UPS Shares Rise 1.49% on 7.4% Dividend Yield but Slide to 152nd in Trading Volume Amid Strategic Tensions Between Growth and Income Investors

On August 19, 2025, United (UPS) traded at $0.1666, rising 1.49% with a trading volume of $0.63 billion, a 22.29% decline from the previous day. The stock ranked 152nd in trading volume, reflecting moderate liquidity amid mixed investor sentiment.

Analysts highlighted UPS’s 7.4% dividend yield as a key attraction, with CEO Carol Tome reaffirming the company’s commitment to maintaining and growing payouts. However, concerns persist about capital allocation. Despite a strong investment-grade balance sheet, net debt/EBITDA ratios remain elevated, and free cash flow (FCF) has fallen short of dividend payouts, raising questions about sustainability. Management’s focus on growth initiatives—such as expanding healthcare and small business (SMB) markets—has drawn praise, but some investors criticize the prioritization of dividends and share buybacks over reinvestment in high-margin sectors.

Strategic tensions between income-focused and growth-oriented shareholders are intensifying. While dividend investors celebrate the company’s stable payouts, growth advocates argue that redirecting cash flow toward automation, technology, and market expansion could unlock higher long-term returns. Management’s 2024 investor day outlined ambitious targets for SMB and healthcare revenue growth, yet execution risks remain due to external factors like tariff uncertainties. The debate underscores UPS’s dual identity as both a dividend stalwart and a growth enabler, with outcomes likely to influence its stock trajectory.

A backtest of a strategy buying the top 500 stocks by daily trading volume and holding them for one day from 2022 to 2025 yielded a 1.98% average one-day return. Over the past year, the total return was 7.61%, with a Sharpe ratio of 0.71, indicating modest risk-adjusted performance. The strategy’s stability contrasts with UPS’s recent volatility, highlighting the need for nuanced capital allocation decisions in a dynamic market.