Is Union Pacific Corporation (UNP) the Most Promising Dividend Stock According to Hedge Funds?

Union Pacific Corporation (UNP) has long been a favorite among dividend investors, with its robust dividend yield and history of consistent payouts. But is it the most promising dividend stock according to hedge funds? Let's delve into the data and find out.

First, let's examine Union Pacific's dividend yield and growth rate. As of 2025, Union Pacific offers an annual dividend of $5.36 per share, with a yield of 2.16%. This yield is notably higher than the industry average of 1.47%, indicating a strong income stream for shareholders (Source: Dividend Yield Higher than the Industry Average?).

However, Union Pacific's dividend growth rate has been inconsistent over the years. While there have been periods of high growth, such as in 2005 and 2006, there have also been years with zero dividends per share. This inconsistency might be a concern for investors seeking consistent growth (Source: Dividend Growth Rate of Union Pacific (UNP)).

Now, let's consider the number of hedge fund investors holding Union Pacific's stock. In Q3 2024, there were 78 hedge fund investors holding Union Pacific's stock, indicating that the company is still favored by many hedge funds despite the fluctuations in its dividend growth rate (Source: Number Of Hedge Fund Holders In Q3 2024: 78).

To further evaluate Union Pacific's dividend sustainability, we can look at its payout ratio and dividend coverage. Union Pacific maintains a conservative payout ratio, with an average of approximately 33.91% over the last 20 years, well below the 65% threshold. This suggests that the company prioritizes a balanced approach to dividend payments and reinvestment in the business (Source: Dividends Payout Ratio of Union Pacific (UNP)).

Additionally, Union Pacific's dividends are well-covered by both earnings and cash flow, ensuring the sustainability of the dividends. In 2024, the company's earnings per share (EPS) were $11.1, and its forward EPS is expected to be $12.11 (Source: Company Summary).

In conclusion, Union Pacific Corporation (UNP) is an attractive dividend stock for hedge funds due to its consistent dividend payouts and growth, strong financial performance, conservative payout ratio, well-covered dividends, reliable stock repurchases, and strong analyst recommendations. While the company's dividend growth rate has been inconsistent, its overall financial health and commitment to returning value to shareholders make it a promising dividend stock. However, it is essential to monitor the company's financial health and industry trends to ensure the continued sustainability of its dividend payments.