Union Pacific Corporation (UNP) Positioned for Growth Amid Merger Talks with Norfolk Southern
Cullen Capital Management, LLC, operating under the name Schafer Cullen Capital Management, Inc. (SCCM), released the fourth quarter investor letter “SCCM Enhanced Equity Income Fund”. A copy of the book can be downloaded here. In the fourth quarter, the US equity market continued to rally, fueled largely by enthusiasm for artificial intelligence. The Enhanced Equity Income Strategy returned 2.0% (net) for the fourth quarter and 7.5% (net) for the year, compared with 6.5% and 8.9% from its primary benchmark, the S&P 500 Buy/Write Index, and 1.4% and 8.7% from its secondary benchmark, ENKD Honor. The total return of this Strategy has been significantly affected by investors’ inattention to high yields and low volatility, and the equity market has failed to expand in all sectors. The strategy anticipates a positive economic outlook for 2026, driven by the Federal Reserve’s interest rate cuts, tax cuts, capital-expenditure bonus reductions (OBBBA), and potentially lower taxes, all of which contribute to growth. In addition, please check the top five Strategy items to know your best choice in 2025.
In its fourth quarter 2025 investor letter, SCCM Enhanced Equity Income Fund highlighted stocks like Union Pacific Corporation (NYSE:UNP). Union Pacific Corporation (NYSE:UNP) is a railroad holding company that operates through its subsidiary Union Pacific Railroad Company. On February 27, 2026, Union Pacific Corporation (NYSE:UNP) stock closed at $264.98 per share. Union Pacific Corporation (NYSE:UNP)’s one-month return was 12.65%, and its shares gained 7.80% in the last 52 weeks. The market capitalization of Union Pacific Corporation is $157.237 billion.
SCCM Enhanced Equity Income Fund said the following about Union Pacific Corporation (NYSE:UNP) in its fourth quarter 2025 investor note:
“Union Pacific Corporation (NYSE:UNP) is one of the largest Class I railroads in North America, operating the premier network in the western two-thirds of the United States connecting important ports, industrial areas, and population centers. The company benefits from a profitable network with a long-standing structure, a tight asset mix, and strong exposure to dynamic, industrial, and agricultural markets, which support long-term pricing power and cash flow strength. A key factor is the growth opportunity and investor focus on the proposed cross-continental merger with Norfolk Southern, which provides a clear path to meaningful financial synergies, cost efficiencies, and an accelerated earnings growth profile. Even on a stand-alone basis, Union Pacific is positioned for continued operating margin improvement driven by labor productivity gains, network efficiencies, and price holdings as contracts are reset. Management’s track record and strong free cash flow provide flexibility in capital returns while continuing to invest in service and reliability. As the clarity of the merger improves, the market is likely to rerate the shares to reflect a diversified long-term growth opportunity and improved earnings potential. Overall, Union Pacific combines high-quality assets, significant operating momentum, and a compelling strategic choice that support an attractive investment proposition. The stock trades at 18x forward earnings and offers a 2.4% dividend yield.
