Union Pacific: A Worthy Core Portfolio Forever Holding

Summary

• Since being added in 2010 to our family portfolio, Union Pacific's common shares have outperformed its industry, sector, and market.
• Union Pacific arguably presents the highest quality business model of the North American freight rail oligopoly.
• The stock’s combined shareholder yields outperformed the rising 10-Year Treasury, and the company benefits from superior executive management performance.
• Valuation multiples suggest a premium stock price, and downside risk is average at best because of under-coverage of short- and long-term debt levels, typical of a railroad.
• Nonetheless, as a wide-moat, fundamentally sound, high-margin dividend-payer, Union Pacific should be a core forever holding in any quality stock portfolio.

Angel Di Bilio/iStock Editorial via Getty Images

Union Pacific Corporation (NYSE:UNP) has been in my family portfolio for almost 12 years. With our focus on enduring companies with shares bought at value prices, UNP stands out as a defensive industrials sector staple in the North American railroads' oligopoly.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of UNP either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

David J. Waldron's articles are for informational purposes only. The accuracy of the data cannot be guaranteed. Narrative and analytics are impersonal, i.e., not tailored to individual needs nor intended for portfolio construction beyond his family portfolio, which is presented solely for educational purposes. David is an individual investor and author, not an investment adviser. Readers should always engage in their own research and consider (as appropriate) consulting a fee-only certified financial planner, licensed discount broker/dealer, flat fee registered investment adviser, certified public accountant, or specialized attorney before making any investment, income tax, or estate planning decisions.