Tuesday, March 6, 2012

Stock Bought: UNP

For my first purchase today I bought shares of Union Pacific (UNP), a company that operates a major North American railroad network with over 32000 route miles of track predominantly in the western and central United States. This purchase complements my positions in Norfolk Southern (NSC) and Canadian National Railway (CNI), giving me geographic diversification that spans most of the U.S. and Canada.

UNP is a good dividend-growth stock. The company has paid uninterrupted dividends for 112 years and increased its dividend for 6 consecutive years. The most recent increase was 26.3% in November 2011 and since mid-2010 the company has been increasing its dividend every two quarters (similar to NSC), so the next increase may come in May. The 5-year average annual dividend growth rate also happens to be 26.3%.

I bought 10 shares of UNP at the price of $105.00 per share, giving me a 2.29% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $6.00, which would add a total of $24.00 to my annual dividend income. This purchase makes UNP the 20th stock in my portfolio.


  1. Nice purchase here. You're a regular railroad baron!

    I can tell you were just itching to deploy some cash. I'm not quite in the same position as you, as my trigger finger unfortunately had to send cash to the IRS in the form of a $1,700 tax bill. Oh well, gotta pay up if you want to make money. I hope to still have a little capital for a purchase in March, but it probably won't be as large as usual.

    Good stuff on UNP. I think this definitely compliments your other holdings and if I was to go long on another railroad UNP would be it. The yield is just a tad low for me at the moment though, but this is a solid business.

    Best wishes!

    1. Hi Dividend Mantra,

      Yep, I'm all aboard the rails! I think railroads are great long-term investments, so I figured I might as well buy them now. I've had my eye on UNP for a while.

      That's a pretty hefty tax bill -- I feel for you. I did my taxes last weekend and it looks like I'll be getting a nice refund -- I'll know for sure in about two weeks.