Union Pacific Corp's Dividend Analysis
Insight into Union Pacific Corp's Upcoming Dividend and Historical Performance
Union Pacific Corp (NYSE:UNP) recently announced a dividend of $1.3 per share, payable on 2024-03-29, with the ex-dividend date set for 2024-02-28. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Union Pacific Corp's dividend performance and assess its sustainability.
What Does Union Pacific Corp Do?
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Omaha, Nebraska-based Union Pacific Corp is the largest public railroad in North America. Operating on more than 30,000 miles of track in the western two thirds of the U.S., UP generated $24 billion of revenue in 2023 by hauling coal, industrial products, intermodal containers, agriculture goods, chemicals, fertilizers, and automotive goods. Union Pacific Corp owns about one fourth of Mexican railroad Ferromex and historically derives roughly 10% of its revenue hauling freight to and from Mexico.
A Glimpse at Union Pacific Corp's Dividend History
Union Pacific Corp has maintained a consistent dividend payment record since 1984, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 1998, earning it the prestigious title of a dividend aristocrat. This honor is reserved for companies that have increased their dividend each year for at least the past 26 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Union Pacific Corp's Dividend Yield and Growth
Union Pacific Corp currently boasts a 12-month trailing dividend yield of 2.03% and a 12-month forward dividend yield of 2.03%, indicating an expectation of consistent dividend payments over the next 12 months.
Over the past three years, Union Pacific Corp's annual dividend growth rate was 10.30%. This rate increased to 11.20% per year when extended to a five-year horizon. Over the past decade, Union Pacific Corp's annual dividends per share growth rate stands at an impressive 13.30%.
Considering Union Pacific Corp's dividend yield and five-year growth rate, the 5-year yield on cost for Union Pacific Corp stock is approximately 3.45%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. Union Pacific Corp's dividend payout ratio is 0.52 as of 2023-12-31, suggesting that a significant part of its earnings is retained for future growth and to buffer against downturns.
Union Pacific Corp's profitability rank is 9 out of 10, indicating strong profitability prospects. The company has also reported positive net income consistently over the past decade, reinforcing its financial stability.
Growth Metrics: The Future Outlook
Union Pacific Corp's growth rank of 9 out of 10 underscores a strong growth trajectory compared to its competitors. The company's revenue per share and 3-year revenue growth rate of 11.20% per year on average outperforms approximately 63.63% of global competitors.
Union Pacific Corp's 3-year EPS growth rate of 8.60% per year on average outperforms approximately 45.53% of global competitors. Additionally, the company's 5-year EBITDA growth rate of 6.10% outperforms approximately 43.78% of global competitors.
Concluding Thoughts on Union Pacific Corp's Dividend Outlook
In conclusion, Union Pacific Corp's consistent dividend increases, reasonable payout ratio, and strong profitability and growth metrics paint a robust picture for dividend sustainability. These factors, combined with the company's established position in the railroad industry, make Union Pacific Corp a potentially attractive choice for value investors interested in stable dividend income. With the upcoming dividend payment, the company continues to demonstrate its commitment to shareholder returns.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
