With the latest CDC masking guidelines, the U.S. economy is pretty much open for business, helping to light a fire under so-called “re-opening” plays. This has included a hefty dose of industrial names as people return to work and start building back their businesses once again. Our Best Dividend Stock List pick in the transportation sector has been a major beneficiary of this re-opening.
The secret to our pick is its near monopoly, as it happens to be one of the largest owners of rail lines in the United States. Its vast network of lines, transfer stations, freight cars and other assets is an enviable umbrella. If manufacturers want to ship their goods across the country – whether it’s up into Canada, down to Mexico or out to various seaports – our pick’s vast network needs to be tapped. This has provided plenty of strong cash flows throughout its history.
And it turns out, such rail lines are in hot demand.
M&A has come calling in the sleepy railroad sector. Numerous deals have been cut and several bidding wars have been started over similar assets, creating excitement in a sector that’s normally as boring as watching paint dry. It’s also helped to create plenty of extra “oomph” for share prices for railroad stocks.
Although, it’s not like our pick needed any help in that department.
Our pick continues to use technology to improve margins and reduce costs. And now with freight loads rising as the economy has grown, our pick is delivering some serious earnings muscle. By adding a recent 10% jump to its dividend, investors have a winning stock.
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, including a 10% increase last quarter!
- Technology continues to improve operating ratio to a record 60.1%!
- Rebounding economic play with rising volumes and earnings.
- Healthy payout ratio of 44% and growing yield of 1.93%.
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