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Railroad Giant With 10 Years of Dividend Growth Maintains Position on Best Dividend Stocks List

Aaron Levitt Mar 11, 2020

“In business, I look for economic castles protected by unbreachable ‘moats’,” an oft-quoted say, by Warren Buffett, which has never meant more than when the market has gone haywire, like it is today. Thanks to the coronavirus, volatility has continued to rise to levels not seen since the Great Recession. Thousand-point swings are now the norm. For investors, this has simply made the current market environment very hard to navigate. Which is why we should follow Buffett’s advice and focus on underlying businesses with strong moats.

And all of that sums up our Best Dividend Stocks List pick in the transportation sector.

While not immune to the market volatility, our pick has managed to hold its own against the pounding waves of the economic throes. The reason comes down to its virtual monopoly in its sector. As one of the largest railroads in the nation, our pick offers a set of assets that are simply irreplaceable and nearly impossible to replicate. Its huge moat has long served our pick well through both good and bad times by providing a steady stream of revenues. If you need to ship freight, there’s a good chance you’ll use its huge network of midstream assets.

At the same time, our firm continues to prepare for the future. Thanks to a ton of new tech upgrades, software and a new model of shipping, our firm has seen its margins explode over the last few years. This is wonderful news as the economy gets rocky and overall economic activity begins to drop. In the end, our pick will only be able make more money and weather the rocky economic environment with ease.

That means it’ll be able to keep its strong dividend going and keep up with its buyback activity. And that’s exactly what investors want, and also how Buffett’s concept of a strong moat works.

To summarize, here are five reasons why you should own this stock:

1. Operates a logistics monopoly of irreplaceable assets throughout the entire country.
2. Has paid dividends for 120 consecutive years and grown that payout five times in the last eight quarters!
3. Thanks to improvements to its operating model and new tech upgrades, its EPS continues to rise during the constrained manufacturing environment.
4. Its new plan is expected to help improve efficiency, downtimes, and margins even further.
5. Healthy payout ratio of 42% and growing yield of 2.50%.

Our Best Dividend Stocks List has 20 of the highest-rated stocks by our proprietary rating system. Go Premium to find out the entire list.

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