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2 Railroad Stocks With Solid Dividend Yield You May Count On
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Prospects of Zacks Transportation - Rail industry’s participants are being weighed down by challenges like elevated fuel prices, supply-chain woes and inflation-induced high interest rates. Most industry players are looking to drive their bottom line amid the headwinds through cost reduction.
Despite these headwinds, the industry has gained 17% over the past three months, outperforming the S&P 500 Index’s 11.2% appreciation and 11.5% growth of the broader Zacks Transportation sector.
Image Source: Zacks Investment Research
Given this encouraging backdrop, it would be a wise decision to consider some dividend-paying railroad companies like Union Pacific Corporation (UNP - Free Report) and Norfolk Southern Corporation (NSC - Free Report) . These companies have consistently announced dividend hikes, thus highlighting their pro-shareholder stance.
Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market, and act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, they offer downside protection with their consistent increase in payouts.
Additionally, these companies have superior fundamentals like a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics.
How to Pick Stocks With Solid Dividend Payouts?
In order to choose some of the best dividend stocks from the aforementioned industry, we have run the Zacks Stock Screener to identify stocks with a dividend yield in excess of 2% and a sustainable dividend payout ratio of less than 60%. Each of the two stocks mentioned below carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Union Pacific: Headquartered in Omaha, NE, Union Pacific, through its subsidiary, Union Pacific Railroad Company, operates in the railroad business in the United States. Currently, it has a market capitalization of $149.73 billion.
UNP pays out a quarterly dividend of $1.30 ($5.20 annualized) per share, which gives it a 2.14% yield at the current stock price. This company’s payout ratio is 50% of its earnings at present. The five-year dividend growth rate is 10.81%. (Check Union Pacific’s dividend history here).
Union Pacific’s consistent initiatives to reward its shareholders through dividends and share repurchases look encouraging. During the first nine months of 2023, UNP paid dividends worth $2,380 million and repurchased shares worth $705 million. In 2022, UNP paid dividends worth $3,159 million and repurchased shares worth $6,282 million.
For 2023, management expects to maintain a dividend of $1.30 per quarter. UNP has no plans to make further share buybacks this year.
Norfolk Southern: Headquartered in Atlanta, GA, Norfolk Southern engages in the rail transportation of raw materials, intermediate products and finished goods in the United States. Currently, it has a market capitalization of $53.36 billion.
NSC pays out a quarterly dividend of $1.35 ($5.40 annualized) per share, which gives it a 2.29% yield at the current stock price. This company’s payout ratio is 44% of its earnings at present. The five-year dividend growth rate is 11.65%. (Check Norfolk Southern’s dividend history here).
Norfolk Southern's consistent initiatives to reward its shareholders through dividends and share repurchases look encouraging. During the first nine months of 2023, Norfolk Southern paid dividends worth $920 million and repurchased and retired shares for $503 million. During 2022, Norfolk Southern paid dividends worth $1,167 million and repurchased and retired common stock worth $3,110 million. In 2021, Norfolk Southern paid dividends worth $1,028 million and repurchased and retired common stock worth $3,390 million. Such shareholder-friendly moves indicate the company’s commitment to creating value for shareholders and underline its confidence in its business. These initiatives not only instill investors’ confidence but also positively impact earnings per share.
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2 Railroad Stocks With Solid Dividend Yield You May Count On
Prospects of Zacks Transportation - Rail industry’s participants are being weighed down by challenges like elevated fuel prices, supply-chain woes and inflation-induced high interest rates. Most industry players are looking to drive their bottom line amid the headwinds through cost reduction.
Despite these headwinds, the industry has gained 17% over the past three months, outperforming the S&P 500 Index’s 11.2% appreciation and 11.5% growth of the broader Zacks Transportation sector.
Image Source: Zacks Investment Research
Given this encouraging backdrop, it would be a wise decision to consider some dividend-paying railroad companies like Union Pacific Corporation (UNP - Free Report) and Norfolk Southern Corporation (NSC - Free Report) . These companies have consistently announced dividend hikes, thus highlighting their pro-shareholder stance.
Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market, and act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, they offer downside protection with their consistent increase in payouts.
Additionally, these companies have superior fundamentals like a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics.
How to Pick Stocks With Solid Dividend Payouts?
In order to choose some of the best dividend stocks from the aforementioned industry, we have run the Zacks Stock Screener to identify stocks with a dividend yield in excess of 2% and a sustainable dividend payout ratio of less than 60%. Each of the two stocks mentioned below carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Union Pacific: Headquartered in Omaha, NE, Union Pacific, through its subsidiary, Union Pacific Railroad Company, operates in the railroad business in the United States. Currently, it has a market capitalization of $149.73 billion.
UNP pays out a quarterly dividend of $1.30 ($5.20 annualized) per share, which gives it a 2.14% yield at the current stock price. This company’s payout ratio is 50% of its earnings at present. The five-year dividend growth rate is 10.81%. (Check Union Pacific’s dividend history here).
Union Pacific Corporation Dividend Yield (TTM)
Union Pacific Corporation dividend-yield-ttm | Union Pacific Corporation Quote
Union Pacific’s consistent initiatives to reward its shareholders through dividends and share repurchases look encouraging. During the first nine months of 2023, UNP paid dividends worth $2,380 million and repurchased shares worth $705 million. In 2022, UNP paid dividends worth $3,159 million and repurchased shares worth $6,282 million.
For 2023, management expects to maintain a dividend of $1.30 per quarter. UNP has no plans to make further share buybacks this year.
Norfolk Southern: Headquartered in Atlanta, GA, Norfolk Southern engages in the rail transportation of raw materials, intermediate products and finished goods in the United States. Currently, it has a market capitalization of $53.36 billion.
NSC pays out a quarterly dividend of $1.35 ($5.40 annualized) per share, which gives it a 2.29% yield at the current stock price. This company’s payout ratio is 44% of its earnings at present. The five-year dividend growth rate is 11.65%. (Check Norfolk Southern’s dividend history here).
Norfolk Southern Corporation Dividend Yield (TTM)
Norfolk Southern Corporation dividend-yield-ttm | Norfolk Southern Corporation Quote
Norfolk Southern's consistent initiatives to reward its shareholders through dividends and share repurchases look encouraging. During the first nine months of 2023, Norfolk Southern paid dividends worth $920 million and repurchased and retired shares for $503 million. During 2022, Norfolk Southern paid dividends worth $1,167 million and repurchased and retired common stock worth $3,110 million. In 2021, Norfolk Southern paid dividends worth $1,028 million and repurchased and retired common stock worth $3,390 million. Such shareholder-friendly moves indicate the company’s commitment to creating value for shareholders and underline its confidence in its business. These initiatives not only instill investors’ confidence but also positively impact earnings per share.