April 27, 2025 a 12:46 pm
NSC: Dividend Analysis - Norfolk Southern Corporation
Norfolk Southern Corporation demonstrates a robust dividend profile with a solid history of payouts over 44 years. The company displays moderate yet consistent dividend growth over the past five years, highlighting its commitment to shareholder returns. A relatively low EPS-based payout ratio underscores its potential for future dividend stability. However, a thorough analysis of its financial metrics is necessary to understand underlying risks.
📊 Overview
The Norfolk Southern Corporation operates in the rail transportation sector, exhibiting a dividend yield of 2.44%. With a current dividend per share of 5.40 USD, it has a commendable history of 44 consecutive years without a cut or suspension in dividends.
| Metric | Value |
|---|---|
| Sector | Rail Transportation |
| Dividend Yield | 2.44% |
| Current Dividend per Share | 5.40 USD |
| Dividend History | 44 years |
| Last Cut or Suspension | None |
📈 Dividend History
Norfolk Southern’s dividend history is a testament to its shareholder value strategy. With no significant dividend cuts in the past decades, the stability fosters investor confidence.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 2.70 |
| 2024 | 5.40 |
| 2023 | 5.40 |
| 2022 | 4.96 |
| 2021 | 4.16 |
📉 Dividend Growth
Understanding dividend growth is essential for forecasting potential income. Norfolk Southern’s dividends have grown by 9.09% over three years and 8.45% over five years.
| Time | Growth |
|---|---|
| 3 years | 9.09% |
| 5 years | 8.45% |
The average dividend growth is 8.45% over 5 years. This shows moderate but steady dividend growth.
✅ Payout Ratio
The payout ratio is a key indicator of dividend sustainability. Norfolk Southern exhibits a healthy EPS-based payout ratio of 36.79% and an FCF-based payout ratio of 52.26%, suggesting a well-managed dividend policy.
| Key figure | Ratio |
|---|---|
| EPS-based | 36.79% |
| Free cash flow-based | 52.26% |
A low EPS payout ratio signifies potential for dividend growth, while the FCF payout ratio balances this optimism with caution, safeguarding against adverse financial conditions.
🔍 Cashflow & Capital Efficiency
The sustainability of dividends often depends on the company's cash flow and capital efficiency metrics, including Free Cash Flow Yield, Earnings Yield, and management’s ability to convert revenues into free cash flow.
| Year | Free Cash Flow Yield | Earnings Yield | CAPEX to Operating Cash Flow | Stock-based Compensation to Revenue | Free Cash Flow / Operating Cash Flow Ratio |
|---|---|---|---|---|---|
| 2024 | 0.0764 | 0.0494 | 0.438 | 0.0011 | 1.00 |
| 2023 | 0.0155 | 0.0341 | 0.739 | 0.0000 | 0.2611 |
| 2022 | 0.0393 | 0.0565 | 0.461 | 0.0042 | 0.5386 |
Norfolk Southern’s cash flow stability suggests strong efficiency in capital utilization, although the slight variation over the years indicates a need for vigilant management oversight.
🗣️ Balance Sheet & Leverage Analysis
An examination of leverage metrics such as Debt-to-Equity and Debt-to-Assets ratios sheds light on Norfolk Southern’s balance sheet. The company maintains a balanced debt profile, key for long-term financial health and stability.
| Year | Debt-to-Equity | Debt-to-Assets | Debt-to-Capital | Net Debt to EBITDA | Current Ratio | Quick Ratio | Financial Leverage |
|---|---|---|---|---|---|---|---|
| 2024 | 1.222 | 0.400 | 0.550 | 3.890 | 0.899 | 0.899 | 3.053 |
| 2023 | 1.375 | 0.422 | 0.579 | 3.687 | 1.242 | 1.142 | 3.259 |
| 2022 | 1.192 | 0.390 | 0.544 | 2.437 | 0.758 | 0.662 | 3.054 |
The leverage structure indicates reasonable levels of debt utilization, supporting further growth while ensuring financial resilience.
📊 Fundamental Strength & Profitability
Analyzing profitability metrics like Return on Equity and margins is crucial in assessing operational efficiency and competitive advantage. Norfolk Southern has shown robust profitability performance in recent years.
| Year | Return on Equity | Return on Assets | Net Margin | EBIT Margin | EBITDA Margin | Gross Margin | R&D to Revenue |
|---|---|---|---|---|---|---|---|
| 2024 | 0.1833 | 0.0600 | 0.216 | 0.341 | 0.336 | 0.375 | 0.0000 |
| 2023 | 0.1429 | 0.0439 | 0.150 | 0.250 | 0.357 | 0.443 | 0.0000 |
| 2022 | 0.2568 | 0.0841 | 0.257 | 0.378 | 0.474 | 0.433 | 0.0000 |
Consistent margin upkeep showcases Norfolk Southern’s competitive standing and ability to generate sustainable profitability.
📈 Price Development
🗣️ Dividend Scoring System
| Category | Score (out of 5) | Description |
|---|---|---|
| Dividend Yield | 4 | |
| Dividend Stability | 5 | |
| Dividend Growth | 3 | |
| Payout Ratio | 4 | |
| Financial Stability | 4 | |
| Dividend Continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 3 |
Total Score: 32/40
📊 Rating
Norfolk Southern Corporation presents a sound investment opportunity for dividend-focused investors, supported by a long dividend history and consistent growth. While moderate leverage suggests a need for cautious fiscal management, its overall financial health supports a positive investment outlook.