Is United Parcel Service (UPS) the Best Dividend Stock in the Industrial Sector?

UPS (NYSE: UPS), one of the world's largest shipping couriers, trades at just 14 times forward earnings and pays a forward dividend yield of 6.4%. Does that make it the best dividend stock in the industrial sector right now, or does it face too many unpredictable headwinds?

Image source: UPS.

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Has UPS finally stabilized its business?

UPS' stock has risen about 26% over the past 12 months. But it remains 44% below its all-time high of $192.88, which it reached on Feb. 2, 2022.

UPS' stock stumbled as delivery volumes pulled back from pandemic-era levels and margins shrank. Inflation, intense competition from FedEx and other couriers, a new contract with the Teamsters union to avert a strike, and an intentional reduction in Amazon's (NASDAQ: AMZN) lower-margin orders exacerbated that pressure.

To stabilize its business, UPS focused on securing higher-margin orders from small- to medium-sized businesses and healthcare customers as it continued to decouple from Amazon. It also trimmed its workforce and automated more tasks. So while UPS' total package volume and revenue continued to decline, its average revenue per piece rose, its adjusted operating margins stabilized, and its adjusted EPS finally grew again in 2025.

Data source: UPS.

For 2026, UPS expects its revenue to rise 3% to $91.2 billion as its adjusted earnings grows 1% to $7.22 per share. Those growth rates might seem anemic, but they would mark the first time its revenue and adjusted EPS rose in tandem since 2022. They also counter the bearish notion that its macro, competitive, and labor-related challenges would crush its business.

Is UPS a reliable dividend stock?

UPS' adjusted EPS estimate for 2026 will easily cover its forward dividend rate of $6.56 per share. Analysts also expect its revenue and adjusted EPS to grow 4% and 12%, respectively, in 2027 as it integrates more AI features, automates its logistics, and faces fewer headwinds in a warmer macro environment. That stabilization should give it ample room to raise its dividend.

UPS isn't an exciting stock, but its future looks much brighter than it did two years ago. If it continues to grow, it could become one of the best dividend plays in the industrial sector.

Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon and United Parcel Service. The Motley Fool recommends FedEx. The Motley Fool has a disclosure policy.