The transportation industry could be set for big changes in 2025, especially with Donald Trump returning to the White House. Shipping rates for containers have already jumped, with both retailers and manufacturers looking to frontload orders ahead of the potential impact of proposed tariffs that could reach up to 20% on all imports, with even higher tariffs on Chinese goods. Back in 2018, when Trump imposed similar tariffs, shipping rates soared by over 70%, showing how much these policies can shake up the market.

For investors looking to take advantage of these potential policy shifts, three dividend-paying transportation stocks stand out: J.B. Hunt Transport Services (JBHT), Knight-Swift Transportation Holdings (KNX), and CSX Corporation (CSX). These companies are well-positioned to benefit from increased demand for shipping containers and freight services, which experts predict will drive up rates for trucking and warehousing. 

Let’s take a closer look at why J.B. Hunt, Knight-Swift, and CSX could deliver strong dividends and growth in 2025.

#1. J.B. Hunt Transport Services (JBHT)

J.B. Hunt (JBHT) is one of the biggest transportation companies in North America. They do a bit of everything in moving goods around—from putting containers on trains to running their own trucks and logistics.

The stock is down about 5% on a YTD basis, but has filled its bear gap from April and is on the move higher. 

The stock might look a bit pricey compared to other companies in the same business - its price/earnings (P/E) ratio is 33.94, while others average around 21.40. But for investors looking for steady income, J.B. Hunt offers a reliable dividend that pays about 0.89% yearly, and they've been increasing these payments for 21 years straight. And on a cash flow basis, JBHT's multiple of 13.93x is a discount to the sector median of 16.7x.

Looking at JBHT's recent earnings, the company beat Wall Street's estimates in the third quarter of 2024. Revenue dropped 3% to $3.07 billion, and operating income fell 7% to $224.1 million. They earned $1.49 per share, down from $1.80 in the same quarter last year.

J.B. Hunt just added 20 hydrogen-powered trucks to their fleet, mainly for use around California's ports. This isn't just good for the environment - it's smart business in California, where they're getting stricter about emissions. They've also made a pact with Walmart(WMT) to handle more of their shipping, which means more steady business and access to Walmart's shipping containers and equipment.

While the shares now trade nearly flat with Wall Street's mean price target of $189.20, the 21 analysts watching the stock maintain an average rating of “moderate buy.” 

#2. Knight-Swift Transportation Holdings (KNX)

Knight-Swift Transportation Holdings (KNX) is one of the largest trucking companies in North America, offering services like full truckload, less-than-truckload (LTL), and intermodal transport. With over 130 locations across the U.S., Mexico, and Canada, and a fleet of around 19,000 tractors and 58,000 trailers, they play a key role in moving goods across the continent.

KNX stock is nearly unchanged in 2024, and has gained 14.7% over the past 52 weeks. 

Knight-Swift has a market cap of $9.3 billion, and is priced at 10.28 times forward cash flow - a reasonable discount to most industrial stocks. KNX also offers a decent dividend yield of 1.13%, backed by a 20-year payment history, which makes it appealing for investors looking for income.

In terms of earnings, Knight-Swift reported a mixed Q3 2024. Net income dropped to $30.5 million, or $0.19 per share, from $60.2 million the previous year. Adjusted EPS of $0.34 beat expectations, but revenue fell by 7.1% to $1.9 billion, which missed the consensus. The company expects adjusted EPS for Q4 to range between $0.32 and $0.36.

Knight-Swift has been making strategic moves to strengthen its position, including acquiring Dependable Highway Express (DHE) in July 2024, which should help boost its LTL business in key regions like California and Nevada. They’ve also partnered with CleanCore Solutions to bring eco-friendly cleaning technologies to their facilities, which aligns with their sustainability goals and helps cut costs.

Analysts are generally positive about Knight-Swift’s future, the consensus recommending a “moderate buy.” 

#3. CSX Corporation (CSX)

CSX Corporation (CSX) is one of the top rail freight companies in North America, running a massive 21,000-mile network across 23 states. They specialize in moving all kinds of goods, including containers, bulk commodities, and merchandise, mainly connecting big cities on the East Coast.

CSX stock is up 5.2% on a YTD basis, and 19.8% over the past 52 weeks.

With a market cap of $69.67 billion and a forward price/cash flow ratio of 14.28, CSX looks like a reasonable pickup at current levels. Plus, its dividend yield of 1.33% is backed by about two decades of consistent growth.

In Q3 2024, CSX missed estimates, with operating income reaching $1.35 billion (up 6.3% from last year) and net earnings climbing to $894 million ($0.46 per share). They also reported a 3% increase in volume to 1.59 million units.

CSX has made significant strides in sustainability and innovation, unveiling its first hydrogen-powered locomotive in collaboration with Canadian Pacific Kansas City, potentially opening new revenue streams and enhancing its competitive edge.

The company has also strengthened its labor relations, securing new five-year collective bargaining agreements with key unions. These agreements are expected to improve workforce stability and operational efficiency, crucial factors for maintaining CSX's industry-leading position.

Analysts are mostly optimistic about CSX’s future, with 16 out of 24 recommending a “strong buy,” one suggesting a “moderate buy,” and seven saying it's a “hold.” 

Conclusion

In conclusion, J.B. Hunt, Knight-Swift, and CSX are all well-positioned to benefit from the anticipated surge in freight and shipping demand heading into 2025, fueled by potential tariff changes and rising container volumes. Each of these companies offers solid growth potential and reliable dividends, making them attractive picks for investors seeking both income and long-term gains.