No. 1 U.S. railroad Union Pacific Corp will increase its dividend 22 percent, dedicate more money to capital spending, and resume share buybacks under an existing program.

The company cited rising shipping volumes and optimism over long-term fundamentals as the U.S. economy emerges from recession.

Union Pacific's quarterly dividend of 33 cents is payable July 1 to shareholders of record on May 28. Its board also approved a $100 million increase in capital spending, boosting 2010 investment to $2.6 billion, the company said.

The increase would help pay for intermodal equipment, which enables rails to carry containers that can also go by ship or truck. Union Pacific said its intermodal business grew during the recession.

The company also plans to resume stock buybacks "on an opportunistic basis." Its existing repurchase program authorizes the purchase of 32.6 million shares by the end of March 2011.

Last month, the leading U.S. railroad reported a 43 percent rise in quarterly profit and said it might bring back 2,800 employees it furloughed during the downturn. (Reuters)