Do Major US Railroads’ Dividends Appeal to Investors in 2018?

In the previous part of this series, we examined the leverage levels of major US railroads after their first-quarter earnings. Now let’s consider their dividend payments. Since it’s a capital-intensive industry, railroads reinvest most of their net earnings back into the business. The retention per share ratio is thus very high. That, in turn, lowers their dividend payout ratios. The transportation and logistics sector is included in the industrials sector. Railroads’ dividend yields have been historically lower than the other subsectors in the industrial (IYJ) sector.