FedEx Stock's Sell-Off Drags Down UPS. Is the High-Yield Dividend Stock a Buy Now?

With the banal astatine its lowest level since July 2020, is UPS a buy, oregon is the dividend banal falling for valid reasons?

UPS' income and operating margins person been falling arsenic the proscription assemblage has been deed hard by pullbacks successful user spending and precocious involvement rates. Management is guiding for 2025 gross to diminution by 2.3%, but expects its operating borderline to emergence by 130 ground points to 8.8% -- an summation compared to 2024, but inactive beneath pre-pandemic levels.

That guidance is reasonably weak, but what was adjacent much concerning was this remark from CFO Brian Dykes connected the Q4 net call: "Our guidance for 2025 does not bespeak immoderate important imaginable planetary commercialized implications owed to changes successful tariffs."

On the net call, UPS noted that S&P Global forecasts 2.5% GDP maturation successful 2025, and a 2% summation successful existent exports and planetary concern production. However, if tariffs and commercialized wars hinder economical growth, these estimates could beryllium excessively optimistic, and UPS' results could beryllium noticeably worse than its already uninspiring projections.

FedEx conscionable chopped its fiscal-year adjusted net per stock (EPS) guidance to a scope of $18.00 to $18.60 per share. At the midpoint, that's down by much than 6% from the guidance it gave conscionable a 4th ago, and down 12.9% from its archetypal forecast for the twelvemonth from June. Given the expert chopped that sent UPS banal falling past Tuesday, determination look to beryllium reasons to beryllium acrophobic that UPS' results could beryllium adjacent little than projected.

A slowdown successful 2025 could enactment the company's medium-term goals successful jeopardy. On the latest net call, UPS said it expects to instrumentality to borderline maturation successful 2026 -- forecasting a home operating borderline of 12% by the 4th fourth of 2026. But if there's a play of prolonged economical weakness, it whitethorn not beryllium capable to deed that extremity connected schedule.

Since it began distributing regularly scheduled quarterly payouts successful 2000, UPS has ne'er chopped its dividend. However, determination person been years erstwhile the institution did not rise it. But successful 2022, UPS boosted its quarterly dividend from $1.02 per stock to $1.52 per stock -- a monolithic summation that whitethorn person been a mistake successful hindsight.