1 Reason Why Now Is the Time to Buy United Parcel Service

Core Viewpoint - United Parcel Service (UPS) is currently undervalued but is positioned for a potential turnaround, making it an attractive investment opportunity for those looking beyond its high dividend yield of 7.9% [1]. Group 1: Business Operations - UPS provides essential package delivery services that are complex and challenging to execute efficiently, as evidenced by Amazon's continued reliance on UPS despite its own delivery investments [2]. - The pandemic led to a surge in package demand, which inflated UPS's stock price. As demand normalized post-pandemic, the stock price fell, prompting UPS to initiate a significant business overhaul to enhance profitability through technology and focus on high-margin services [4]. Group 2: Financial Performance - UPS is undergoing a multi-year restructuring that involves substantial upfront costs and a strategic exit from low-margin businesses, which may initially reduce sales but is expected to improve profitability in the long run. This includes a deliberate reduction in business with Amazon [5]. - Recent financial results have been disappointing, with a dividend payout ratio exceeding 97%, indicating caution for income-focused investors [5]. - Positive signs are emerging, such as a 5.5% increase in revenue per piece in the U.S. business during Q2 2025, suggesting that UPS may be on the verge of a recovery as confidence in its business transformation grows [6].