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New Dividend Portfolio Buy: Railroad Company Union Pacific

I purchased my first railroad stock for the Dividend Yield Passive Income Portfolio last Friday.

It was the railroad company Union Pacific (UP). Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, provides rail transportation services in North America. The company offers freight transportation services for agricultural products, including grains and commodities, food, and beverage products; and automotive products, such as imported and exported shipments, finished vehicles, and automotive parts and materials.

I paid $154.75 per share which resulted in $1,242.92 net cost. The new stake will give me only around $25 bucks in dividend income per year. But the potential is available to get higher dividends in the upcoming years. Earnings are expected to grow by 13.68 percent of the next five years and the payout ratio is only at 30.2 percent while the long-term-debt to equity ratio is at 0.44.

Latest Portfolio Transactions (Click to enlarge)

Portfolio Holdings Dividend Yield Passive Income I (Click to enlarge)

Portfolio Holdings Dividend Yield Passive Income II (Click to enlarge)

UNP is a Dividend Challenger who raised dividends over a period of seven consecutive years. The five year dividend growth rate amounts to 29.8 percent.

I believe that UNP is one of the most stabile railroads on the market. For sure, stocks like NSC, ARII or CSX pay better dividends but the quality is not the same and debt ratios of them are also a bit higher.

The current yield amounts to 2.04 at a forward P/E of 14.14. For the estimated growth a current P/E of 17.61 for the biggest player in the market is ok in my view.



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For readers who are new to the matter and my dividend growth philosophy: I funded a virtual portfolio with 100k on October 04, 2012 with the aim to build a passive income stream that doubles each five to ten years. I plan to purchase each week one stock holding until the money is fully invested. The total number of constituents is expected at 50 – 70 companies and the dividend income should be at least at $3,000 per year.
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The stock holdings are up 7.63 percent since the date of funding. In addition, I received around $1,000 in cash dividends. Due to the slow purchase process and high amount of cash since October 2012, the full portfolio is only up 6.34 percent.

Portfolio Performance (Click to enlarge)

The full year dividend income is now estimated at $2,416.32 annualized. With a yield on cost of 3.44 percent it’s still possible to hit the mark of at least $3,000 per year despite the fact that the current trade is far below this ratio.


Here is the income perspective of the portfolio

Sym
Name
P/E Ratio
Dividend Yield
Buy
# Shrs
Income
Value
TRI
Thomson Reuters C
26.38
3.74
28.90
50
$64.75
$1,736.00
LMT
Lockheed Martin C
14.19
3.64
92.72
20
$92.00
$2,545.00
INTC
Intel Corporation
12.23
3.98
21.27
50
$45.00
$1,172.00
MCD
McDonald's Corpor
17.79
3.17
87.33
15
$46.20
$1,460.25
WU
Western Union Com
11.68
3.24
11.95
100
$60.00
$1,841.00
PM
Philip Morris Int
16.77
3.99
85.42
20
$68.78
$1,755.60
JNJ
Johnson & Johnson
19.76
2.85
69.19
20
$50.80
$1,771.40
MO
Altria Group Inc
15.79
5.21
33.48
40
$72.00
$1,393.60
SYY
Sysco Corporation
19.54
3.4
31.65
40
$44.40
$1,315.20
DRI
Darden Restaurant
15.38
4.25
46.66
30
$61.50
$1,451.10
CA
CA Inc.
13.31
3.28
21.86
50
$50.00
$1,519.50
PG
Procter & Gamble
20.27
2.97
68.72
25
$58.20
$1,976.25
KRFT
Kraft Foods Group
17.48
3.69
44.41
40
$80.00
$2,169.60
MAT
Mattel Inc.
18.64
3.35
36.45
40
$55.60
$1,681.20
PEP
Pepsico Inc. Com
18.82
2.77
70.88
20
$44.20
$1,606.40
KMB
Kimberly-Clark Co
20.17
3.34
86.82
15
$47.55
$1,435.35
COP
ConocoPhillips Co
11.47
3.88
61.06
20
$52.80
$1,383.80
GIS
General Mills In
17.52
2.8
42.13
30
$41.10
$1,477.50
UL
Unilever PLC Comm
18.29
3.46
39.65
35
$47.01
$1,375.15
NSRGY
NESTLE SA REG SHR
18.27
3.29
68.69
30
$65.31
$2,007.00
GE
General Electric
17.65
3.1
23.39
65
$48.10
$1,545.70
ADP
Automatic Data Pr
25.7
2.35
61.65
25
$43.50
$1,852.25
K
Kellogg Company C
23.03
2.96
61.52
25
$44.50
$1,516.00
KO
Coca-Cola Company
20.24
2.85
38.83
40
$43.80
$1,547.60
RTN
Raytheon Company
13.4
2.71
57.04
20
$42.00
$1,569.60
RCI
Rogers Communicat
11.2
4.04
46.5
50
$84.00
$2,092.50
GPC
Genuine Parts Com
18.07
2.62
77.06
20
$42.12
$1,596.00
TSCDY
TESCO PLC SPONS A
236
3.89
17.08
110
$75.68
$1,951.18
APD
Air Products and
22.57
2.55
85.71
15
$40.50
$1,592.25
GSK
GlaxoSmithKline P
19.49
4.63
52.16
30
$71.13
$1,542.30
WMT
Wal-Mart Stores
14.39
2.45
79.25
20
$36.16
$1,487.20
BTI
British American
15.99
3.99
111.13
23
$96.14
$2,425.58
CHL
China Mobile Limi
10.88
4.03
55.32
25
$55.95
$1,403.75
MMM
3M Company Common
18.5
2.11
110.27
15
$37.43
$1,779.00
TUP
Tupperware Brands
18.05
2.33
80.98
15
$29.40
$1,275.00
IBM
International Bus
13.54
1.89
197.09
16
$57.60
$3,074.72
HAS
Hasbro Inc.
18.8
3.27
44.09
30
$45.60
$1,404.60
T
AT&T Inc.
26.32
5.21
34.47
30
$53.70
$1,029.60
WAG
Walgreen Co. Comm
23.31
2.14
44.25
30
$34.20
$1,603.80
AFL
AFLAC Incorporate
8.46
2.3
59.39
20
$28.00
$1,220.80
TGT
Target Corporatio
15.45
2.36
68.69
32
$48.32
$2,040.32
CSCO
Cisco Systems In
13.06
2.55
25.12
90
$55.80
$2,188.80
DE
Deere & Company C
9.55
2.33
84.11
15
$29.10
$1,237.35
RGR
Sturm Ruger & Co
12.36
3.3
51.65
20
$38.52
$1,189.40
LO
Lorillard Inc Co
13.54
4.99
42.3
30
$65.00
$1,320.60
UNP
Union Pacific Cor
17.65
1.85
154.75
8
$22.88
$1,238.00














$2,416.32
$75,796.80














Average Yield
3.19%














Yield On Cost
3.44%

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