Yahoo Finance Four Days Left To Buy Union Pacific Corporation (NYSE:UNP) Before The Ex-Dividend Date
Readers hoping to buy Union Pacific Corporation (NYSE:UNP) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Union Pacific investors that purchase the stock on or after the 30th of May will not receive the dividend, which will be paid on the 30th of June.
The company's next dividend payment will be US$1.30 per share, and in the last 12 months, the company paid a total of US$5.20 per share. Looking at the last 12 months of distributions, Union Pacific has a trailing yield of approximately 2.7% on its current stock price of $191.91. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Union Pacific has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Union Pacific
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Union Pacific paid out a comfortable 46% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Dividends consumed 59% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's not ideal to see Union Pacific's earnings per share have been shrinking at 3.1% a year over the previous five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Union Pacific has lifted its dividend by approximately 16% a year on average.
To Sum It Up
Is Union Pacific an attractive dividend stock, or better left on the shelf? Earnings per share have fallen significantly, although at least Union Pacific paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. To summarise, Union Pacific looks okay on this analysis, although it doesn't appear a stand-out opportunity.
So if you want to do more digging on Union Pacific, you'll find it worthwhile knowing the risks that this stock faces. Case in point: We've spotted 1 warning sign for Union Pacific you should be aware of.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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