United Parcel Services (UPS +0.02%) hasn't delivered the goods for investors this year. The stock continued its downward slide following a disappointing second-quarter update on July 29, 2025. UPS' share price is now more than 30% year to date.
Should you buy UPS stock while it's below $90? Here are four reasons why I think the answer is a resounding "yes" -- at least, for income investors.
NYSE: UPS
Key Data Points
1. The dividend is still "rock solid."
One positive side effect of UPS' dismal stock performance for income investors is that its dividend yield has increased. The stock's forward dividend yield currently stands at 7.38%.
But is the company's juicy dividend sustainable? UPS CEO Carol Tomé thinks so. She stated in the company's Q2 earnings call:
UPS is rock-solid strong, and so is our dividend. The UPS dividend is backed by solid free cash flow and a strong investment-grade balance sheet. We know how important the dividend is to our investors, and you have our commitment to a stable and growing dividend.
Two key takeaways from that statement should be reassuring to income investors. First, UPS continues to have the financial flexibility to fund its dividend. Tomé was right that the company has sufficient free cash flow to back the dividend. Second, management is committed to the dividend program.
2. Current headwinds should be only temporary.
UPS' business admittedly faces challenges. However, I think the current headwinds should be only temporary.
For example, Tomé noted in the Q2 earnings call that the small package market in the U.S. was negatively impacted by U.S. consumer sentiment near all-time lows. Long-term investors and economic observers, though, know that consumer sentiment doesn't stay at such low levels indefinitely.
What's the chief culprit behind this low consumer sentiment? Uncertainty surrounding the Trump administration's tariffs. UPS reported that increased tariffs and the elimination of the de minimis exemption caused its China-to-U.S. average daily volume to sink 34.8% in May and June. This is the company's most profitable trade lane. But as Tomé pointed out, "Trade doesn't stop, it moves." In Q2, UPS' volume between China and the rest of the world increased by 22.4%.
3. The Amazon glide-down should boost profitability.
UPS' move to cut its Amazon (AMZN +2.05%) shipment volume by 50% was controversial. However, it should boost profitability over the long run.
Tomé said in the Q2 call that the Amazon glide-down is on track for the most part. The one exception is that the staffing attrition rate has been lower than expected. However, UPS announced a voluntary separation program for full-time U.S. drivers that should alleviate the problem. The company's costs could be reduced quite a bit as longtime drivers retire. Around 85% of UPS drivers have been with the company between 25 and 40 years and are at the top end of the pay scale.
Image source: Getty Images.
4. UPS' long-term growth prospects remain strong.
Income investors can also take comfort that UPS' long-term growth prospects remain strong. Complex healthcare logistics represents an addressable market of $82 billion and is a top priority for the company. In the Q2 earnings call, Tomé reiterated UPS' goal of becoming the world's No. 1 complex healthcare logistics provider.
Acquisitions will play a key role in UPS' healthcare growth strategy. The company expects to close before year-end on its $1.6 billion acquisition of Andlauer Healthcare Group. Andlauer is a leading supply chain management company based in Canada that provides services to the healthcare sector.
While small-to-medium-sized businesses (SMBs) are being hit hard by tariffs, this market is another growth driver for UPS. The company is already making progress, with SMBs contributing 32% of total U.S. volume in Q2. UPS' SMB penetration also increased by 230 basis points in the quarter.
