Anders Bylund, The Motley Fool

Sun, Jun 8, 2025, 2:31 AM5 min read

• UPS shares are down 24% over the past six months, boosting the dividend yield to record highs.

• The company is focusing on higher-margin business and trimming low-profit contracts, especially with leading client Amazon.

• UPS is taking smart steps to position itself for the next economic upswing.

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Shares of freight service veteran UPS (NYSE: UPS) are diving these days. The stock is down 24% in the last six months, building on a longer downturn that started in the inflation panic of 2022.

The steep price drop brought two investor-friendly qualities to UPS. First, this world-class company is hanging out in Wall Street's bargain bin at the moment. Second, the same stock price pressure drove UPS' dividend yield to record-breaking levels.

Read on to see why you should consider buying some UPS stock on the cheap in June 2025, locking in a great purchase price and a fantastic dividend payout.

It's fair to say that UPS has experienced some financial trouble recently. The pandemic e-commerce boom faded out. The inflation crisis accelerated the package-shipping slowdown. More recently, trade tensions between Washington and Beijing pose new threats to the shipping industry. UPS thrives on high consumer confidence and healthy global trade trends. The company suffers when those market qualities are headed in the wrong direction, as they are in 2025.

So yes, UPS is having some trouble. However, it is well equipped to handle these challenges.

Even in a painful downswing, UPS remains a very profitable business. The company generated $5.9 billion of net income over the last four quarters, converting 92% of the paper profits into free cash flows.

UPS spent all of the cash profits on dividend checks. That's hardly ideal, and the company doesn't have much room for dividend increases in this economy. At the same time, UPS has $5.1 billion in cash reserves and a rock-solid credit rating. The dividend looks safe from cash-preserving cuts in the foreseeable future.

And UPS isn't resting on its laurels. The company plans to boost its profitability over the next year by taking on a smaller number of low-margin shipments. The long-standing partnership with Amazon (NASDAQ: AMZN) is the main target for this cost-cutting effort, with shipments under the contract halving by the summer of 2026. The move will let UPS close 73 shipping centers and reduce its annual operating time by 25 million hours.