United Parcel Service (UPS 2.66%), better known as UPS, is one of the most widely followed high-yield dividend stocks. Although shares sport an above-average forward yield, there has been some uncertainty over the past year as the logistics giant attempts to successfully execute a turnaround.
However, based on the latest quarterly earnings release, I'm more bullish than ever about UPS's turnaround prospects.
Even as, based on the latest results themselves, a turnaround remains a work in progress. Why?
NYSE: UPS
Key Data Points
Digging deeper, there's more to suggest that improved results are just on the horizon. Coupled with UPS's 6.2% forward dividend yield, this could be the recipe for some strong total returns in the years ahead.
Image source: Getty Images.
First, the bad news
While you may be thinking I'm about to report that UPS had a banner quarter during the fourth quarter of 2025, don't hold your breath. The takeaway here is "better than expected." The company reported declines in revenue, operating earnings, and adjusted earnings per share (EPS).
| Metric |
Q4 2025 |
Q4 2024 |
% Change |
|---|---|---|---|
|
Total revenue |
$24.5 billion |
$25.3 billion |
-3.2% |
|
Total operating earnings |
$2.6 billion |
$2.9 billion |
-12% |
|
Adjusted earnings per share (EPS) |
$2.38 |
$2.75 |
-13.5% |
To make matters worse, UPS made another disappointing announcement. By maintaining, rather than raising, UPS's $1.64 per share quarterly cash dividend, the company's 16-year dividend growth streak is now over.
Yes, all of this seems lackluster. It makes perfect sense why shares are experiencing mixed price action post-earnings. However, take a closer look, and there is more reason to be excited than disappointed with the latest developments.
Why I'm more bullish than before on UPS's comeback
Again, while revenue and earnings fell year over year, Wall Street was expecting worse results. For instance, sell-side analysts were expecting revenue of just $24 billion and earnings of only $2.20 per share. Besides exceeding walked-back expectations, UPS also reported strong guidance for the coming year.
UPS's outlook calls for revenue of $89.7 billion in 2026, versus analysts' estimates of just $88 billion. UPS's operating margin guidance of 9.6% implies operating profits of $8.6 billion. That's a 9.3% improvement compared to the reported operating profit for 2025.
As for the lack of dividend increases, it's encouraging that UPS has maintained its high payout. For months, there were rising concerns that UPS would cut or suspend its dividend, given its dividend payout ratio exceeding 80%.
There's reason for hope
After a transitory 2025, UPS appears well-positioned to begin a comeback in 2026, at least based on the aforementioned guidance updates. Further progress could lead to further gains for the stock. Shares have surged from $82 to $110 at this writing, but don't rule out further upside.
Longer-term earnings estimates call for EPS to hit $8.11 per share by 2027. UPS currently trades for around 14 times forward earnings, but during more promising times, it has traded at a slightly higher forward price-to-earnings (P/E) ratio.
A mix of improved earnings and valuation expansion could mean steady gains in the years ahead. Add to this the fact that UPS will maintain its 6.2% dividend throughout the turnaround, and you may start to see why I'm more bullish on UPS than I was before earnings.
