Shares in United Parcel Service (NYSE: UPS) dropped by 20% in the first half of 2025, attributed to trade tariff disputes impacting delivery volumes. Initial full-year guidance may be at risk after missing earnings targets in 2023 and 2024. Management forecasted $89 billion revenue and $9.61 billion operating profit for 2025.

Investors are concerned about UPS’ ability to meet targets, especially with uncertainty around its dividend. The company’s $5.7 billion free cash flow guidance may not cover $5.5 billion in dividend payments and $1 billion in buybacks as planned. The trade conflict has weakened delivery volumes, impacting overall performance.

UPS faces pressure on earnings guidance, free cash flow, dividend payouts, and buyback plans due to current challenges. Investors with a 6.5% dividend yield rely on cash flow distribution, but management aims to invest in growth areas like healthcare and small businesses for long-term success. Second-quarter earnings results in July will provide more clarity.

The Motley Fool Stock Advisor team did not include UPS in their list of top 10 stocks to buy now, which historically yielded high returns. They recommend considering other investment opportunities for potential growth. UPS’ performance in the market and its strategic growth plans will be closely monitored by investors and analysts.

Read more at Yahoo Finance: Why Shares in UPS Declined by 20% in the First Half of 2025