One of Berkshire Hathaway Incorporated which is Warren Buffet’s holding company bought Burlington Northern Santa Fe railroad in 2010. At $26.5 billion it was one of Berkshire’s largest acquisitions.
Since 2010 Burlington Northern has doubled. It was aided by the oil production boom. Since the pipelines have not been able to keep up with the amount of shale being produced they had to turn to railroads.
The economy is consumer driven. Using the railroad helps to keep costs low putting more money in consumer’s pocket. Buffet has stated that as long as goods are moved around railroads are going to get their share.
Two railroads that should be bought for an investment Buffet style are Unions Pacific and Canadian National Railway. The only two railroads that play major roles in the West is the one that Buffet already has stock in Burlington Northern and Union Pacific. Union Pacific not only moves oil but it also moves autos, lumber, and food. The increase in demand for these products will offset the railroad’s costs in oil export.
Canadian National Railway is the largest railroad in Canada. It has more rail network than any other railroad with over twenty thousand miles of track. It plays a huge part in moving products between Canada and the United States.
The balance sheets of both railroads are the best in the business. Union Pacific has been paying a dividend for over thirty-four years but has also tripled in the past five years. Canadian railroad has been paying dividends for over seventeen years.
As an investment both of these railroads are a solid investment. Railroads are able to move products at a lower rate than any other way.