Union Pacific dividend: cash coverage and yield
Union Pacific's latest quarterly rate is $1.42 per share, and its base case grows dividends from $5.72 to $6.05 per share. Union Pacific's cash coverage is mixed: payouts sometimes exceeded free cash flow after investment, although it retained free cash flow in 2023 and 2024.
How much does Union Pacific pay per share?
Dividends grow modestly in the base case, from $5.72 to $6.05 per share. That follows the latest $1.42 quarterly rate and the stated commitment to annual increases. The bear case declines from $5.68 to $4.80 as financing, integration and weak earnings force cuts. The bull case reaches $6.33 because stronger earnings permit faster increases, though it remains below an immediate full-synergy payout.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| − Dividends paid, per share | 5.43 | 5.28 | 5.20 | 5.06 | 4.27 |
| − Share buybacks, per share | 4.50 | 2.47 | 1.16 | 10.07 | 11.12 |
| = FCF not paid out, per share | 1.93 | 1.47 | |||
| = Paid out more than FCF, per share | 0.70 | 5.93 | 6.10 |
Is Union Pacific's dividend covered by its cash?
The pattern matters because dividends and buybacks are not costless proof of success. A dividend sends cash directly to shareholders. A buyback reduces the number of shares, which can increase each remaining share’s claim on future earnings. But if payouts exceed free cash flow, the gap must come from asset sales, cash reserves or borrowing.
That happened especially strongly early in the period. Union Pacific later retained free cash flow in 2023 and 2024, while debt repayments exceeded new borrowing. Even so, net debt ended 2025 above its level at the end of 2021. Union Pacific also paused repurchases for the Norfolk Southern transaction, allowing more internally generated cash to accumulate for the proposed acquisition.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| Free cash flow | 5,499 | 5,894 | 4,773 | 5,742 | 6,096 |
| − Dividends paid | 3,236 | 3,213 | 3,173 | 3,159 | 2,800 |
| − Share buybacks | 2,679 | 1,505 | 705 | 6,282 | 7,291 |
| = Free cash flow not paid out | 1,176 | 895 | |||
| = Paid out more than the free cash flow | 416 | 3,699 | 3,995 |
What could change Union Pacific's dividend?
The view would move toward the bear case if regulatory conditions delay closing, integration costs rise or traffic benefits fail to appear during 2027–2029. Fuel costs rising faster than surcharge recovery would also pressure margins.
| October 2027 | October 2028 | October 2029 | |
|---|---|---|---|
| EBITDA | 13,400 (12,700 / 13,700) | 19,850 (12,350 / 20,900) | 21,400 (12,800 / 22,800) |
| Shares (millions) | 820 (595 / 820) | 821 (821 / 821) | 821 (821 / 818) |
| Dividends per share | 5.72 (5.68 / 5.75) | 5.88 (4.82 / 6.01) | 6.05 (4.80 / 6.33) |
| Net debt | 61,713 (24,113 / 60,713) | 58,713 (59,913 / 57,013) | 55,613 (59,313 / 53,813) |