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When a stock’s price is falling, its yield is sky-high, and there’s plenty of doubt, it looks like a classic value trap. Does it ever make sense for dividend growth investors to walk into that trap? Sometimes, what’s under the hood tells a very different story.

In Episode 51, Greg revisits UPS ($UPS), a company we last covered years ago but is now back on our radar for entirely new reasons. Rising wages, Amazon contract changes, and global trade tariffs have cut the stock price in half since 2022, sending its dividend yield toward 8%. At first glance, it looks like the market is pricing it for a dividend cut.

But step behind the headlines, and the story gets more compelling: UPS continues to post solid margins, generates strong cash flow, and has the scale and efficiency to remain a leader in global logistics. Even if a dividend cut occurs, investors may still come out ahead with sustainable yields and renewed dividend growth potential. Greg breaks down the scenarios, risks, and catalysts that make UPS a compelling story to consider.

Topics Covered:

• [00:03:32] Why UPS looks like a high-yield “problem child” but may still be a dividend growth play
• [00:06:20] UPS’s history: growth in revenue, profits, and dividends since 1999
• [00:09:58] The “trifecta” of headwinds—union wage hikes, Amazon contract cuts, and tariffs
• [00:12:36] Comparing UPS vs. FedEx ($FDX), Amazon ($AMZN), USPS, and DHL in market share and profitability
• [00:19:57] How AI could improve delivery efficiency
• [00:21:12] Business metrics, profitability, debt profile, and why UPS’s financing signals investor confidence
• [00:25:27] The dividend dilemma: can UPS sustain its payout, or is a cut coming?
• [00:27:44] Three scenarios: steady dividend, improved valuation, or a cut that resets growth
• [00:31:47] Long-term catalysts: tariffs, Amazon shifts, and global trade recovery
• [00:33:37] What research firms (Morningstar, Value Line) are projecting for UPS
• [00:34:56] Final take: UPS as a value play that still pays you to wait

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Disclaimer: This discussion is for educational purposes only and not investment advice.

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