Latest news with #UnitedParcelService
Yahoo
12-06-2025
- Business
- Yahoo
3 Dividend Stocks With High but Shaky Yields That Are Probably Going to Get Cut
This closed-end fund's net asset value continues to decline, making its distribution appear increasingly untenable. Whirlpool faces significant near-term pressure, and a dividend cut would help ease that. UPS' free cash flow may not cover its dividend in 2025, and there are more effective uses for its cash flow, such as investing in its growth initiatives. 10 stocks we like better than United Parcel Service › With respective dividend or distribution yields of 14.7%, 8.3%, and 6.6%, these three investments could provide an investor with an aggregate yield of 9.9% if purchased together. However, I think that the closed-end Guggenheim Strategic Opportunities Fund (NYSE: GOF), the home appliance company Whirlpool (NYSE: WHR), and UPS (NYSE: UPS) are likely to reduce their dividends or distributions to investors. Furthermore, in two of the cases, doing so would make them stronger companies. Here's why. This is a closed-end fund, meaning it doesn't raise new capital from investors; but it can use debt to generate returns for them. It trades on the market like a stock, and it makes monthly distributions (rather like dividends). The fund has a superb record of making distributions to investors, having maintained them for over a decade. But here's the thing: The fund's net investment income hasn't covered its distribution for the last seven years, and over the previous six years, the fund has used its capital to make distributions. This is to the detriment of its net asset value (NAV), which has declined every year since 2018, and now stands at $11.50. Meanwhile, the fund has effectively increased its leverage to boost its investment income. This isn't a sustainable path, yet the market is pricing it at a 28.5% premium to its NAV. Go figure. The home appliance company is one of the most interesting stocks on the market. Management believes it will benefit from the Trump tariffs and the administration's approach to defending American manufacturing interests, not least by closing a loophole that allows Asian competitors to use Chinese steel in their products and thereby avoid tariffs on it. That may be the case, and it is good news for Whirlpool and its competitive positioning. Still, the company must navigate ongoing weakness in the housing market, which is unlikely to improve until mortgage rates decrease from their relatively high level. High rates discourage home sales, which hurt the higher-margin discretionary appliance sales that Whirlpool needs to boost its earnings. d And the recent easing of the trade conflict may encourage competitors to increase imports to the U.S. as they did in the fourth quarter of 2024 and the first quarter of 2025, ahead of any tariffs imposed by the new regime. It all adds up to an uncertain near-term environment for Whirlpool, and its earnings and cash flow guidance could be under threat. The annual dividend currently uses up $390 million in cash, and management expects $500 million to $600 million in free cash flow (FCF) in 2025. However, it has $1.85 billion in debt maturing in 2025 and plans to pay down $700 million of it through refinancing, with the amount ranging from $1.1 billion to $1.2 billion. Those plans could come under threat if the company misses guidance, and I think that could happen in the current environment. Alongside Whirlpool, UPS will be a better investment if and when it cuts its dividend. The company began the year with management estimating that it would generate $5.7 billion in FCF while paying $5.5 billion in dividends and expecting to make $1 billion in share buybacks. Then, in late April, the impact of tariffs on the economy began to take effect. And management declined to affirm its full-year guidance on the first-quarter earnings call, implying that its FCF guidance is under threat. Furthermore, there's the added complication of UPS deliberately reducing its lower-margin delivery volumes by 50% from 2024 to the second half of 2026. The company's dividend is under threat, and even if management elects to maintain it, there's a powerful argument to say it shouldn't. As previously discussed, the company's investments in technology and refocusing its network on higher-margin and more productive deliveries (such as in the healthcare and small and medium-size business markets) imply that its return on equity (RoE) will improve. That would be a significant plus. Still, it would be an even bigger plus if management could allocate more of its earnings to invest in the business at a higher rate of RoE, rather than using up a significant portion of its cash flow and earnings on dividend payments. A dividend cut would help free up cash for productive investment that would add value for shareholders. Before you buy stock in United Parcel Service, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and United Parcel Service wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $875,479!* Now, it's worth noting Stock Advisor's total average return is 998% — a market-crushing outperformance compared to 174% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and United Parcel Service. The Motley Fool recommends Whirlpool. The Motley Fool has a disclosure policy. 3 Dividend Stocks With High but Shaky Yields That Are Probably Going to Get Cut was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
11-06-2025
- Business
- Yahoo
Why I Just Bought This Badly Beaten-Down, 6.6%-Yielding Dividend Stock and Plan to Buy Even More
Shares of UPS have been cut in half in recent years. That slump has driven up the logistics giant's dividend yield. It has a plan to turn things around, which includes shrinking its volumes to grow its free cash flow. 10 stocks we like better than United Parcel Service › UPS (NYSE: UPS) has struggled in recent quarters due to a challenging market environment and other issues. Tariffs, slowing economic growth, and low margins on volumes from its largest customer, Amazon (NASDAQ: AMZN), have impacted the leading global logistics company's revenue and cash flow, which has, in turn, weighed on its share price. Shares are down more than 50% from their peak a few years ago. That slump has driven its dividend yield up to 6.6%. For an income-focused investor like myself, UPS' big-time dividend yield is very appealing. However, that's not the main reason I'm buying shares of the beaten-down logistics giant. I think this leader can turn things around, which should boost its financial results and share price. That would also hopefully put its high-yielding payout on a more sustainable level. I think the company's combination of income and upside potential could add up to a robust total return in the coming years as UPS executes its turnaround plan. UPS is facing a barrage of headwinds. Tariffs have created a lot of uncertainty, which has impacted shipping volumes. The company's revenue declined by 0.7% in the first quarter to $21.5 billion. While its earnings increased by 4.2% per share, free cash flow was only $1.5 billion. That was barely enough to cover its dividend payment of $1.3 billion in the quarter. The company also had a fairly tight dividend payout ratio last year ($6.2 billion in free cash flow after capital expenses versus $5.4 billion in dividend payments). A big issue is a decline in the company's profit margin. Its non-GAAP operating margin slumped from 10.9% in 2023 to 9.8% last year. It was down to just 8.2% in 2025's Q1, though that was a slight improvement from 8.2% in Q1 2024. The company experienced a decline in shipping volumes in its U.S. domestic business and weakness in its supply chain-solutions operations, with the latter due partially to the sale of Coyote Logistics last year. One issue plaguing UPS is its relationship with Amazon. CEO Carol Tome commented on the company's relationship with the e-commerce giant earlier this year: "Amazon is our largest customer, but it's not our most profitable customer. Its margin is very dilutive to the U.S. domestic business." That's leading the company to significantly reduce its relationship with the e-commerce giant. It plans to cut its shipping volume by over 50% by next June. It's cutting back on its least profitable business with Amazon, which is lighter deliveries that travel short distances. It plans to keep its more profitable volumes, which include returns and heavier packages shipped longer distances. The company is undertaking a large-scale, cost-reduction initiative as part of that volume reduction. It aims to cut $3.5 billion in costs this year by reducing operational hours, headcount, and facilities. Meanwhile, the company plans to focus on growing other, more profitable business lines that are unrelated to Amazon. These volumes include healthcare logistics and those from small and mid-sized businesses. It has been beefing up its healthcare logistics platform via acquisitions. Last year, it bought Frigo-Trans and BPL to bolster its healthcare logistics capabilities in Europe. Meanwhile, it recently agreed to buy Andlauer Healthcare Group for $1.6 billion to strengthen its ability to offer complex healthcare logistics solutions to customers. The company expects a combination of lower overall volumes related to Amazon, increased revenue per piece elsewhere, lower costs, and lower capital expenses to yield increased returns, higher margins, and more free cash flow. The company's capital-spending plan is around $3.5 billion this year, down from $3.9 billion last year. That $400 million in savings will give it more financial flexibility as it engineers its turnaround plan. Meanwhile, the company entered this year with a strong financial position. Last year, it paid off $3.8 billion of debt, lowering its leverage ratio to 2.25 times. The company's strong financial position gave it the confidence to buy back $1 billion of its stock in the first quarter of this year as it capitalized on the decline in its share price to complete its entire 2025 buyback plan. UPS also raised its dividend earlier this year. It has either maintained or increased its payout every year since going public in 1999. UPS looks like a unique investment opportunity these days. It pays a high-yielding dividend that the global logistics giant should be able to maintain during its turnaround phase. On top of that, it has significant upside potential as it executes its strategy to reduce lower-margin volumes while growing its more profitable volumes. That has me excited to add the stock to my portfolio. While it's a higher-risk, high-yielding dividend stock, its total return potential is too compelling to pass up. I'm starting with a small position, and I plan to add to it over time. Before you buy stock in United Parcel Service, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and United Parcel Service wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $660,341!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $874,192!* Now, it's worth noting Stock Advisor's total average return is 999% — a market-crushing outperformance compared to 173% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Matt DiLallo has positions in Amazon and United Parcel Service. The Motley Fool has positions in and recommends Amazon and United Parcel Service. The Motley Fool has a disclosure policy. Why I Just Bought This Badly Beaten-Down, 6.6%-Yielding Dividend Stock and Plan to Buy Even More was originally published by The Motley Fool
Forbes
10-06-2025
- Business
- Forbes
Should You Buy UPS Stock At $100?
United Parcel Service (NYSE:UPS) has notably underperformed against the broader S&P 500 index over the past year, falling nearly 30% compared to the S&P 500's 12% increase. This drop occurs despite UPS's strategic move to minimize lower-margin Amazon deliveries, aimed at boosting profitability. Nevertheless, new tariffs may directly affect UPS by increasing costs for customers and possibly decreasing shipping volumes, especially in international trade. In spite of these obstacles, we consider UPS stock, currently valued at approximately $98, to be an appealing buying opportunity. While there are legitimate concerns regarding the company's operational performance and financial status—which our assessment of growth, profitability, financial stability, and resilience during downturns indicates as weak—we assert that these challenges are already apparent in the stock's significantly low valuation. That being said, if you are looking for upside with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative, having outperformed the S&P 500 and delivering returns that exceed 91% since its launch. Additionally, see – Amid AI-Fueled Growth, AVGO Stock's Valuation Raises Concern When considering what you pay per dollar of sales or profit, UPS stock appears inexpensive relative to the broader market. United Parcel Service's Revenues have slightly decreased over recent years. United Parcel Service's profit margins are significantly worse than most companies within the Trefis coverage universe. United Parcel Service's balance sheet appears solid. UPS stock has experienced an impact that was slightly better than the benchmark S&P 500 index during certain recent downturns. Concerned about the repercussions of a market crash on UPS stock? Our dashboard How Low Can United Parcel Service Stock Go In A Market Crash? contains a thorough analysis of how the stock has performed during and after prior market crashes. In conclusion, United Parcel Service's performance across the parameters discussed above is as follows: UPS stock has exhibited moderate performance across the parameters mentioned, and we believe the negative aspects are predominantly already incorporated into the stock price. In fact, we estimate UPS' Valuation to be $124 per share, indicating over 25% upside potential. While it appears that there is some upside potential for UPS stock, the Trefis Reinforced Value (RV) Portfolio has outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to yield strong returns for investors. Why is that? The quarterly rebalanced mix of large, mid, and small-cap RV Portfolio stocks provided a flexible approach to capitalize on favorable market conditions while mitigating losses when markets decline, as elaborated in RV Portfolio performance metrics.
Yahoo
10-06-2025
- Business
- Yahoo
Why United Parcel Service (UPS) Outpaced the Stock Market Today
United Parcel Service (UPS) closed the most recent trading day at $99.31, moving +1.08% from the previous trading session. The stock's change was more than the S&P 500's daily gain of 0.09%. Coming into today, shares of the package delivery service had gained 2.46% in the past month. In that same time, the Transportation sector gained 7.55%, while the S&P 500 gained 7.21%. Market participants will be closely following the financial results of United Parcel Service in its upcoming release. The company's earnings per share (EPS) are projected to be $1.57, reflecting a 12.29% decrease from the same quarter last year. Meanwhile, our latest consensus estimate is calling for revenue of $20.84 billion, down 4.51% from the prior-year quarter. Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $7.08 per share and revenue of $87.37 billion. These totals would mark changes of -8.29% and -4.06%, respectively, from last year. Investors should also pay attention to any latest changes in analyst estimates for United Parcel Service. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability. Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system. The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 1.78% downward. Right now, United Parcel Service possesses a Zacks Rank of #3 (Hold). Investors should also note United Parcel Service's current valuation metrics, including its Forward P/E ratio of 13.87. Its industry sports an average Forward P/E of 13.87, so one might conclude that United Parcel Service is trading at no noticeable deviation comparatively. Investors should also note that UPS has a PEG ratio of 1.72 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Transportation - Air Freight and Cargo industry currently had an average PEG ratio of 1.72 as of yesterday's close. The Transportation - Air Freight and Cargo industry is part of the Transportation sector. This group has a Zacks Industry Rank of 90, putting it in the top 37% of all 250+ industries. The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1. Be sure to follow all of these stock-moving metrics, and many more, on Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report United Parcel Service, Inc. (UPS) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
09-06-2025
- Business
- Globe and Mail
Is Amazon Paying $4 Billion to Break Up With UPS?
Amazon (NASDAQ: AMZN) is an online retail powerhouse, selling and delivering its own products and acting as a middleman for other retailers. The company's delivery trucks are ubiquitous in some areas of the country. But it has even bigger aspirations when it comes to getting products to customers. So why did United Parcel Service (NYSE: UPS) decide to stop handling as many Amazon deliveries? Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » The Amazon and UPS breakup As with any good breakup drama, the story between Amazon and UPS, as United Parcel Service is called for short, is hard to call. UPS says that the Amazon business it was doing was high volume, but low margin. That meant that it didn't add enough to the bottom line to make it worth the top-line benefit. UPS says it plans to step away from half of the business it does with Amazon over the next couple of years. That effort is in keeping with UPS' goal of improving the quality of its business. But management highlighted that it will still work with Amazon on some things. Notably, Amazon is increasingly good at delivering its own wares, but it doesn't have a strong handle on returns. With a large retail store network, UPS can still provide return services to Amazon at an attractive return for UPS shareholders. So the relationship isn't dead -- it's just different. Or, you could say, they will still be friends. Amazon is paying up to fill the gap UPS' decision to put limits on its relationship with Amazon is a problem for Amazon. While it is true that Amazon has been growing its distribution capabilities, it now has to step up more quickly than it might have planned. To that end, Amazon recently announced that it was making a capital investment of up to $4 billion to enhance its ability to make rural deliveries. And it inked a deal with UPS' peer FedEx (NYSE: FDX), where that carrier will handle larger packages for Amazon. The market saw all of this as a win for FedEx and a loss for UPS. For Amazon, it wasn't too big a deal, noting that the stock is widely adored on Wall Street right now. While Amazon's stock is about 15% below its all-time high, its price-to-sales and price-to-earnings ratios are both above their five-year averages. And they are both fairly lofty on an absolute basis, as well. Still, it looks a little like Amazon is scrambling to take on the distribution services that UPS is willingly giving up. So what about UPS? The company's stock has lost more than half of its value since hitting a peak in 2022. In fact, it made the Amazon announcement just as it appeared it was getting its business back on track following a period of weakness that led to a corporate overhaul. Indeed, revenue had started to grow and margins appeared to have stabilized. Moving away from low-value Amazon business was a preemptive move made at a time when UPS had shifted from business weakness to business strength. In other words, UPS is being proactive because it sees the writing on the wall. Its Amazon business was going to keep shrinking anyway, so why not get ahead of it? The costs Amazon is incurring to make up for the loss of UPS as a delivery service is a sign that this was a big deal. But it will be a bigger deal for Amazon than UPS, since UPS was clear that the business wasn't very profitable. In fact, UPS could end up the big winner if the ability to slim down allows it to further improve its margins, even if the top line of its income statement shrinks along the way. Don't sleep on UPS as an investment Wall Street loves Amazon, and perhaps for good reason. But the stock is trading with a premium price tag. UPS, which could actually end up being the big winner in its breakup with Amazon, is deeply unloved. Notably, its price-to-sales and price-to-earnings ratios are well below their five-year averages. The stock's dividend yield, meanwhile, is historically high at around 6.7%. There's no question that UPS has extended the length of its turnaround by breaking up with Amazon. But the near-term pain could be exactly what it needs to rise up again. Contrarian investors, dividend investors, and value investors should all be doing a deep dive into UPS today with the idea of adding this unloved delivery service to their portfolios. Should you invest $1,000 in Amazon right now? Before you buy stock in Amazon, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $869,841!* Now, it's worth noting Stock Advisor 's total average return is789% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
