March 18, 2016: Bought 30 shares of UNP at $85.09 per share.
Omaha, Nebraska-based Union Pacific Corporation (NYSE:UNP) operates through its principal operating company, Union Pacific Railroad Company. The company operates the largest public railroad in North America, with 32,000 miles of track linking 23 states in the western two-thirds of the United States. UNP hauls coal, industrial products, intermodal containers, agricultural goods, chemicals, and automotive products. UNP owns a quarter of Mexican railroad Ferromex. The company was founded in 1862.
UNP is a Dividend Challenger with a 9-year streak of annual dividend increases. The company pays quarterly dividends of 55¢ per share in the months of March, June, September and December. At my buy price of $85.09, the stock yields 2.59%.
I already own 26 UNP shares, which I transferred from my Scottrade account in December 2015. Adding 30 shares increases my holding to 56 shares. My cost basis is $88.98 and the average yield on cost is 2.47%.
Below is a 5-year chart depicting my buy prices:
I like UNP for several reasons, including a strong dividend growth rate of nearly 20%! The company has paid dividends for 116 years in a row. Below is a 10-year chart showing dividends relative to earnings and free cash flow. The current dividend payout ratio is 40%.
Following is a table containing updated ratings of UNP from various sources:
|†combined Value/Growth/Momentum score|
Morningstar's fair value estimate of UNP is $95.00, whereas S&P Capital IQ calculates a fair value of $88.00. According to Tipranks, based on 11 ranked analysts offering 12-month price targets for UNP, the average price target is $85.70. Based on the median of these estimates ($88.00), I bought shares at a discount of 3.31%.
30 shares of UNP adds $66.00 to DivGro's projected annual dividend income. I've updated my portfolio to reflect this purchase.
Do you own shares of UNP? Do you think UNP is a good dividend growth prospect? Please share your comments below.