Norfolk Southern Corporation’s (NSC - Free Report) board has approved an 11% hike in quarterly cash dividend to 80 cents per share ($3.20 annually) from the previous 72 cents. The dividend is payable Sep 10 to shareholders of record as of Aug 6.
The move indicates the company’s commitment to add shareholder value as well as underlines its confidence in business growth.
Per the company’s chairman, president and CEO James A. Squires, the dividend raise is a result of its strong results, placing it on a solid growth path for the future, as well as a sound financial position.
The company recently reported second-quarter financial results wherein both earnings and revenues surpassed estimates and increased substantially year over year. Results were aided by a low effective tax rate and impressive volume growth. (Read more: Norfolk Southern Beats Q2 Earnings & Revenues, Up Y/Y)
Norfolk Southern has distributed dividends for 144 consecutive quarters since its inception in 1982. We remind investors that the company’s latest dividend hike is the second one this year. During the first quarter, the company raised its quarterly dividend payout by 18%. Thus combined with the 11% dividend hike, Norfolk Southern increased its dividend by 29% in the ongoing year.
The successive dividend hikes can be attributed to the reduced corporate tax rate arising from the Tax Cuts and Jobs Act. With a low effective tax rate, companies are now left with huge savings boosting their free cash flow. This surge in free cash flow is enabling them to frequently engage in such shareholder-friendly activities.
Zacks Rank & Other Key Picks
Norfolk Southern holds a Zacks Rank #2 (Buy). Other top-ranked stocks in the railroad space are CSX Corporation (CSX - Free Report) , Canadian National Railway Company (CNI - Free Report) and Union Pacific Corporation (UNP - Free Report) . While CSX sports a Zacks Rank #1 (Strong Buy), Canadian National Railway and Union Pacific carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of CSX, Canadian National Railway and Union Pacific have rallied more than 42%, 12% and 44%, respectively, in a year.
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