Dividends & The Improbable Universe

It is, of course, a truth universally acknowledged, that a single dividend stock in possession of a reasonable yield, must be in want of a second. And so, we find ourselves considering two entities – Northrop Grumman (NOC +2.47%), purveyors of things that go boom (and occasionally don’t, which is, statistically speaking, quite remarkable), and Union Pacific (UNP 2.34%), masters of the incredibly complex art of moving things from one place to another on metal rails. Both, it turns out, are rather good at giving money back to the people who gave them money in the first place. A concept so logical, it’s almost unsettling. (Almost. We’re still trying to grasp the implications of quantum physics.)

Northrop Grumman: Or, The Business of Not Being Hit By Things

Northrop Grumman’s share price has enjoyed a rather spirited ascent this year – approximately 33% upwards, which, when you consider the sheer chaos of existence, is frankly astonishing. Much of this is, naturally, attributable to the ongoing… situations in various parts of the world, which, sadly, tend to encourage increased defense spending. (It’s a vicious cycle, really. Peace is expensive, but war… well, war is just remarkably expensive.) But let’s look beyond the immediate geopolitical turbulence. There are reasons to believe this isn’t just a temporary spike, but a company poised for long-term success.

Currently, the dividend yield sits at a respectable 1.4%, which is roughly in line with the S&P 500 average. (A benchmark, naturally, though what it’s benchmarking against remains a philosophical conundrum for another day.) But Northrop Grumman isn’t just content to meet the average; they’ve been diligently increasing their payouts for 22 consecutive years, including an 11% bump planned for 2025. This suggests a commitment to returning value to shareholders, which, in the grand scheme of things, is rather nice of them.

The company reported $41.9 billion in revenue in 2025 – a 2.2% increase – and earnings per share (EPS) of $29.14, up 2.6%. Over the past decade, revenues have climbed by over 71%, and EPS by a staggering 138%. (These numbers, of course, are entirely arbitrary. The universe doesn’t care about your quarterly earnings. But Wall Street does, and that’s generally enough.) The stock’s total return over that period? A rather impressive 360%.

As of the end of 2025, Northrop’s backlog stood at a record $95.7 billion – a 5% year-over-year increase. This means they have a substantial amount of pre-ordered… stuff. (Stuff that goes boom, mostly. And other, slightly less explosive, stuff.) This provides a degree of revenue visibility, shielding them from the vagaries of short-term economic fluctuations. (Though, naturally, nothing truly shields you from the inevitable heat death of the universe.)

They’re also deeply involved in cutting-edge technology, like the B-21 Raider stealth bomber (which is currently ramping up production) and the replacement of the Sentinel intercontinental ballistic missile fleet. (Don’t think about that too hard.) They’re even the lead partner for the Space Development Agency, working on a network of 150 satellites for communications and missile tracking. (Because, you know, space.) And, crucially, they’re making their fighter planes and weapons systems more effective through software updates – meaning fewer costly hardware refits. (Which, from an accounting perspective, is a very good thing.) Take, for instance, the Integrated Viper Electronic Warfare Suite AN/ALQ-257 system, which allows F-16s to detect, identify, and jam modern radar systems. (It’s like a very sophisticated game of hide-and-seek, but with significantly higher stakes.)

Union Pacific: Or, The Art of Moving Things From A to B (Eventually)

Union Pacific’s shares are up over 14% this year. The company operates over 32,000 miles of track across 23 states – a truly impressive feat of engineering. (Consider the sheer amount of metal involved. It’s enough to make a magnet weep.) They’re also seeing improved productivity, thanks to the application of artificial intelligence and better network efficiency. (Because even railroads need a little help from the robots.)

Here are three reasons to consider Union Pacific stock. Firstly, their proposed $85 billion merger with Norfolk Southern would create the first intercontinental railroad in the U.S. (A truly ambitious undertaking. Though one wonders if the trains will ever actually arrive.) This would, theoretically, lead to revenue synergies and cost efficiencies. (Though, naturally, mergers are never quite as straightforward as the PowerPoint presentations suggest.)

However, there’s a slight snag. The merger application was recently rejected by the federal Surface Transportation Board, who deemed it incomplete and inconsistent regarding its impact on other transportation stakeholders. (Bureaucracy, it seems, is a universal constant.) The regulator, understandably, is concerned about the potential for a transcontinental railroad to exert undue influence over the transportation landscape. (A valid point, really. Imagine the scheduling conflicts.)

Union Pacific and Norfolk Southern plan to resubmit a revised application in April. Their main argument? There’s little geographic overlap between their lines, meaning the merger won’t eliminate competition in most cities. (A clever tactic, though one wonders if the regulators will be convinced.) Another benefit? It would remove the Chicago bottleneck, where goods currently have to be transferred from one railway to the next. (A logistical nightmare, apparently. Though one can’t help but picture tiny trains having a traffic jam.)

Union Pacific has been raising its dividends annually for 19 consecutive years, including a 2.9% increase in 2025. The current yield is around 2%. Over the past decade, the payout has increased by 150%, and the stock’s total return is just under 300%. They reported $24.5 billion in revenue in 2025 – a 1% increase – and EPS of $11.98, up 8%. They expect mid-single-digit percentage EPS growth again in 2026. (Optimistic, perhaps, but one can always hope.)

A Reasonable Investment, In An Increasingly Unreasonable Universe

Northrop Grumman and Union Pacific both present compelling cases for dividend investors. Northrop’s next-generation stealth technology and robust government contracts provide a degree of safety, while Union Pacific’s position in the U.S. logistics network – built over 127 years – gives it a competitive edge. (Though, let’s be honest, everything is temporary. Eventually, the sun will explode, and all our investments will be rendered… irrelevant.) So, choose wisely. Or don’t. It’s really up to you. After all, in the grand scheme of things, it hardly matters.

2026-03-07 13:33

Northrop Grumman: Or, The Business of Not Being Hit By Things

Union Pacific: Or, The Art of Moving Things From A to B (Eventually)

A Reasonable Investment, In An Increasingly Unreasonable Universe

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