HON vs UNP: Dividend Comparison
Dividend data as of
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.
Verdict
Yield Analysis
UNP yields 0.20% more than HON. In dollar terms, HON pays $4.58/share vs UNP's $5.44/share annually.
Dividend Growth
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: 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: The payout ratio of 45% is well within sustainable levels, leaving room for future increases. Earnings cover the dividend 2.2x.
Estimated Annual Dividend Income
Based on current dividend yields. Actual income may vary.
What does $10,000 buy in HON vs UNP today?
At $241.59 per share, $10,000 buys about 41.4 shares of Honeywell International Inc (HON). Each share pays $4.58 per year in dividends, so the position starts out generating roughly $190 per year — about $16 a month.
At $260.92 per share, $10,000 buys about 38.3 shares of Union Pacific Corp (UNP). Each share pays $5.44 per year in dividends, so the position starts out generating roughly $208 per year — about $17 a month.
UNP is the larger income stream from day one: $19 per year more on the same $10,000 invested.
What could $10,000 of HON or UNP income look like in 10 years?
Honeywell International Inc (HON) has raised its dividend about 5.4% a year over the past five years. If that pace held, the $188 per year that $10,000 generates today at the current 1.88% yield would reach $318 per year by 2036 — a 3.2% yield on the original cost.
Union Pacific Corp (UNP) has raised its dividend about 6.1% a year over the past five years. If that pace held, the $208 per year that $10,000 generates today at the current 2.08% yield would reach $377 per year by 2036 — a 3.8% yield on the original cost.
On those trailing rates, UNP pays more in 2036: $377 versus $318 per year. The projection assumes each five-year growth rate persists and no dividends are reinvested — real payouts will differ.
When would HON's dividend growth overtake UNP's higher yield?
It doesn't, on the trailing numbers. Union Pacific Corp (UNP) yields more today (2.08% vs 1.88%) and has also grown its dividend at least as fast (6.1% vs 5.4% a year over five years). Unless HON accelerates its raises or UNP stumbles, HON never closes the income gap — UNP wins on both current income and growth.
Can HON and UNP afford their dividends?
Honeywell International Inc (HON) earns $7.58 per share against $4.58 paid out in dividends — 1.7x coverage (a 61% payout ratio).
Union Pacific Corp (UNP) earns $11.98 per share against $5.44 paid out in dividends — 2.2x coverage (a 45% payout ratio).
UNP's wider coverage leaves more cushion if earnings dip. As a rule of thumb, coverage below about 1.5x (a payout ratio above ~65%) is where a dividend starts to look stretched — worth watching for HON if earnings weaken.
Which fits an early-retirement income portfolio better, HON or UNP?
For income you need right now, Union Pacific Corp (UNP) leads: $100,000 invested today pays about $173 a month at the current 2.08% yield, versus $157 a month from Honeywell International Inc (HON) at 1.88%.
UNP also leads on dividend growth (6.1% vs 5.4% a year over five years), so the trailing numbers favor it on both fronts.
On consistency: HON has raised its dividend 15 consecutive years; UNP has raised its dividend 19 consecutive years.
Many income investors simply hold both — the mix pairs current yield with growth and spreads single-name risk. Whichever way you lean, dividends are never guaranteed; recheck the payout each quarter rather than setting and forgetting.
$10,000 with DRIP: projected annual income
If each holding keeps raising its dividend at its real 5-year rate and every payment is reinvested, a $10,000 position pays $384/yr in HON vs $463/yr in UNP by year 10.
Assumes dividends are reinvested at the current yield and grow at each holding's trailing 5-year dividend CAGR. A projection, not a prediction — no price appreciation modeled.
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