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Union Pacific Continues to Gain on Investor Friendly Moves

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Trades from $3

Shares of Omaha, Nebraska-based railroad operator Union Pacific Corporation (UNP - Free Report) gained over 2% since the company’s announcement of two shareholder-friendly moves on Nov 17.

The company raised its quarterly dividend to 60.5 cents per share ($2.42 per share annualized), representing an increase of 10% over the previous payout. The new dividend, which has been approved by the company’s board of directors, is payable on Dec 29, to shareholders on record as of Nov 30, 2016.

We believe that the dividend hike not only highlights Union Pacific’s commitment to create value for shareholders but also underlines the railroad operator’s healthy financial condition and confidence in its business going forward. Union Pacific’s past records indicate its stable dividend payment history. In fact, company has been rewarding shareholders through dividend payments over the last 117 years.

Union Pacific is not the only transportation company to announce a dividend hike this year. Other big names in the transportation space like FedEx Corporation (FDX - Free Report) , United Parcel Service (UPS - Free Report) and Delta Air Lines (DAL - Free Report) have also increased their dividend payouts this year.

Apart from announcing the dividend hike, the board of Union Pacific announced a new share buyback plan that allows the company to repurchase up to 120 million common shares by the end of 2020. The new plan will take effect from Jan 1, 2017, replacing the existing scheme which ends on Dec 31, 2016 (one year ahead of schedule).

We are impressed with the company’s efforts to reward investors through share buybacks and dividend payouts. During the third quarter of 2016, the company bought back 9 million shares for $851 million. The company returned $3.6 billion to its stockholders in the first nine months of 2016 through these investor-friendly measures. Of the $3.6 billion, approximately $2.2 billion have been returned through share buybacks.

Zacks Rank

Union Pacific currently has a Zacks Rank # 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

 

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