Union Pacific At New Highs As Transports Rally

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As transportation stocks help lead the market,Union Pacific ( UNP ) shares are trading near new highs.

The stock's sound performance is part of a sector move. The Dow transportation average is up more than 20% this year, and IBD's transportation sector was No. 4 out of 33 in Wednesday's edition.

Union Pacific pays a quarterly dividend of 69 cents a share. That translates to an annualized yield of not quite 2%. The eight railroad companies that pay dividends have yields that range from 0.7% to 2.5%.

The company raised the dividend most recently in January. It was the latest of several increases in recent years. The dividend has gone up more than 150% from the 27 cents a share it was paying three years ago.

Earnings growth over the past three quarters ranged from 10% to 18%. That's moderately off from previous quarters and the company's three-year EPS growth rate of 28%. Its three-year Earnings Stability Factor is 5, near the best-possible score of 0 on a 0 to 99 scale.

In the first-quarter report, slowing shipments for coal and grains weighed on results. But crude oil shipments more than doubled from the year-ago period, thanks to a boom in shale drilling. Auto and chemicals shipments also were strong in the quarter.

"Despite the fact that rail-based crude transportation costs five times more ($10--$15 per barrel), crude shippers are compelled to rely on rail-based transport," noted an industry analysis by Zacks Equity Research.

"This is due to the lack of pipeline infrastructural support in key oil and gas fields like Bakken Shale Formation in North Dakota and Montana, Eagle Ford Shale, Barnett Shale and Permian basin in Texas, the Gulf of Mexico and Alberta oil sand fields in Canada."



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: UNP

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