Core Viewpoint - United Parcel Service (UPS) has seen its stock price decline over 30% year-to-date, but it remains an attractive option due to its high dividend yield and potential for profitability improvements through strategic changes and market expansions [1]. Group 1: Dividend - UPS offers a forward dividend yield of 7.57%, which is considered substantial and appealing to income investors [2]. - CEO Carol Tomé has expressed confidence in the sustainability of the dividend, citing strong free cash flow and a solid investment-grade balance sheet as backing [2]. - Management is committed to maintaining a stable and growing dividend, recognizing its importance to investors [2]. Group 2: Tariff Impact - UPS is currently facing challenges due to tariffs, with CEO Tomé stating that tariffs generally negatively impact trade [3]. - The average daily volume for UPS's most profitable trade lane between China and the U.S. decreased by 34.8% year-over-year in May and June, while volume from China to other global markets increased by 22.4% in Q2 [3]. - UPS has expanded its capacity in the India-to-Europe trade lane to accommodate rising demand [3]. Group 3: Amazon Business Adjustment - UPS has reduced its business with Amazon by 50%, which may lead to a more profitable business model in the long run [4]. - The company has initiated a voluntary separation program for full-time U.S. drivers, which is expected to result in significant cost reductions as higher-paid drivers leave [5]. - Despite the reduction, Amazon will remain a key customer, with the retained volumes generating higher profits than those being eliminated [6]. Group 4: Expansion into Higher-Profit Opportunities - UPS is focusing on expanding into healthcare logistics, which has a total addressable market of $82 billion, aiming to become the leading provider in this sector [7]. - The company already leads in radiopharmaceutical logistics and offers unique capabilities such as RFID tagging [8]. - UPS plans to acquire Andlauer Healthcare Group to enhance its cold chain and pharmaceutical transportation capabilities in the U.S. and Canada, while also serving small-to-medium-sized businesses (SMBs) that accounted for 32% of total U.S. volume in Q2 2025 [9]. Group 5: Investment Appeal - While growth investors may not find UPS attractive, income investors are likely to appreciate the high dividend yield [10]. - The stock is also appealing to value investors, trading at only 13.2 times forward earnings [10].