United package services(NYSE: UPS) did not deliver the goods for investors this year. The action continued its slide downwards following a disappointing update of the second quarter on July 29, 2025. The UPS share price is now greater than 30% of years.
Should you buy shares in less than $ 90? Here are four reasons why I think the answer is a resounding “yes” – at least for income investors.
A positive side effect of the performance of dismal UPS shares for income investors is that its dividend yield has increased. The performance of the share dividends of action is currently 7.38%.
But is the juicy dividend of the company sustainable? The CEO of UPS, Carol Tomé, thinks. She declared in the call of the profits of the second quarter of the company:
UPS is solid and solid, just like our dividend. The UPS dividend is supported by solid treasury flows and a solid investment quality assessment. We know how important the dividend is for our investors, and you have our commitment to a stable and growing dividend.
Two main points to remember from this declaration should be reassuring for income investors. First, UPS continues to have financial flexibility to finance your dividend. Tomé was right to say that the company has sufficient available cash flow to support the dividend. Second, management is engaged in the dividend program.
UPS activities are certainly faced with challenges. However, I think that the current winds should only be temporary.
For example, Tomé noted in the call for profits in the second quarter that the market for small packages in the United States was negatively affected by the feeling of American consumers near all time. Long -term investors and economic observers know, however, that consumers’ feeling does not remain indefinitely at such low levels.
What is the main culprit behind this low feeling of consumers? Uncertainty surrounding the Trump administration’s prices. UPS indicated that the increase in prices and the elimination of minimis minimis exemption caused an average daily volume of China-US to the United States of 34.8% in May and June. This is the most profitable business route in the company. But as Tomé pointed out, “trade does not stop, it moves.” In the second quarter, the volume of UPS between China and the rest of the world increased by 22.4%.
UPS movement to cut its Amazon(Nasdaq: Amzn) The 50% shipment volume was controversial. However, this should increase long -term profitability.
Tomé said in the first quarter that the Amazon shift is on the right track for the most part. The only exception is that the staff attrition rate has been lower than expected. However, UPS has announced a voluntary separation program for full -time American drivers who should mitigate the problem. The costs of the company could be a little reduced as longtime drivers retire. About 85% of UPS drivers were with the company between 25 and 40 years and are at the upper end of the remuneration scale.
Image source: Getty Images.
Investors of income can also comfort that the long -term growth prospects of the UPS remain strong. Complex logistics of health care represents an add -up market of $ 82 billion and is an absolute priority for the company. In the call of earnings in the second quarter, Tomé reiterated UPS’s objective to become the world provider of logistics of health care n ° 1 in the world.
Acquisitions will play a key role in the UPS health care growth strategy. The company plans to close before the end of the year on its acquisition of $ 1.6 billion from Andlauer Healthcare Group. Andlauer is a management of the Canada -based supply chain that provides services to the health sector.
While small in the size of companies (SMEs) are hardly affected by prices, this market is another growth engine for UPS. The company is already making progress, SMEs contributing 32% of the US total volume in the second quarter. The penetration of UPS SMEs also increased by 230 base points during the quarter.
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Keith Speights has positions in Amazon and United Bâl Service. The Motley Fool has positions and recommends Amazon and United Parcel Service. The Motley Fool has a policy of disclosure.
Should you buy shares in less than $ 90? was initially published by the Motley Fool
