Is Union Pacific a Dividend Stock to Buy?
Many investors buy railroad stocks for the surety of their dividends. They operate in relatively secure industries, with strong business moats, and even own their own infrastructure. As such, investing in a railroad can be compared to parking cash in a bank account or buying a U.S. Treasury. That said, Union Pacific's (NYSE: UNP) dividend yield is now 1.8%, and interest rates have been on the rise recently. As such, investors might prefer to simply put money into bonds or in the bank rather than take on the extra risk of buying a stock.
Is it now time to give up on the stock, or buy more? Let's take a closer look at what's going on.
Rising interest rates certainly can pressure stock prices, as institutional investors may switch to buying bonds instead of equities. However, it's tough to predict where interest rates will go, so it doesn't make sense to sell Union Pacific because of the possibility of rates rising.
Source Fool.com
