Shares of United Parcel Service (NYSE:UPS) are down around 12% this year as the logistics giant hasn’t been doing all that well of late. But with a strong future and a robust business, this could be an underrated play for income investors in the long run.
In the first quarter of 2024, the company reported $21.7 billion in revenue, which was down 5.3% from the same period last year. Management, however, remains optimistic that its business will get back to growing, and notes that through the quarter its daily volumes in the U.S. were showing improvement.
Due to various geopolitical issues and challenging economic conditions, there are multiple macroeconomic factors which are negatively affecting UPS’ performance right now. The good news for investors, is that those factors are likely temporary in nature. As economic conditions improve, and with the business being a leader in logistics, UPS should be able to continue growing in the long run.
In the meantime, investors can get the stock at a reduced price. Shares of UPS are trading at 20 times earnings and are less than 5% away from their 52-week low of $133.68. At a lower price, the stock’s yield is up to 4.7%, which is higher than normal and it’s also more than three times the S&P 500 average of around 1.4%.
For long-term investors, UPS can make for an intriguing investment option as it provides you with a high-yielding dividend and there’s room for the stock to rally in the long run as well. As long as you can be patient with the stock, it can be a great investment to buy and hold right now.
