Prediction: UPS Stock Will Outperform If Management Cuts the Dividend
It could be a third time unlucky for UPS (NYSE: UPS) in 2025. Having failed to meet its initial full-year guidance in 2023, and then again in 2024, UPS is under real pressure to avoid doing so this year due to the slowdown in the economy. There's a strong case for buying the stock, but it would be even stronger if management decided to cut the dividend.Investors should be wary when a blue-chip stock like UPS yields almost 7%. The market is hinting that the dividend isn't sustainable, and for good reason.The dividend was questionable even before the tariff conflict started, hurting trade flows, corporate and consumer confidence, and, in turn, delivery volumes. For example, in January, management told investors it planned to pay $5.5 billion in dividends and buy back $1 billion in shares, even as it forecast just $5.7 billion in free cash flow (FCF) for the full year.Continue reading
It could be a third time unlucky for UPS (NYSE: UPS) in 2025. Having failed to meet its initial full-year guidance in 2023, and then again in 2024, UPS is under real pressure to avoid doing so this year due to the slowdown in the economy. There's a strong case for buying the stock, but it would be even stronger if management decided to cut the dividend.
Investors should be wary when a blue-chip stock like UPS yields almost 7%. The market is hinting that the dividend isn't sustainable, and for good reason.
The dividend was questionable even before the tariff conflict started, hurting trade flows, corporate and consumer confidence, and, in turn, delivery volumes. For example, in January, management told investors it planned to pay $5.5 billion in dividends and buy back $1 billion in shares, even as it forecast just $5.7 billion in free cash flow (FCF) for the full year.
