UPS overpromised and underdelivered for a third consecutive year.
Management believes that free cash flow will continue to improve, justifying future dividend increases.
UPS’s valuation is so cheap that the company only has to produce mediocre results to potentially regain favor on Wall Street.
10 stocks we like better than United Parcel Service ›
High-yield dividend stocks are an excellent means of participating in the stock market while generating passive income. But even the highest-yielding stock in the S&P 500 — LyondellBasell Industries (yielding 12.6%) — couldn’t keep up with recent S&P 500 gains on dividends alone. At the time of this writing, the index is up 16.6% year to date after gaining more than 20% in both 2023 and 2024.
The best reason to buy high-yield dividend stocks isn’t to try to beat the indexes with dividends. Rather, it’s to invest in solid companies at good values that also reward investors with dividends. A dividend is reliable only if the company paying it can support the expense.
By investing $4,000 in United Parcel Service (NYSE: UPS), investors can expect to earn $275 in annual dividends, based on its current yield. Here’s why the value stock is a buy in 2026.
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UPS continues to disappoint investors, down around 25% year to date and up just 15% from its 12-year low. Revenue and margins surged during the COVID-19 pandemic. Both metrics have been steadily declining for the last three years, in lockstep with UPS’s falling stock price.
Despite the challenges, UPS has remained committed to its dividend, which now yields a staggering 6.9% because the stock has fallen so much. That’s a tasty incentive for folks willing to hold the stock in the hopes that UPS can turn things around.
But it’s a mistake to buy a stock solely for the yield — as evidenced by UPS’ recent performance. Even factoring in dividends, UPS investors have still lost 28.1% over the last five years, while the S&P 500 would have doubled your money during that period.
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