Why Union Pacific (UNP) is a Top Dividend Stock for Your Portfolio

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.Union Pacific in FocusBased in Omaha, Union Pacific (UNP) is in the Transportation sector, and so far this year, shares have seen a price change of 8.77%. Currently paying a dividend of $1.34 per share, the company has a dividend yield of 2.16%. In comparison, the Transportation - Rail industry's yield is 1.47%, while the S&P 500's yield is 1.49%.Taking a look at the company's dividend growth, its current annualized dividend of $5.36 is up 1.5% from last year. Union Pacific has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 8.44%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Union Pacific's payout ratio is 49%, which means it paid out 49% of its trailing 12-month EPS as dividend.UNP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $12.03 per share, representing a year-over-year earnings growth rate of 8.48%.Bottom LineInvestors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, UNP is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Union Pacific Corporation (UNP): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks