Union Pacific: Still on Track

03/25/2015 7:00 am EST


David Fish

Executive Editor, Moneypaper

No matter how robust (or weak) the economy gets, one thing will always be true: consumer and industrial products have to move from their points of origin to their end users, asserts David Fish, editor of Direct Investing.

That means that the transportation industry will always have customers, even if the economy goes through bouts of weak demand from time to time.

Despite the fall in oil and gas prices, which may help truckers, the railroads have an enduring advantage, especially when it comes to long hauls, such as coast-to-coast shipments, such as goods from China and other Asian countries that are destined for East Coast delivery.

Considering how many other industries depend on having their products delivered, that makes railroads a vital cog in the wheel of commerce that can help investors reach their goals.

Our latest featured stock is Union Pacific (UNP). Founded in 1862 and based in Omaha, Nebraska, Union Pacific is the largest railroad in the United States, with about 32,000 miles of track that link the Pacific Coast and Gulf Coast with the Midwest and East Coast.

In 2014, it generated about $24 billion in revenues from industries such as Energy, Industrial, Intermodal (freight containers), Agricultural, Chemicals, and Automotive.

The company earned $5.75 per share in 2014 and consensus estimates call for it to earn about $6.60 per share this year and $7.49 in 2016.

The annual dividend was just raised from $2 to $2.20 per share, providing a yield of 1.8% and representing the 11th increase in the past nine years.

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