The Fool’s Take
Shares of United Parcel Service were recently hovering around a five-year low — and sporting a hefty dividend yield of 6.7%.
All is not peachy at UPS, though, as its earnings are close to no longer covering those dividend payouts. First-quarter 2025 results generally compared poorly to year-earlier levels, disappointing investors.
Management has reassured shareholders that the dividend is safe, but UPS wants earnings to be double the dividend. To achieve that, it must either grow earnings faster than the dividend or cut the payout. UPS could still be worth buying for patient investors. Unlike some turnaround companies that are losing market share and not making a profit, UPS is incredibly profitable.
Its poor results stem from overexpansion to prepare for a sustained boom in delivery volumes. Instead, volumes flatlined as the pandemic receded, leaving UPS overextended. UPS’ profits are still slightly above pre-pandemic levels; they look low because of how much they grew in 2020 and 2021.
Even if UPS slashes its dividend in half, it would yield more than 3.3% at recent share prices — with the payout likely growing over time. All told, UPS stands out as a good choice for investors looking for a beaten-down value stock to hold for years. (The Motley Fool recommends UPS.)
Ask The Fool
From R.R., Cadillac, Mich.: I read that Warren Buffett is stepping down from his company, Berkshire Hathaway. Is it time to sell its stock?
It’s true that Buffett, along with his late business partner, Charlie Munger, was the driving force behind the company’s growth for 60 years. It’s also true that Berkshire isn’t likely to grow as fast now as it once did, when it was much smaller.
But Buffett built his company to last and has thoughtfully chosen Berkshire veteran Greg Abel to succeed him. When legendary leaders pass the torch, selling isn’t necessarily a smart move.
Consider that Costco co-founder Jim Sinegal stepped down in 2012, but the stock has averaged annual gains of 22% over the past decade. Similarly, Apple cofounder Steve Jobs stepped down in 2011, yet Apple’s stock has averaged annual gains of 20% over the past 10 years.
Here are some (among many) good reasons to sell a stock: You’ve lost faith in management, you don’t expect the company to grow sufficiently in the years to come, you need the money from the sale, or you’ve found a much better investment.
From D.N., Fort Myers, Fla.: What’s the “attention economy”?
With billions of people regularly visiting various sites online, the race is on to “monetize” them — that is, to find ways to profit from those visits.
A key way to do so is via online advertising, and many companies are making billions of dollars that way. For example, Meta Platforms — parent of Facebook, Instagram, WhatsApp and Threads — raked in $160.6 billion in 2024 just from advertisements.
In 2024, Google parent Alphabet generated $264.6 billion in advertising revenue — $36.1 billion from its YouTube business alone.
The Fool’s School
No one wants to think about death, but it’s unavoidable, eventually. Knowing what the probate process is and how it works can help you take actions to minimize headaches and costs.
Your best move for putting your affairs in order is to consult an estate planning attorney. For now, though, here’s an introduction to probate.
Probate is the legal process of wrapping up the affairs of someone who has died. It has a reputation for being a major, costly hassle, but in many states it’s not. The rules, requirements and costs vary by state and also often depend on the value of the estate of the person who died (the “decedent”).
Much depends on whether the decedent leaves behind a valid will. If there is a will, it will likely name an “executor” who will typically manage the probate process, working with the probate court to settle the estate. All assets will be identified and any debts owed will be paid, if possible. Any taxes owed will be paid, too.
What’s left is then distributed according to directions in the will. If the decedent died “intestate” — without a will — an independent administrator may be appointed to distribute assets. This can cost the state significant time and money, increasing the cost of probate. (If you haven’t had a will prepared, consider doing so!)
In these cases, assets are generally distributed to the next of kin according to state guidelines. Setting up a “living trust” is often recommended as a probate-avoidance strategy, but get more information before deciding to do so. It’s possible to spend more setting up the trust than you’ll save avoiding probate. (That said, living trusts can serve other useful purposes.)
You can learn much more at sites such as EstatePlanning.com, MetLife.com/stories/legal/what-is-probate, and Kiplinger.com/personal-finance/the-basics-of-estate-planning.
Also look at books such as J.K. Lasser’s New Rules for Estate, Retirement, and Tax Planning by Stewart H. Welch III and J. Winston Busby (Wiley, $28), or Nolo’s Guide to Estate Planning by Liza W. Hanks (Nolo, $36).
My Smartest Investment
From J.B., online: My smartest financial move has been to drive slightly new, paid-off cars.
The Fool responds: There are upsides and downsides to buying a used car, but in general, it’s a savvy financial move. The downsides: You often won’t get a warranty; you may not get the latest safety features; you can’t customize many options; the vehicle will have experienced some wear and tear; and you may not know its full history.
On the other hand, cars can lose 10% or more of their value each year, and new cars lose some value as soon as you drive them off the lot. Some used cars do come with warranties, and used cars cost less to buy — and typically less to insure. That means you can pay them off sooner, as well.
Currently, with tariffs potentially making new cars more expensive, used cars can look even more attractive. It’s smart to do your research before buying a used (or new) car, at sites like ConsumerReports.org, Edmunds.com, KBB.com and CarEdge.com. You might look into buying a used vehicle via a local seller or via sites such as Cars.com, Carvana.com and CarMax.com.
(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)
Who Am I?
I trace my roots to the 1840s, when I was founded in Providence, R.I., as America’s first maker of fine writing devices. My initial offerings were gold and silver coverings for wooden pencils.
In 1879, I introduced my “stylographic pen” — a precursor of not-yet-invented ballpoint pens — and a “propel-repel” mechanical pencil, a forerunner of modern mechanical pencils. All my writing devices are inspected at least 120 times before I sell them. Many of my products can be engraved, and they’re often given as gifts. Still based in Rhode Island, I offer a lifetime mechanical warranty.
Who am I?
Forget last week’s question? Find it here.
Last week’s answer: Chipotle Mexican Grill