Imagine you’re a king in Medieval Europe. Protecting your castle is of paramount importance, with one of the best ways to do that is to dig a moat around your property – the bigger, the better. The same principal applies to business. Those firms with huge economic moats and advantages over their rivals often make wonderful long-term investments: full of profits, steady sales and, of course, dividends.
A prime example of this is our Best Dividend Stocks List pick in the transportation sector.
Thanks to regulation, our pick operates one of the largest networks of rail lines, terminals and other logistics assets. In fact, it runs more than 32,000 miles’ worth. Better still is that its network of rail lines crisscrosses all of America as well as Canada and Mexico. This huge moat makes it a leader in the sector and nearly all goods – flowing from every direction – crisscross its network at some point.
This near monopoly has made the firm a dividend powerhouse throughout its history and even more so in recent years as tax changes and demand for its network have grown.
But our pick’s best days could still be ahead.
Thanks to a recent hard stance toward China and foreign imports, our pick could see demand rise as more goods are manufactured, and subsequently shipped, throughout the U.S. Meanwhile, the shift toward online sales has the number of distribution warehouses growing. Getting goods to where they initially need to be in order to facilitate truck deliveries later has fallen to railway traffic. Continued growth here could provide a nice boost to our pick’s bottom line.
In the end, our pick’s moat and future potential continue to deliver great results for shareholders.
To summarize, here are five reasons why you should own this stock:
- Operates a logistics monopoly of irreplaceable assets throughout the entire country.
- Has paid dividends on its common stock for more than 100 consecutive years.
- Potential big winner from onshoring and decoupling from China.
- Continues to invest in tech upgrades to improve margins further and boost profits.
- Healthy payout ratio of 49% and growing yield of 1.8%.
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