Is United Parcel Service Stock a Buy Despite Tariff Worries?

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]