NEW YORK, December 29, 2025, 10:47 ET
- UPS shares were down about 0.6% at $99.91 in morning trade, implying roughly a 6.6% yield on its current dividend.
- UPS has targeted $3.5 billion of year-over-year cost savings in 2025 as it reshapes operations and pulls back from some lower-margin volume.
- The carrier is also investing in higher-value logistics, including healthcare, after completing its $1.6 billion Andlauer Healthcare Group deal in November.
United Parcel Service shares slipped below $100 on Monday morning, keeping the package carrier’s dividend yield near 6.6% as investors weighed the company’s overhaul and whether the payout can be sustained.
The yield has climbed as the stock has lagged, turning UPS into a closely watched income name even as its core U.S. delivery business faces softer demand and higher costs.
That matters now because UPS is in the middle of a network and customer-mix reset that management says is aimed at improving profitability, a shift that will affect cash generation used to fund dividends and investment.
In a Dec. 28 analysis, Motley Fool contributor Matt DiLallo said UPS is beginning to show signs of progress from its strategy, pointing to cost savings and improving cash generation.
Other recent commentary has been more cautious, warning that a high yield can reflect market concerns about dividend coverage if volumes and earnings remain under pressure.
UPS said in its third-quarter report that it had realized about $2.2 billion in cost savings as of Sept. 30 and still expected $3.5 billion of year-over-year savings in 2025.
The company is also dialing back deliveries tied to Amazon, its biggest customer, as part of a push to prioritize more profitable packages. UPS has said it aims to reduce Amazon volumes by more than half by the second half of 2026.
UPS reported third-quarter revenue of $21.4 billion and non-GAAP adjusted diluted earnings per share of $1.74 in its Oct. 28 earnings release. Companies use “adjusted” results to strip out certain one-time items and show underlying performance. United Parcel Service, Inc.
In its U.S. domestic segment, revenue fell to $14.22 billion from $14.60 billion a year earlier, and the company cited lower volume as a key driver.
Average daily U.S. domestic package volume fell to 16.15 million in the quarter, from 18.41 million a year earlier, the filing showed.
UPS reported free cash flow of $2.74 billion for the first nine months of 2025. Free cash flow is the cash left after capital spending, and it is a key pool of money for dividends and debt reduction.
UPS last announced a quarterly dividend of $1.64 per share, payable Dec. 4, or $6.56 a year on an annualized basis. At Monday’s share price, that works out to a yield of about 6.6%.
Chief Executive Carol Tomé said UPS was executing “the most significant strategic shift in our company’s history” when it released third-quarter results. United Parcel Service, Inc.
UPS has also been pushing deeper into healthcare logistics, completing the acquisition of Canada’s Andlauer Healthcare Group for about $1.6 billion, the company said in November.
Rival FedEx, which competes with UPS in U.S. and international parcel delivery, raised its full-year outlook this month after reporting quarterly results, highlighting a mixed backdrop that still includes trade uncertainty.
For UPS investors, the next catalyst will be updated guidance on volume, margins and cash generation as the company finishes its 2025 cost-cut plan and absorbs the near-term impact of shifting away from lower-margin deliveries.
