Bernstein Lifts UPS (UPS) Price Target on Margin Improvement Outlook

United Parcel Service, Inc. (NYSE:UPS) is included among the 13 Best Dividend Stocks Paying Over 6%.

On January 9, Bernstein analyst David Vernon raised his price target on United Parcel Service, Inc. (NYSE:UPS) to $125 from $122 and kept an Outperform rating. Vernon said concerns around the dividend look overblown, especially as UPS works to improve margins. He also expects future growth to lean more toward higher-return markets.

UPS shares fell nearly 20% in 2025, and that drop has pushed the dividend yield to an unusually high 6%. It has also lifted the dividend payout ratio to roughly 98%. On paper, that leaves little room if profits do not improve, which is why dividend risk has become such a big talking point.

Still, United Parcel Service, Inc. (NYSE:UPS) has been clear about where it stands. In a November 6 press release announcing the latest dividend, the company said:

“Commitment to the dividend is one of UPS’s core principles and a hallmark of the company’s financial strength. UPS has either maintained or increased its dividend each year since going public in 1999.”

The next step is execution. UPS is resizing and reshaping its business, including moving away from lower-margin Amazon volume. If that transition holds, the payout ratio should begin to ease as earnings rebuild. Analysts currently expect earnings per share to rise about 4% in 2026 and 11% in 2027, assuming the company follows through on its plan.

United Parcel Service, Inc. (NYSE: UPS) provides integrated logistics and delivery services to customers across more than 200 countries and territories.

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Disclosure: None.