Core Insights - United Parcel Service (UPS) offers a substantial dividend yield of 6.4%, supported by 16 consecutive annual dividend increases, making it attractive for income-seeking investors [1] - The stock has experienced significant volatility, losing over 50% of its value since its peak in early 2022 due to changing market conditions and investor sentiment [2] Business Performance - UPS has undergone a major business overhaul, including facility closures and modernization efforts, aimed at boosting profitability, with profit margins showing signs of stabilization [3] - The company has made a strategic decision to reduce its reliance on Amazon, its largest customer, due to low profitability in that segment, which may lead to short-term challenges but is expected to be beneficial in the long run [5][6] Market Environment - Current tariff policies from the U.S. administration have created uncertainty in global trade, contributing to a nearly 20% decline in UPS shares in 2025 [7] - Despite negative sentiment, there is a belief that global trade will recover, as evidenced by recent trade talks between the U.S. and China, suggesting that investor pessimism may be overstated [8] Operational Outlook - UPS is focusing on streamlining its operations while adapting to reduced package volumes due to the shift away from Amazon deliveries, with execution being a critical factor to monitor [9] - The company has shown resilience, with year-over-year increases in revenues and operating profits in the first quarter of 2025, indicating effective execution amidst challenges [10]

Group 1: Dividend Risks - Both Ford and UPS are at risk of cutting their dividends due to challenging financial conditions, with UPS planning to pay out about $5.5 billion in dividends in 2025 and Ford potentially using up to 89% of its free cash flow (FCF) on dividends in 2025 [4][6] - UPS aims to pay out approximately 50% of its earnings in dividends, while Ford targets 40% to 50% of its FCF [2][4] - The trading environment has deteriorated, leading both companies to suspend or not update their guidance, with UPS experiencing a 9% decline in average daily volumes in the second quarter [5][6] Group 2: Company Performance - Ford's transition from internal combustion engine (ICE) vehicles to electric vehicles (EVs) is progressing slowly, with significant losses in its EV segment, reporting a loss of $5.1 billion in 2024 [10] - UPS is shifting its revenue mix from low-profitability business-to-consumer deliveries to higher-margin deliveries in small and medium-sized businesses (SMBs) and healthcare, which is expected to improve its financial performance [11][12] - UPS has seen impressive growth in its SMB segment, increasing its share of U.S. volume from 27% in 2021 to 28.9% in 2024, with a goal of reaching 40% [13] Group 3: Strategic Outlook - UPS is investing in productivity-enhancing technologies, which are expected to lead to cost reductions and improved returns on assets [12] - Ford faces significant challenges in the EV market, particularly with competition from Tesla, while UPS is on a better strategic trajectory despite near-term headwinds [14]

Two investing adages might seem to contradict each other. Many investors have long followed the maxim to "buy low and sell high." On the other hand, they've also been told: "Don't try to catch a falling knife."Which of the familiar sayings applies to United Parcel Service (UPS 0.85%)? Shares of the package delivery giant have plunged more than 50% below the high set in 2022. However, I don't view UPS as a "falling knife" to avoid. Instead, I think this ultra-high-yield dividend stock is a great pick for lon ...

The United States and China recently announced a deal to temporarily reduce their high reciprocal tariffs. The 90-day agreement between the two nations to reduce tariffs has rekindled hopes of easing global trade tensions. The development is a highly welcome one for United Parcel Service (UPS) , which has a global presence.Although signs of trade tensions easing have emerged, until a concrete long-term trade deal is inked, we are not out of the woods as far as this uncertainty is concerned. This can be gaug ...

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

Core Insights - Amazon has entered into a multi-year agreement with FedEx for the delivery of select large packages, following UPS's decision to cut its less-profitable deliveries for Amazon and reduce its workforce by 20,000 jobs [1][10] - The deal is expected to provide Amazon with "cost favorability" compared to UPS, enhancing its delivery options [2][5] - FedEx's shares rose by 7% following the announcement, indicating positive market sentiment towards the partnership [1] Group 1 - The agreement with FedEx will not replace UPS, as FedEx will operate alongside Amazon's existing third-party partners, including UPS and USPS, as well as its own delivery network [3] - FedEx described the agreement as "mutually beneficial," suggesting a potential improvement in the relationship between the two companies after they severed residential delivery ties in 2019 [3][9] - UPS plans to reduce its shipment volumes for Amazon by over 50% by the second half of 2026, focusing on more profitable deliveries [4][10] Group 2 - The competitive landscape between FedEx and UPS has intensified over the past five years, with both companies vying for market share and often competing for the same customer accounts [10]

Amazon will have FedEx deliver large packages to the retailer’s customers for the first time in six years.The companies reached a multiyear agreement that renews a relationship that ended in 2019, Bloomberg reported Monday (May 12).The deal follows a January announcement by UPS that it will cut the number of packages it delivers for Amazon by half by the end of next year, according to the report.Amazon said in the report that it does not plan to use FedEx to replace the business it still does with UPS; inst ...

Financial Data and Key Metrics Changes - The company reported consolidated profit growth in the first quarter, with U.S. operating profit increasing by $164 million and U.S. operating margin expanding by 110 basis points [38] - Last year, the company generated $6.3 billion in free cash flow and ended the year with over $6 billion in cash on the balance sheet [48] Business Line Data and Key Metrics Changes - The company plans to reduce Amazon's volume by more than 50% by June 2026, focusing on profitable segments while exiting unprofitable fulfillment center outbound volume [36][37] - Health care revenue totaled $10.5 billion last year and is expected to grow mid-single digits in 2025, with plans to acquire targeted companies to enhance capabilities [41][42] Market Data and Key Metrics Changes - The U.S. import volume is approximately 400,000 pieces per day, representing less than 2% of total global average daily volume and about 5% of consolidated revenue [50] - The company has seen strong growth in small and medium-sized businesses (SMBs), with SMBs making up 31.2% of total U.S. volume, the highest concentration in ten years [42] Company Strategy and Development Direction - The company is undertaking the largest network reconfiguration in its history, planning 164 operational closures, including 73 buildings, to improve cost structure and profitability [39][60] - The focus is on revenue quality and growth in key markets such as health care, international, and SMBs, while leveraging technology and automation to enhance efficiency [41][60] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macro environment and emphasized the need for meaningful actions to improve performance and create additional value [19][20] - The company is confident that its strategic actions will lead to improved profitability, cash generation, and higher returns on invested capital, which should positively impact share price over time [46] Other Important Information - The company has maintained its dividend policy, marking the sixteenth consecutive year of dividend increases, and prioritizes reinvestment in the business [48][49] - The company is actively managing risks associated with voluntary carbon reduction commitments and trade policy changes, while also exploring opportunities in the evolving market landscape [16][50] Q&A Session Summary Question: Why is UPS reducing its volume from Amazon, and why now? - The company is exiting unprofitable Amazon fulfillment center outbound volume, which has pressured U.S. operating margins, while retaining profitable segments [36][37] Question: When will UPS redesign its network and reduce costs to grow profit? - The company has already begun profit growth, reporting a $164 million increase in U.S. operating profit and plans to remove $3.5 billion in expenses through network reconfiguration [38][39] Question: What plans do you have to grow the business, especially with reduced exposure to large customers? - The company expects growth by focusing on health care, international markets, and SMBs, with specific acquisitions planned to enhance capabilities [41][42] Question: Can you comment on investor confidence and stock performance? - Management expressed disappointment in stock performance but highlighted actions taken to improve profitability and cash generation, which should lead to higher share prices over time [44][46] Question: What is the status of the dividend policy and buybacks? - The dividend remains a hallmark of financial strength, with a focus on reinvestment, maintaining a strong financial condition, and using excess cash for share repurchases [48][49] Question: How will UPS be affected by tariff changes? - The company is well-positioned to manage complex trade policies but acknowledges exposure to potential price increases and consumer demand impacts due to tariffs [50][52] Question: How does RFID technology provide a competitive advantage? - RFID technology improves efficiency and visibility, with a significant reduction in manual scans, and the company plans to expand its deployment internationally [53][54] Question: How will UPS maintain competitiveness with closing drop-off locations? - The company continues to lead in service reliability and will remain accessible through a network of UPS stores and drop-off points, despite building closures [56][57] Question: Has there been a change in the cleanliness of package cars and driver appearance? - The company maintains high standards for vehicle cleanliness and has updated driver uniform guidelines to enhance comfort and visibility [58][59]

Buying a quality dividend stock near a multiyear low can be a great move, especially if you're willing to be patient and hang on for the long term. As long as the dividend remains intact, the yield moves up as a stock price falls in value. And that's been the case for all the stocks listed here.PepsiCo (PEP 0.88%), UnitedHealth Group (UNH -0.88%), and United Parcel Service (UPS 0.22%) are all down more than 15% in the past 12 months and are trading near multiyear lows. Their yields are also all firmly above ...

Financial Performance - Revenue for Q1 2025 was $21,546 million, a decrease of 0.7% compared to $21,706 million in Q1 2024[206] - Operating profit increased to $1,666 million, reflecting a 3.3% increase from $1,613 million in the previous year[206] - Net income rose to $1,187 million, a 6.6% increase from $1,113 million in Q1 2024[206] - Total revenue increased by 1.4% to $14,460 million in Q1 2025, driven by a 1.9% increase in Next Day Air revenue[229] - Operating profit increased by $146 million to $979 million, with an operating margin of 6.8%, up 100 basis points from the previous year[241] - Non-GAAP adjusted operating profit rose by $164 million to $1,011 million, with a non-GAAP adjusted operating margin of 7.0%, an increase of 110 basis points[241] - Total revenue for the quarter increased by 2.7% to $4,373 million, driven by a $94 million increase in export revenue[242] - Operating profit decreased by $15 million to $641 million, resulting in an operating margin of 14.7%, down from 15.4%[254] - Non-GAAP adjusted operating profit decreased by $28 million to $654 million, with a non-GAAP adjusted operating margin of 15.0%, down from 16.0%[254] - Revenue in Supply Chain Solutions decreased by 14.8% to $2,713 million, primarily due to the divestiture of Coyote, which contributed $563 million in the prior year[257] Volume and Operational Metrics - Average daily package volume decreased by 1.9% to 20,789 thousand packages, primarily due to planned volume declines from the largest customer[206] - Average daily package volume decreased by 3.5% to 17,443 thousand packages in Q1 2025 compared to Q1 2024[229] - Business-to-consumer volume decreased by 7.0%, while business-to-business volume increased by 1.5%[232] - Total average daily package volume increased by 7.1% to 3,346 thousand packages, with domestic volume up 4.8% and export volume up 9.3%[242] - Export premium products volume increased by 10.4%, while non-premium product volumes increased by 11.5%[247] Cost Management and Savings - The company expects to achieve total cost savings of $3.5 billion from the Network Reconfiguration and Efficiency Reimagined initiatives in 2025, with $500 million realized by March 31, 2025[201] - The company anticipates recording between $400 million and $600 million in expenses related to early asset retirements and other costs in 2025[202] - The company expects to incur expenses between $400 million and $600 million in 2025 related to early asset retirements and other costs associated with its Network Reconfiguration and Efficiency Reimagined programs[216] - Operating expenses increased by 3.7% to $3,732 million, with pickup and delivery expenses rising by $87 million due to increased volumes[252] - Total operating expenses were $19,880 million, a decrease of $213 million or 1.1% compared to the previous year[268] - Compensation and benefits increased by $235 million for the quarter, with non-GAAP adjusted total compensation and benefits also increasing by $236 million[269] - Purchased transportation expenses decreased by $516 million, primarily due to the impact of the disposition of Coyote and insourcing of the Ground Saver product[273] Strategic Initiatives and Acquisitions - The acquisition of Frigo-Trans, completed in January 2025, is expected to enhance complex cold-chain logistics capabilities internationally[200] - The company plans to reduce its operational workforce by approximately 20,000 positions and close 73 facilities by the end of June 2025[201] - Cash paid for acquisitions in 2025 included $478 million for Frigo-Trans and reacquired development area rights for The UPS Store[292] - The company has pending acquisition commitments, including an agreement to acquire Andlauer Healthcare Group for approximately CAD $2.2 billion (USD $1.6 billion)[304] Shareholder Returns and Capital Management - Shareholder returns included $1.0 billion in share repurchases and dividends of $1.64 per share during the first quarter[205] - The company repurchased 8.6 million shares of class B common stock for $1.0 billion during the first quarter of 2025[295] - The quarterly cash dividend was increased to $1.64 per share in 2025, compared to $1.63 in 2024[296] - Total debt outstanding as of March 31, 2025, was $21.369 billion, an increase from $20.013 billion in 2024[295] - The company anticipates capital expenditures of approximately $3.5 billion in 2025, with 80% allocated to network enhancement projects and technology initiatives[293] - Total capital expenditures for the three months ended March 31, 2025, were $876 million, representing 4.1% of revenue, down from $1.035 billion or 4.8% in 2024[290] Cash Flow and Financial Position - As of March 31, 2025, the company had $5.1 billion in cash, cash equivalents, and marketable securities, with $1.7 billion held by foreign subsidiaries[286][288] - Net cash from operating activities for the three months ended March 31, 2025, was $2.318 billion, a decrease of $1.0 billion compared to $3.316 billion in 2024[287] Market Risks and Hedging - The total net fair value of currency derivatives as of March 31, 2025, was $103 million, down from $283 million at the end of 2024[311] - As of March 31, 2025, the company's market risks and hedging strategies have not materially changed from the disclosures in the Annual Report for the year ended December 31, 2024[313] - The company entered into foreign currency exchange forward contracts on multiple currencies, including Euro, British Pound Sterling, Canadian Dollar, Hong Kong Dollar, and Chinese Renminbi in Q1 2025[313] - The fair value changes of these contracts between December 31, 2024, and March 31, 2025, were primarily due to fluctuations in foreign currency exchange rates[313] - The company limits counterparty risk by engaging only with banks and financial institutions that meet established credit guidelines[314] - Agreements with active counterparties include early termination rights and collateral provisions for positions exceeding $250 million[315] - As of March 31, 2025, the company held no cash collateral and was not required to post any collateral with counterparties[316] - The company has not historically incurred losses due to counterparty default and does not expect to in the future[316]