Along with the rest of the transportation sector, $23 billion railroad Norfolk Southern ( NSC) is having a fairly tepid year in 2012. Shares have slid more than 3% on the year as tempered freight volumes and low fuel prices in the first half of the year weighed on profitability. Still, the fundamentals haven't justified the selloff in NSC -- and the firm's 47 cent per share quarterly dividend could be on track for an upgrade in 2012. Right now, NSC yields 2.68%. Even though fuel prices impact how much it costs to run NSC's trains, the firm wants $100 oil. That's because rail transport firms are competing with trucking companies for freight shipping dollars -- and with rail transport dramatically more efficient than a diesel-hungry big-rig, high oil prices give NSC and its peers a competitive advantage. >>25 Energy Stocks to Consider High commodity prices in general are good for NSC. Since its biggest customers are coal mines (and others are metal miners and agricultural firms), higher commodity costs mean that there's more room in customers' margins for shipping costs. While the commodity pullback in the past few weeks has been painful, it's not likely to last in perpetuity. And Norfolk Southern is in good financial shape. The company has more than $3 billion in cash and investments sitting on its balance sheet, offsetting around half of its long-term debt load. Excellent free cash flow should help to support a dividend hike for NSC this year. Watch out for second quarter earnings late next month. As of the most recently reported quarter, Norfolk Southern was one of Wintergreen Advisors' holdings and also showed up in Bridgewater Associates' portfolio.