UPS is taking a big gamble, and you need to know these two things.

The logistics giant UPS has recently seen its stock price fall to a five-year low, behind which is an aggressive business overhaul – shifting from low-margin, high-frequency orders like those of Amazon to truly profitable businesses such as logistics for small and medium-sized enterprises and international premium services.

Sounds good, but what's the cost? This year, the stock price has already fallen by 25%, and the company is closing 93 logistics centers. The CEO speaks well: revenue per item increased by 9.8% in Q3, and cost control is also good. But investors are still watching.

The most heartbreaking thing is this 7% dividend yield. It looks outrageously high, but in reality, it's because the stock price has fallen sharply - down 60% from its peak in 2022. The payout ratio is as high as 98%, indicating that UPS has distributed almost all its profits to shareholders, leaving very little financial room for transformation.

However, UPS is quite resilient and has committed to continue paying dividends regardless of the circumstances — this company has maintained or increased its dividends every year since going public in 1999. Analysts predict that if the transformation is successful, earnings per share will grow by 4% and 11% in 2026 and 2027, respectively.

Core Judgment: UPS is currently in the midst of transformation, facing short-term pain but with long-term potential. High dividends are both a risk signal and a bet on the success of the transformation.