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5 Best Railroad Stocks to Buy in 2025

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Railroad stocks were responsible for one of the first big investment booms in U.S. history. More than a century later, railroads remain a key part of the economy. Railroad stocks offer ownership in the companies that operate in the railway industry. Over the years, the industry has consolidated to a handful of titans responsible for moving most of the goods around the country and to and from ports.

Image source: Getty Images.

As shippers and truckers faced disruptions during the COVID-19 pandemic, railroads held up better than most because of their unique 24/7 business model and ability to move a lot of cargo with very few people. And in an age where fuel efficiency is increasingly a priority, railroads are only growing in importance as the transportation solution of choice.

Transportation stocks tend to be cyclical, but rail holds up better than most in an economic downturn because rail companies are larger and better capitalized than trucking companies. Despite high oil prices leading to higher fuel bills, railroads also tend to do well when fuel costs spike because trains can transport a lot more cargo than trucks for each gallon of diesel burned.

For much of the 20th century, the railroad industry was plagued by bankruptcies. But today, thanks to years of consolidation and a recent push known as Precision Scheduled Railroading, the remaining companies are able to get more from their assets. The changes have brought down costs throughout the industry and allowed the companies to return more cash to shareholders.

5 railroad stocks

5 railroad stocks to buy right now

1. Union Pacific

1. Union Pacific

Union Pacific is one of two large railroads operating in the western half of the country. Its track connects the ports of Los Angeles and Long Beach with U.S. population centers. Union Pacific has long had a reputation among investors as the best-run U.S. railroad, with vast stretches of track through rural areas and connections to western energy assets.

Like most railroads, Union Pacific pays a dividend, with the stock yielding about 2.1% at the time of this writing. Over the past five years, the railroad has increased revenue at a compound annual rate of about 2.2%. The company is also in the middle of an extensive cost cutting campaign orchestrated by Jim Vena, who took over as CEO in 2023.

2. Canadian Pacific

2. Canadian Pacific

Canadian Pacific was historically the smaller of the two major Canadian railroads. That changed with the company’s 2023 acquisition of Kansas City Southern. The deal gave Canadian Pacific a vast network down the spine of North America to a deep-water port in Mexico. This network, coupled with its existing east-west track across Canada, allows freight to travel around the continent seamlessly.

Railroad mergers have a long history of getting off-track, and investors should tread cautiously during what is likely to be a multiyear integration process. But if all goes according to plan, the new Canadian Pacific Kansas City can be a new North American transportation powerhouse.

3. Canadian National

3. Canadian National

Canadian National has been public only since the mid-1990s, but the government entity-turned-private company provides access to almost every corner of Canada and a shipping link to the Gulf of Mexico. The railroad has more than 20,000 route miles of track and hauls agricultural products, energy, and containers from coast to coast.

Canadian National offers something that its U.S. counterparts can’t match: Access to both the Atlantic and Pacific oceans, as well as all of the geography in between. The company is well-positioned to benefit from strong demand for Canadian energy assets and the impact of companies bringing their supply chains to North America.

Image source: Getty Images.

4. CSX

4. CSX

CSX is primarily focused east of the Mississippi River, with more than 20,000 miles of track and access to 70 ports. Due to the more congested landscape, East Coast railroads have historically been less efficient than their Canadian and Western counterparts.

Still, CSX has made great strides in recent years in improving its operations. CSX has delivered compound annual growth of more than 9% over the past five years.

CSX has officially existed only since 1980, but it is a combination of a number of railroads that have been around since the dawn of the U.S. rail age, including the Baltimore & Ohio, the oldest in the nation. The company faces the challenge of maintaining and modernizing many century-old assets along the rails, but it has still generated reliable profits.

5. Norfolk Southern

5. Norfolk Southern

Norfolk Southern is the other Eastern-focused railroad, operating more than 19,000 track miles across 22 states and the District of Columbia. The company is a major transporter of industrial, agricultural, and consumer products and is a primary source of transportation for coal and auto parts. Norfolk Southern also has an extensive intermodal network in the East that carries containers from ship hulls to truck flatbeds.

Norfolk Southern’s revenue has grown at a 12% annualized rate over the past five years, and its dividend currently yields more than 2.1%. The company has hiked its dividend four times since the beginning of 2021 and doubled its share repurchase target. In years to come, Norfolk Southern plans to return between 35% and 40% of net income to shareholders through continued dividends.

No-railroad option

One other “railroad company” is a lot more than railroading

Another railroad competes against Union Pacific out West, but it is hidden inside the massive portfolio of Berkshire Hathaway (BRK.A -0.36%)(BRK.B -0.18%). In 2009, Berkshire Hathaway bought full control of Burlington Northern Santa Fe (BNSF), giving it ownership of North America’s largest railroad. BNSF operates more than 32,500 miles of track in 28 states and three Canadian provinces.

BNSF’s earnings make up only a small fraction of Berkshire Hathaway’s overall revenue, and it would be unwise to buy Berkshire solely for its railroad. But for investors looking for exposure to rail in a diversified package, Berkshire Hathaway could be an attractive investment.

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Are these stocks right for you?

Are railroad stocks right for you?

Rail can be plodding, but it does deliver. In a world where the supply chain is under pressure and fuel efficiency is king, rail is well positioned to take an ever-expanding part of the transportation pie in years to come.

  • Rail offers the ability to haul a lot more cargo than other transportation methods with just a handful of employees
  • Unlike trucking, rail has a 24/7 operating model
  • Rail companies are reliable dividend payers

These railroad companies provide a steady stream of income, reliable cash flows, and modest but sustainable revenue growth. Railroad stocks can be an attractive way to diversify for investors looking to keep a growth-focused portfolio on the rails when tech stocks are out of favor.

FAQs

FAQ about investing in railroad stocks

Are railroads a good stock investment?

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Railroad stocks don’t tend to generate flashy returns, but the companies are the backbone of the U.S. transportation system and provide reliable cash flows and dividends. The industry is cyclical, performing better when the economy is strong.

What are the top 5 railroad companies?

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The top five railroad companies are Union Pacific, CSX, Norfolk Southern, Canadian National, and Canadian Pacific Kansas City.

What are the railroad stocks with the highest dividends?

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As of mid-2025, the highest dividend yields in the railroad industry were paid by Canadian National (2.37%) and Union Pacific (2.28%).

Who is the billionaire who owns the railroads?

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While railroads were once owned by wealthy individuals including Cornelius Vanderbilt, today’s companies are either owned by shareholders or other publicly traded companies. Today, the billionaire most associated with railroads is Warren Buffett. Berkshire Hathaway owns Burlington Northern Santa Fe (BNSF), one of the two major U.S. West Coast railroads.

What are the most undervalued railroad stocks?

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Based on the stock multiple to earnings, Norfolk Southern and CSX are the two lowest-valued railroad stocks. Canadian Pacific Kansas City is the highest valued.

Lou Whiteman has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway, Canadian Pacific Kansas City, and Union Pacific. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.



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Rail & Road

Hanoi speeds up metro and railway industry development

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Illustrative photo (H. Hieu)

The Hanoi Department of Construction announced it is accelerating steps to meet the goal of developing 15 urban railway lines, totaling about 600km, by 2045.

The city is currently rushing to complete procedures to begin construction on two urban railway lines in 2025, inclulding Line 2, Nam Thang Long – Tran Hung Dao section, 11.5km long, and Line 5, Van Cao – Hoa Lac section, 38.43km long.

This is part of Hanoi People’s Committee Resolution No188 to develop urban railways in three phases.

From 2024 to 2030, the city aims to complete about 96.8km, including Lines 2, 3, and 5, while preparing investments for 301km of Lines 1, extended 2A to Xuan Mai, Lines 4, 6, 7, 8, and those connecting satellite cities. The total estimated capital for this phase is about $14.6 billion.

From 2031 to 2035, Hanoi will complete an additional 301km of urban railways, with an estimated capital of about $22.57 billion. Once completed, urban railways will handle 35-40 percent of public passenger transport.

From 2036 to 2045, the city will complete the remaining 200.7km supplemented under the Capital Master Plan and revised General Plan. The estimated capital for this phase is $18.25 billion.

Developing the urban railway system will not only ease Hanoi’s urban traffic pressure but also promote sustainable, modern, and connected urban development. Once completed, the urban railway network will serve as the backbone of the public transport system, driving development in both the inner city and satellite urban areas.

Dang Huy Dong, Director of the Institute for Planning and Development Research, stated that completing the urban railway system in just under 12 years is a daunting task. 

It may not be feasible without integrating TOD (transit-oriented development) urban models along metro station routes. This requires exceptional management that goes beyond current investment and construction regulations.

According to Dong, without solutions for management mechanisms and funding, continued reliance on ODA loans will hinder Hanoi’s ability to complete its historic urban railway mission. To secure funding, TOD planning and auctions for real estate investment rights in these areas are essential.

Public transportation includes various types, but only urban railways can effectively address urban traffic issues in cities with populations of 5 million or more.

Hanoi will conduct a review of land ownership and usage along the corridors, project locations, and TOD planning areas of approved urban railway lines.

TOD area is developed around stations and stops of public transportation, focusing on creating living, working, and recreational spaces closely connected to these transport routes. The goal of TOD is to encourage the use of public transportation, reduce traffic congestion, and foster sustainable urban development.

VND17,509 billion railway complex

Hanoi People’s Committee has submitted a proposal to the Prime Minister regarding the location, scale, and boundaries of a railway industry complex project in southern Hanoi (in communes of Chuyen My and Ung Hoa, Hanoi, covering about 250 hectares).

Previously, Vietnam Railways Corporation proposed that competent authorities review and approve the investment policy for this project.

The proposed railway industry complex is a multifunctional facility, including a factory for manufacturing and assembling vehicles, equipment, and spare parts; a research center; a maintenance and repair center; infrastructure connections to the national railway; and supporting facilities.

The preliminary total investment for the railway industry complex is VND17,509 billion. Public investment will fund the railway line connecting to the national railway, technical infrastructure, an R&D center, and state-supported components. 

State capital injected into enterprises will fund the assembly plant and related components, while inviting investors to participate and collaborate in business operations.

If approved by authorities, the railway industry complex project will be prepared for investment within one year and constructed within three years to complete Phase 1 by 2029.

According to Vietnam Railways Corporation, the complex aims to produce domestically and gradually localize hardware and software components for information, signaling, and power supply systems; and master operations and maintenance. And it will produce certain spare parts for high-speed railways. It will also involve technology transfer, equipment investment, and production of locomotives and carriages for national railways with speeds below 200 km/h, as well as purchasing designs and manufacturing for urban railways.

The project will also establish a functional area for major repairs of all railway vehicles and equipment, initially focusing on national and urban railways.

N. Huyen 




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Trial finds ‘world-first’ system protects tracks from damage

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A world-first system of shock absorbers made from recycled tyres has been shown to be effective in protecting railway tracks from damage.  

The new technology was tested over a two-year period by a collaborative team from the University of Technology Sydney (UTS), Sydney Trains, Transport for NSW, and industry partners EcoFlex and Bridgestone.

Researchers installed track sections with a rubber underlay made from tyres alongside conventional track sections for a direct comparison, monitoring vibration, track settlement, and ballast degradation at a live Sydney Trains freight line in Chullora. 

The results showed that the sections with the rubber underlay showed “significantly less degradation and greater stability”.  

To make the shock absorbers, tyre cells are placed in a specific layout made from recycled tyres infilled with waste materials such as spent ballast and coal wash. 

Recycled rubber grids cast from worn out conveyor belts from mining sites are also placed directly beneath the ballast.  

The technology addresses a long-standing engineering challenge: the high cost of maintaining conventional tracks. 

UTS researcher Distinguished Professor Buddhima Indraratna, the original inventor of this technique, and Director of the UTS Transport Research Centre, said the rubber-based underlay effectively protects the ballast, preventing it from being pulverised and extending the life of the entire track structure. 

“Additionally, the underlay controls the way the train load is distributed to the deeper, softer and often wet soil beneath the track, preventing unacceptable soil settlement and weakening of the overlying track.  

“This translates directly to lower maintenance costs, fewer track closures for the public, and improved network reliability.” 

Dr Richard Kelly, Chief Technical Principal for Geotechnical Engineering at SMEC Australia and an advisor on this project, said: “If widely adopted by railway asset owners, this will save Australian rail industry millions of dollars annually by reducing the demand for freshly quarried rock for ballast that is very expensive and not carbon friendly.” 

The project also provides a novel way to address tyre waste – with over 50 million end-of-life tyres generated in Australia each year.  

“We have proven we can turn a significant waste stream into a high-value asset that makes our critical infrastructure more resilient and advances the circular economy,” said Professor Cholachat Rujikiatkamjorn from the UTS Transport Research Centre. 

The research team will now expand its work through a $740,000 Australian Research Council Linkage Project grant, testing the technology in more challenging locations – such as at bridge approaches and junctions, where abrupt changes in track stiffness create high-impact zones prone to rapid degradation. 



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Union Pacific exploring Norfolk Southern rail takeover, reports say

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A Norfolk Southern train in North Carolina in 2022. Union Pacific is reportedly looking at buying its competitor, a deal that would shake up the U.S. freight rail landscape if it materializes.Jonathan Drake/Reuters

Union Pacific, the largest U.S. freight railroad operator, is exploring a possible acquisition of Norfolk Southern to create a US$200-billion coast-to-coast rail network, a person familiar with the matter said.

Talks are in early stages, the person said, with no guarantee talks will progress or that any deal would pass what would be expected to be a lengthy, detailed regulatory review. The two companies declined to comment.

Any deal to unite two of the six largest freight rail operators in North America is likely to draw intense regulatory scrutiny. Major shippers in the steel, chemical and grain industries are expected to lobby against any further concentration in an industry that has consolidated from over 100 Class I railroads in the 1950s to just six today.

Union Pacific UNP-N shares fell 2.7 per cent in Friday afternoon trading, while Norfolk Southern NSC-N rose 1.52 per cent.

A combination would mark a shift in the U.S. freight rail landscape, creating a single-line network stretching from coast to coast, changing the current divide between western and eastern regional operators.

Norfolk is recovering from a tumultuous past couple of years that included the firing of its previous CEO amid ethics investigations, a boardroom battle with activist Ancora, and a train derailment that cost the company about $1.4-billion.

A merger between Union Pacific and Norfolk Southern would create the first modern West-to-East single-line freight railroad in the U.S.

Earlier this year, Union Pacific CEO Jim Vena said a transcontinental merger would be good for customers, eliminating the need for interchanges between carriers in Chicago – a longstanding bottleneck – and reducing costly delays for shippers.

But critics warn that such consolidation could reduce competition, a possible concern for regulators. With fewer major players in the market, shippers may face higher costs and diminished service options.

“We suspect certain shipper groups could get vocal on the perceived lost competition a merger would bring,” Barclays analyst Brandon R. Oglenski said.

Discussions between the two operators, first disclosed by Semafor, spurred speculation that competitors would also consider concentration.

“History teaches that mergers and acquisitions within the railroad industry will inspire and motivate additional M&A,” said Mike Steenhoek, executive director of the Soy Transportation Coalition.

That happened earlier this decade when Canadian Pacific offered to acquire Kansas City Southern, which prompted CP’s main competitor – Canadian National – to submit their own offer to acquire Kansas City Southern.

Ultimately the Canadian National offer was not allowed to proceed, and Canadian Pacific did acquire Kansas City Southern in 2023 – creating the first railroad to link Canada, the U.S. and Mexico.

In 2024, Union Pacific led the industry with $24.3-billion in revenue, followed by BNSF (privately held, owned by Berkshire Hathaway), CSX CSX-Q, Canadian National CNR-T, Norfolk and Canadian Pacific Kansas City CP-T.

“The energy and momentum toward the remaining two U.S. based Class I railroads – BNSF and CSX – pursuing a merger would be considerable,” Steenhoek said.

A regulatory decision could take 16 to 22 months, with merging carriers required to notify the Surface Transportation Board three to six months before filing an application, followed by a year-long evidentiary review and a final ruling within 90 days, Oglenski said.

A potential Union Pacific acquisition of Norfolk Southern could have material synergy, he said.

“Any deal would face serious review from regulators,” said Emily Nasseff Mitsch, equity analyst at CFRA.



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