UPS rated 'sell' due to thin dividend coverage and rising costs risking dividend cut.

United Parcel Service (UPS) is rated a 'sell' because its free cash flow barely covers its $5.4 billion dividend, leaving little room for error. Rising costs, especially in salaries and diesel, along with upcoming debt refinancing at higher interest rates, threaten its profitability and the sustainability of its dividend. Capital expenditures are at multi-year lows, limiting UPS's flexibility. A dividend cut is considered likely if the company misses its cost or sales targets.

As of Oct 16, 2026 21:01 WIB, UPS shares trade at USD 99.57 on Pluang, showing a 1.78% gain in the last day despite the concerns raised about its dividend sustainability. The stock carries a dividend yield of 6.71%, attracting a predominantly sell-oriented order activity at 98%. Market participants hold UPS for an average of 142 days, reflecting a moderate-term investment horizon amid the current challenges.