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This Parcel Powerhouse Just Joined The 7% Club
Noah Zelvis
July 31, 2025
United Parcel Service (NYSE: UPS) has long been regarded as a cornerstone of the global logistics and delivery sector.
But lately, its prowess with parcel delivery has been taking a back seat to its income potential – for investors seeking a passive income, at least.
Following recent share price declines, UPS now offers one of the most attractive dividend yields in the S&P 500.
It recently joined the 7% club, with a yield of 7.22%. That puts it in the top 15% for yield attractiveness with 16+ years of dividend increases to sweeten the deal.
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Operational Overview and Recent Earnings
While not fully recession-proof, logistics and parcel delivery remain essential services.
Add to this the growing reliance on e-commerce globally, and it’s easy to see how consumer and business habits may provide long-term tailwinds to fuel UPS' success.
The logistics provider is active in more than 200 countries and delivers an average of 22.4 million packages per day.
That’s quite an impressive feat for a company that began as a tiny messenger service with a $100 loan.
Founded in 1907 by two enterprising teens, UPS is now the world’s largest package delivery service. In 2024, it generated $91.1B in revenue, with consolidated revenues of $21.2B in Q2 2025.
It expects to pay out around $5.5 billion in dividends in 2025 as it pursues strategic optimization and cost-cutting programs.
Action: Keep a close eye on earnings releases and share prices. Pay attention to company announcements about new service initiatives in addition to the impact of its strategic initiatives as it attempts to navigate a tricky economic environment. |
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Dividend Profile
As of mid-July, UPS offers a dividend yield above 7%, one of the highest in the S&P 500.
This yield is more than double the index average and historically high for UPS, suggesting a potentially undervalued opportunity for dividend investors with a nose for sniffing out the most lucrative opportunities.
UPS has a 20+ year record of consistent dividend payments, with regular annual increases over the past decade.
In 2024, UPS returned ~$5.4 billion to shareholders in dividends, backed by disciplined capital management.
Despite recent earnings pressure, UPS continues to generate strong free cash flow, which supports the current dividend.
Action: Look out for new dividend announcements and monitor stock prices. |
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Bear Case
Volume decline could be a cause for concern. Parcel volumes dropped post-pandemic as consumer spending shifted from goods to services.
Alongside this consideration, businesses are cutting costs by consolidating shipments, and UPS has lost some ground to cheaper regional carriers and Amazon's in-house delivery.
Slower volume growth = less revenue = less support for a rising dividend.
UPS’s payout ratio is elevated—estimated at 90% or more of net income, depending on recent results.
If earnings fall further, this could breach sustainable levels, forcing a freeze or cut to the dividend.
Final Thoughts
Despite near-term headwinds, UPS remains a global logistics leader with a strong brand, essential services, and a long-standing commitment to shareholder returns.
The company’s robust free cash flow, high barriers to entry, and strategic focus on efficiency make it well-positioned for long-term recovery.
For dividend investors seeking reliable income and potential upside as the business stabilises, UPS offers an unusually high yield from a blue-chip name.
With disciplined management and ongoing investment in automation, the current valuation presents a compelling opportunity for those with a long-term outlook.
That’s all for today’s edition of the Dividend Brief.
Thanks for reading, and if you have any feedback or dividend stocks you want me to take a look at, just reply to this email!
—Noah Zelvis
DividendBrief.com