recession fears, but Buffettâs strategy focuses on undervalued, high-quality businesses with durable moats, and UPS fits this mold.
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UPS Is A Classic Value Trap
In my opinion, UPS (NYSE:UPS) is a classic value trap. At first glance, the stock may look cheap as it has dropped precipitously over the last few years.
Analystâs Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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