Dividend Increase: Union Pacific Corporation

Union Pacific Corporation (UNP) just declared $0.665 quarterly dividend. This is an increase of 9.9% from $0.605.

I own 13 shares, so this will increase my annual dividend income by $3.12 to $4,528.10

I updated both my Passive Income page as well as my Portfolio page to reflect the changes.

My Thoughts:

I first bought UNP on 7/2/2015 for $96.50 a share. If you look at the price history of UNP, you will see that the stock went even lower after my initial investment purchase. The only reason why I did not buy more shares is that I did not have any more money left. I was focusing on buying my condo and saving for renovation. UNP got as low as $69.99 a share.

The last dividend increase was 10.0% on November 17, 2016. The year before that, UNP did not increase its dividend. Matter a fact, they froze it for 6 straight quarters.

I would love to buy more shares of this company. Their dividend payout is great at only 44%. Earnings are expected to continue to increase for the next two years. However, I find UNP to be overvalued just like the rest of the market. UNP has a PE ratio of 20.6. UNP 5-year average PE ratio is 17.5. I would like to see a PE ratio 15 or below before I would buy more shares.

I find UNP to be overvalued, and I would recommend a HOLD

What do you think of the increase? Loving it?

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