You've probably heard the investing adage, "Don't try to catch a falling knife." The premise is that buying a stock that's in a clear downtrend can backfire because you can't know whether it will decline even further.

The old saying is often good advice, but not always. Sometimes, stocks that have fallen significantly and haven't rebounded are great picks.

United Parcel Service (NYSE: UPS) appears to be a good example, in my opinion. This magnificent high-yield dividend stock is down 45% since early 2022. However, I think this dismal performance now presents a once-in-a-decade buying opportunity.

Behind the decline

Why has UPS stock plunged roughly 45%? The short answer is that the company's revenue and earnings have declined. That's all investors need to bail out on a stock. Several factors contributed to UPS' declining financial fortunes, though.

During the worst period of the COVID-19 pandemic, shipping volumes skyrocketed as consumers shopped online. UPS was a key beneficiary. However, this artificial boost didn't last forever, and volumes returned to more typical levels over time.

The macroeconomic environment caused by the aftermath of the pandemic also worked against UPS. Inflation soared, causing the company's costs to jump and consumers to reign in spending. The Federal Reserve raised interest rates to fight inflation, which led to higher borrowing costs.

UPS' biggest customer, Amazon, expanded its internal distribution network. In 2020, Amazon comprised 13.3% of UPS' total revenue. By 2023, the e-commerce giant contributed 11.8% of total revenue.

The threat of a strike by union workers in 2023 negatively impacted UPS' business as some customers sought alternative shipping solutions. Although the strike was averted, UPS' five-year contract with the International Brotherhood of Teamsters had front-loaded costs that affected the company's bottom line.

Why things are looking up for UPS

I believe UPS' future looks much brighter than its recent past. This isn't merely wishful thinking, either. Several signs back up my confidence.

In the second-quarter earnings call, UPS CEO Carol Tomé noted that the company's U.S. shipping volumes returned to growth in May for the first time in nine quarters. Although international volumes haven't followed suit yet, average daily volume increased year over year in 11 of the top 20 export countries in Q2.

Tomé predicted that UPS will also return to earnings growth in the second half of 2024. Although the growth won't be all that strong at first, I expect it will accelerate as the company moves past the front-loaded costs of its union contract.

UPS' focus on healthcare logistics and small to medium-sized businesses should help boost earnings, too. The company's end-to-end logistics network is a big plus for these businesses.

If you want a highly tangible indication that UPS is turning the corner, just look at the company's restart of its stock buyback program. UPS expects to repurchase around $500 million of its shares in 2024 and buy back $1 billion of its stock each year going forward.

A once-in-a-decade opportunity

UPS' trailing-12-month revenue has declined the most since 2010, and its share price is down the furthest since 2009. The stock's price-to-earnings multiple remains well below its 10-year average.

As previously discussed, UPS appears to be at (or at least near) an inflection point where its business begins to turn around. Meanwhile, its forward dividend yield tops 5.1%.

Is this really a once-in-a-decade opportunity to buy UPS stock? In my opinion, absolutely.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights has positions in Amazon and United Parcel Service. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends United Parcel Service. The Motley Fool has a disclosure policy.

A Once-in-a-Decade Opportunity: Buy This Magnificent High-Yield Dividend Stock That's Down 45% was originally published by The Motley Fool