Why Union Pacific Is a Top Dividend Stock to Own

Railway operator Union Pacific (NYSE:UNP) is raising its dividend payments again. The Nebraska-based company announced on May 13 that its Board of Directors approved a 10% increase in the dividend. Shareholders will now be receiving $1.07 per share. With the rate hike, that equates to an annual payout of $4.28, which yields 1.9%. Although investors can find higher payouts, it is still better than the S&P 500 average which is around 1.4%. And this a fairly strong and consistent income stock to own – Union Pacific has been paying dividends for 122 years in a row.

What's even more encouraging is that the company says even with the increase, it will be able to maintain a fairly low payout ratio of just 45%, leaving plenty of room for it to continue raising its dividend payments in the future.

Over the past five years, the business has been a very stable one with its revenue staying within a range of $19 billion and $23 billion. And Union Pacific has posted strong net margins as well, which normally are well above 20%.

With strong margins, consistent revenue, and a healthy payout ratio, Union Pacific is a top dividend stock to own for the long term. In 12 months, its share price has risen by more than 30%, providing investors with not just stable income but also some great returns. Investing in railroad operators can be a great way to invest in the economy and benefit from its growth. If you're looking for a stable long-term stock to own, Union Pacific is one you'll want to consider.