We recently published a list of the 11 Best Dividend Paying Stocks According to Hedge Funds. In this article, we are going to take a look at where Union Pacific Corporation (NYSE:UNP) stands against other best dividend-paying stocks.
Dividend-paying stocks have consistently attracted investor interest due to their long-term value. CNBC highlights this by examining the historical performance of the broader market. Between 1960 and 2024, a $10,000 investment in the index would have grown to over $982,000 purely from stock price appreciation, based on data from FactSet and NYU Stern. However, many companies in the index also returned capital to shareholders through dividends. Had an investor reinvested those dividends over the years, the investment would have ballooned to approximately $6.42 million by the beginning of 2025.
This outlook seems reasonable, especially when considering how crucial cash flow has become in today’s economic environment. Investors continue to favor income-generating assets, and dividends remain one of the most reliable ways to deliver that income. Reflecting this trend, several companies within the market have recently introduced dividend payments.
According to S&P Global, companies in the S&P index now contribute roughly 85% of the total dividends paid across the market—up from 82% in 2024. This increase includes 2.7% of the total dividend pool coming from firms that only recently began issuing dividends. The top 29 companies in the index alone are responsible for 40% of all dividends paid by the index’s constituents and 35% of the total dividends across the entire US equity market. Under the current base-case forecast, these leading firms are expected to distribute a combined $280 billion in dividends. In a more optimistic (upside) scenario, that figure could climb by 2.75% to $288 billion, with major large cap companies projected to deliver the most significant gains by weighted average. If the most favorable (bull-case) conditions materialize, these 29 companies could boost total dividend payouts by an estimated 4.5%, contributing an additional 1% themselves.
It’s no surprise, then, that dividends have become a central theme in many investors’ strategies. According to Brian Bollinger, founder of Simply Safe Dividends, focusing on companies that regularly pay dividends can offer a sense of reassurance. He further noted that younger investors, in particular, have the opportunity to build long-term dividend growth portfolios aimed at maximizing total return and capital appreciation over time.
According to Nuveen, companies that focus on dividend growth tend to possess strong long-term fundamentals and may deliver relatively attractive performance in the year ahead. Historically, firms that consistently increased or initiated dividend payments have produced higher annualized returns and exhibited lower volatility compared to the broader equity market. While such companies may not lead in every market environment, their favorable risk-adjusted returns over extended periods make them a solid foundation for equity portfolios.
Nuveen also suggested that many firms remain in a strong position to continue raising dividends over time. In the US, corporate balance sheets are generally healthy, consumer spending remains steady, and earnings growth is projected to pick up pace in 2025. Data from FactSet shows that dividends per share for the S&P index rose by 7.6% in 2024, with consensus forecasts pointing to a further 4.2% increase in 2025.
An intermodal container train winding through a rural landscape.
Our Methodology
For this list, we scanned Insider Monkey’s database of over 1,000 hedge funds, as of the close of Q4 2024. From the top 60 companies, we selected 11 dividend stocks with yields of at least 1% as of April 12. These companies show strong financial performance and have solid records of paying dividends. The stocks are ranked according to the number of hedge funds having stakes in them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Union Pacific Corporation (NYSE:UNP)
Number of Hedge Fund Holders: 93
Union Pacific Corporation (NYSE:UNP) is a Nebraska-based railroad holding company that transports a wide range of goods and commodities, providing exposure to multiple industries, including agriculture, automotive, and energy. The company runs an extensive rail network spanning 32,693 miles across 23 US states and multiple international border crossings.
In the fourth quarter of 2024, Union Pacific Corporation (NYSE:UNP) reported a revenue of $6.12 billion, showing a modest 1% dip from the previous year. However, a 5% increase in revenue carloads helped offset part of the decline. The railroad operator also improved its operating ratio to 58.7%—a 220-basis-point improvement—even after factoring in a 70-basis-point impact from a newly ratified crew staffing agreement. Operating income rose 5% to reach $2.5 billion.
Union Pacific Corporation (NYSE:UNP) has a long-standing track record of shareholder returns, having paid dividends without interruption for 125 years and raised its payouts for 18 straight years. In fiscal 2024, the company produced over $9.3 billion in operating cash flow and closed the quarter with more than $1 billion in cash and equivalents. Currently, it pays a quarterly dividend of $1.34 per share and has a dividend yield of 2.45%, as of April 13.
Overall, UNP ranks 10th on our list of the best dividend paying stocks according to hedge funds. While we acknowledge the potential of UNP as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than UNP but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
