Norfolk Southern Corporation’s ( NSC Quick Quote NSC - Free Report) efforts to reward its shareholders through dividends and buybacks bode well.
Investors always prefer an income-generating stock. Hence, a dividend-paying one is obviously much coveted. However, headwinds like high fuel costs and supply-chain disruptions continue to hurt NSC. Currently, NSC carries a Zacks Rank #3 (Hold).
Factors Favoring NSC
Despite economic uncertainties, Norfolk Southern is committed to reward its shareholders. During 2022, Norfolk Southern paid dividends worth $1,167 million, up 13.5% year over year, and repurchased and retired common stock worth $3,110 million.
Norfolk Southern's strong free cash flow generating ability supports its shareholder-friendly activities. In January, the company's board announced a 9% increase in its quarterly dividend payout. This was the fourth dividend hike announced by the company in a year’s time.
Moreover, higher fuel surcharges and favorable pricing are driving the top line. Improvement in coal revenues represents a further tailwind. In fourth-quarter 2022, coal revenues increased 28% year over year to $448 million. Coal volumes increased 8% in the quarter.
NSC is being hurt by headwinds like supply-chain disruptions and slower network velocity, due to which overall volumes declined 1% year over year in fourth-quarter 2022. Volumes declined in each quarter of 2022, resulting in an annual decline of 3% from 2021 levels.
Moreover, high fuel costs are denting the bottom-line growth. At NSC, expenses on fuel surged 82.6% year over year in 2022, leading to a 18.5% rise in operating costs. High capex is also likely to play as a spoilsport.
Zacks Rank & Key Picks
Currently, NSC carries a Zacks Rank #3 (Hold). Some better-ranked stocks for investors interested in the Zacks
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