Railroad operator Union Pacific (NYSE: UNP) has been transporting items for over 160 years. It has paid a dividend yearly for the final 124 of them.
The final time it minimize the dividend was 25 years in the past. Will the corporate make it 26? Let’s have a look…
Final yr, free money move was $5.7 billion, down from 2021’s $6.1 billion, which had been the very best in at the very least 10 years.
Money move from operations was truly larger, however due to an almost $700 million improve in capital expenditures, free money move declined, which Security Web doesn’t wish to see.
Whereas the corporate introduced in $5.7 billion in free money move, it shipped $3.2 billion again to shareholders within the type of dividends for a really snug payout ratio of 56%.
Which means even when free money move had been to leap the tracks and decline once more, there may be loads of room earlier than the dividend would eat up all the free money move and the corporate must take into account a minimize.
In 2023, free money move is forecast to return in at $5.6 billion, so so long as it’s within the ballpark, dividend traders shouldn’t fear.
As I discussed, the corporate has paid a dividend for greater than a century and the final minimize was in 1998, so its latest dividend-paying historical past is superb. It has raised the dividend yearly for the previous 16 years.
The present $1.30 per share quarterly dividend equals a 2.6% yield. So Union Pacific isn’t a very excessive yielder. However with a 16-year streak of climbing the dividend, a low payout ratio and loads of money move, Union Pacific’s dividend shouldn’t go off the rails anytime quickly.
Dividend Security Score: B
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