Our analysis is based on comparing Union Pacific Corp. with the following peers – Kansas City Southern, Norfolk Southern Corporation, Canadian National Railway Company, CSX Corporation, Canadian Pacific Railway Limited and Genesee & Wyoming, Inc. Class A (KSU-US, NSC-US, CNI-US, CSX-US, CP-US and GWR-US).
Union Pacific Corp.’s dividend yield is 2.08 percent and its dividend payout is 44.48 percent. This compares to a peer median dividend yield of 1.62 percent and a payout level of 31.71 percent. This type of dividend performance might make it a good stock for dividend investors. In addition, the company’s relatively good dividend quality score of 67 out of a possible score of 100 points to some sustainability of its robust payout ratio, and underscores its attractiveness for dividend investors seeking current income.
Dividend Quality Overview
- Over the last twelve months (prior to December 31, 2016), UNP-US paid a high quality dividend, which represents a yield of 2.08% at the current price.
- Dividends paid during each of the last five years were consistently of high quality.
- The ending cash balance is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
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Over the last twelve months (prior to December 31, 2016), UNP-US paid a high quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 4.00x), investing cash flow (coverage of -1.81x), issuance cash flow (coverage of -1.26x) and twelve-month prior cash (coverage of 0.74x), for a total dividend coverage of 1.71x.
UNP-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -1.65x). Thus, the total coverage including share buybacks is 3.36x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||1.94||1.74||1.55||3.53||N/A||2.08|
|Dividend Payout (%)||30.11||31.42||33.22||40.07||44.48||44.48|
A complete list of metrics and analysis is available on the company page.
Union Pacific Corp. provides railroad and freight transportation services. Its principal operating company, Union Pacific Railroad Co., operates as a railroad franchise. The Railroad’s diversified business mix includes agricultural products, automotive, chemicals, coal, industrial products and intermodal. The Railroad’s diversified business mix includes Agricultural Products, Automotive, Chemicals, Coal, Industrial Products and Intermodal. The Agricultural Products business engages in the transportation of grains, commodities produced from these grains, and food and beverage products. The Automotive business engages in automotive carrier business in west of the Mississippi River and operates vehicle distribution centers. The Chemicals business engages in transportation of chemicals. The Industrial Products business facilitates the movement of numerous commodities throughout North America. The Intermodal business includes two segments: International and Domestic. The International segment consists of import and export container traffic that mainly passes through West Coast ports. The Domestic segment includes container and trailer traffic picked up and delivered within North America for intermodal marketing companies, as well as truckload carriers. Union Pacific was founded in 1969 and is headquartered in Omaha, NE. Union Pacific was founded in 1969 and is headquartered in Omaha, NE.
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