HON vs UNP: Dividend Yield, Growth & Safety Comparison
Honeywell International Inc (HON) and Union Pacific Corp (UNP) are both in the Industrials sector, making them natural rivals for dividend investors. Both stocks offer similar yields — HON at 1.88% and UNP at 2.08%. Both stocks show similar dividend growth rates, each around 5.4% over the past five years. UNP holds the edge in dividend safety with a "Safe" rating. Both are classified as Dividend Contenders.
Key Metrics Comparison
| Metric | HON | UNP |
|---|
| Dividend Yield | 1.88% | 2.08% |
| Annual Dividend | $4.58 | $5.44 |
| 5-Year CAGR | 5.4% | 6.1% |
| Payout Ratio | 61% | 45% |
| Consecutive Years | 15 | 19 |
| Price | $241.59 | $260.92 |
Yield Comparison
Union Pacific Corp (UNP) currently yields 2.08%, which is solid for the broader market. That's 0.20% more than Honeywell International Inc (HON), which yields 1.88%. In dollar terms, UNP pays $5.44/share annually versus HON's $4.58/share.
Dividend Growth
Over the past five years, UNP has grown its dividend at a 6.1% CAGR compared to HON's 5.4%. HON: Dividend growth has been steady, with a 3-year CAGR of 5.6% and a 5-year CAGR of 5.4% (10-year: 7.9%). UNP: Dividend growth is slowing — the 3-year CAGR of 2.3% trails the 5-year rate of 6.1% and the 10-year rate of 10.3%.
Dividend Safety
HON's dividend safety is rated "Moderate." The payout ratio of 61% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.7x. UNP's dividend safety is rated "Safe." The payout ratio of 45% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.2x. UNP's payout ratio of 45% is more conservative than HON's 61%, suggesting more room for future increases.
Income Comparison
A $10,000 investment in UNP generates approximately $208/year in dividend income, compared to $188/year from HON — a difference of $20/year. At $100,000, that gap widens to $200/year.
Verdict
- Best for income: UNP
- Best for growth: UNP
- Best for safety: UNP
Frequently Asked Questions
Which has a higher dividend yield, HON or UNP?
Union Pacific Corp (UNP) has a higher dividend yield of 2.08% compared to Honeywell International Inc (HON) at 1.88%.
Is HON or UNP a better dividend growth stock?
Union Pacific Corp has the stronger dividend growth with a 5-year CAGR of 6.1%, compared to Honeywell International Inc's 5.4%.
Which is safer for dividend income, HON or UNP?
Honeywell International Inc's dividend safety is rated "Moderate" while Union Pacific Corp is rated "Safe." The payout ratio of 61% is moderate. The dividend is currently covered by earnings but leaves less room for growth. Earnings cover the dividend 1.7x. The payout ratio of 45% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.2x.
How much income does $10,000 in HON vs UNP generate?
A $10,000 investment in HON generates approximately $188/year in dividends, while the same amount in UNP generates about $208/year.
Is HON or UNP a Dividend Aristocrat?
Honeywell International Inc is a Dividend Contender (15 years) and Union Pacific Corp is a Dividend Contender (19 years).
Which has a lower payout ratio, HON or UNP?
Union Pacific Corp has a lower payout ratio of 45% compared to Honeywell International Inc's 61%. A lower payout ratio generally indicates more room for dividend growth and better sustainability.
HON vs UNP: which is better for retirement income?
It depends on your priorities. UNP for current income, UNP for dividend growth, UNP for safety. Many retirement investors hold both for diversification.
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