Railroad Stocks With Pricing Power and Growing Dividends for Income Investors

Union Pacific, CSX and Norfolk Southern remain standout income plays largely because their track networks are hard to replicate and require heavy, continuous investment. In the second quarter, the freight cycle turning their way showed up in results: Union Pacific’s intermodal revenue rose 26% to $1.386 billion as tight truck capacity pushed shippers to rail. The focus for investors is whether dividends hold up amid spending and volume. Union Pacific’s quarterly dividend is $1.42 per share (up from $1.38), with $5.68 annualized forward. Cash flow was $3.076 billion versus $873 million capex and $819 million dividends. Risk: a pending Norfolk Southern merger could bring regulatory and integration uncertainty.