5 Best Railroad Stocks that Pay Dividends

4. Union Pacific Corporation (NYSE:UNP)

Dividend Yield as of August 18: 2.15%

Union Pacific Corporation (NYSE:UNP) is a Nebraska-based railroad company that covers 23 states in the US. In July, Credit Suisse initiated its coverage of the stock with an Outperform rating and a $255 price target, appreciating its structural advantages and business fundamentals.

In Q2 2022, Union Pacific Corporation (NYSE:UNP) reported operating revenue of $6.3 billion, up 14% from the same period last year. This growth was driven by higher fuel surcharge revenue, core pricing gains, and a positive business mix. The company’s operating income stood at $2.5 billion, growing 1% from the prior-year period.

Union Pacific Corporation (NYSE:UNP) has paid dividends on its common stock for 123 consecutive years. Its quarterly payout stands at $1.30 per share, with a dividend yield of 2.15%, as of August 18. For FY22, the company targets a long-term dividend payout ratio of 45%.

As per Insider Monkey’s database, 65 hedge funds owned stakes in Union Pacific Corporation (NYSE:UNP), worth over $6.3 billion. Fisher Asset Management was the company’s leading stakeholder with stakes worth over $1.1 billion.

Carillon Tower Advisers mentioned Union Pacific Corporation (NYSE:UNP) in its Q1 2022 investor letter. Here is what the firm has to say:

“Union Pacific (NYSE:UNP) benefited from rising oil prices, which typically bring more demand for rail shipping as opposed to moving freight by truck. Rail transportation can be much more fuel-efficient than over-the-road trucking.”