Union Pacific’s Smart Capital Use Signals a Strong, Sustainable Dividend

Union Pacific Corporation (NYSE:UNP) is one of the best next generation dividend aristocrat stocks.

The company’s capital investment approach focuses on strengthening its existing infrastructure to enhance safety and reliability, while also targeting specific projects to boost efficiency, productivity, and service quality. The strategy includes initiatives aimed at lowering environmental impact and improving the customer experience, all with an eye toward long-term growth.

An intermodal container train winding through a rural landscape.

Union Pacific Corporation (NYSE:UNP) maintains an industry-leading operating ratio and return on invested capital, with no changes to its long-term capital allocation framework. For the year, the company has outlined a $3.4 billion capital plan and expects to repurchase between $4.0 billion and $4.5 billion worth of shares.

The company reliably generates strong returns from capital projects like siding extensions, new mainlines, and terminal upgrades.  This disciplined approach supports Union Pacific Corporation (NYSE:UNP)’s well-regarded dividend policy. The company has paid regular dividends for 125 consecutive years and has increased its payouts for 18 straight years, drawing the attention of income-focused investors.

Alongside its dividend payments, Union Pacific Corporation (NYSE:UNP) has aggressively bought back its own shares, reducing its total share count by 31% since 2015.

The company currently offers a quarterly dividend of $1.34 per share and has a dividend yield of 2.4%, as of June 14.

While we acknowledge the potential of UNP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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