As a multinational logistics giant, United Parcel Service (UPS) is seen as something of a bellwether for the economy. Sadly for shareholders, UPS stock has grown only about as fast as the global economy for decades.
Partly that's a function of UPS being a capital-intensive business. Operating a fleet of more than 500 planes and 100,000 vehicles, alongside a highly unionized workforce, means UPS is tethered to "old economy" margins. Meanwhile, the market over the past 20 years has favored "capital-light" tech giants with fat margins over value names that pay hefty dividends.
However, a general market preference for growth stocks isn't the only thing weighing on UPS. Much of the company's sluggishness can be blamed on its former best friend: Amazon.com (AMZN). Once UPS's biggest customer, Amazon is now its most formidable competitor.
The pressure Amazon put on margins became so acute that UPS management began a strategic "decoupling," aiming to cut its Amazon-related volume by half by the end of 2026.
While concentrating on higher-margin operations makes strategic sense, forgoing Amazon's massive volume has created a significant "growth gap" that the top line reflects. Indeed, revenue has increased at an average annual rate of less than 5% over the past 20 years. Operating income declined in 10 of the past 20 fiscal years. Those sorts of results don't usually drive outstanding returns.
If there is a bright spot, it's that UPS has been good for the income crowd. The company has raised its dividend annually for 17 years and routinely ranks among the highest-yielding dividend stocks in the S&P 500.
Even better, UPS has increased its payout at a compound annual growth rate of more than 8% over the past two decades. Furthermore, under its current authorization, the company is expected to spend roughly $1 billion in 2026 buying back its own stock.
Analysts are increasingly bullish on UPS stock's prospects going forward. Sorry to say, but long-time shareholders are still sitting on dismal returns.
The bottom line on UPS stock?
UPS has been painful for anyone tough enough to ride it out. Over its entire life as a publicly traded company, UPS stock generated an annualized total return (price change plus dividends) of just 4.6%. (Interestingly, the global economy grew at a similar pace.)
Other standardized time frames are likewise a downer. UPS has a negative total return over the past one-, three- and five-year periods. And it lags the broader market by wide margins over the past 10 and 15 years.
Which brings us to what $1,000 invested in UPS 20 years ago would be worth today. Have a look at the below chart.
A thousand bucks invested in UPS two decades ago would today be worth just $2,700. That's good for an annualized return of 5.2%. The same sum invested in the S&P 500 would theoretically be worth almost $8,000, or a return of 10.9%.
If there's any solace to be found, Wall Street is incrementally more optimistic on the industrial stock – at least over the next 12 months or so. Of the 30 analysts covering UPS surveyed by S&P Global Market Intelligence, 12 rate it at Strong Buy, one says Buy, 14 have it at Hold, two say Sell and one calls it a Strong Sell. That works out to a consensus recommendation of Buy, albeit without much conviction.
Speaking for analysts sitting on the sidelines, Susquehanna's Bascome Majors cites inflation and other macro risks for rating shares at Neutral (the equivalent of Hold).
"Near-term, we believe parcel demand is solid, and investor concern around the well-telegraphed second phase of Amazon's 'glide down' drives a fairly benign setup for UPS," Majors writes. "Mid-term, rising U.S. union labor inflation in 2027 to 2028 keeps us from getting too excited about the fourth quarter of 2026 and beyond."
