As oil prices continue to march higher, the benefits of transporting goods by rail are going to be even more pronounced. Railroads offer better fuel efficiency than transporting goods by truck, and considerably more goods can be transported at once. Think hundreds of truck trailers all going to the same location at once.

It should then come as no surprise to anyone why the railroad sector appears to be one of the best places to park your money while oil prices remain high. However, just because the sector is in great shape doesn't mean every stock within that sector is a buy. A quick scan of the railroad sector yielded a couple of outstanding dividend-paying companies that should be trusted to deliver phenomenal returns for shareholders, while one company has me shaking my head in disdain.

Canadian National Railway (NYSE: CNI) -- trust it
Canadian National Railway is a perfect example that just because a company is tackling a new 52-week high, that doesn't mean it can't continue heading higher.

Canadian National has an aggressive five-year growth projection of 15% while trading at roughly three times its book value. The company has used nearly $6.1 billion in debt to purchase and maintain its railway fleet. Despite being heavily levered, the company's debt-to-equity ratio sits at a modest 51%. In short, the company just keeps delivering one solid quarter after another.

The real driving force behind Canadian National is its rapidly growing dividend. Although you won't find successive quarterly increases like you would with the S&P 500 Dividend Aristocrats, you will find plenty of evidence that this company's dividend is moving steadily in the right direction. Currently yielding 1.7%, shareholders have been privy to a 10-year compounded annual dividend growth rate of 18%! Those are results you can bank on!

Norfolk Southern (NYSE: NSC) -- trust it
Much like Canadian National, Norfolk Southern is projected to grow at a rapid 13.6% over the next five years, according to analysts. Norfolk maintains a slightly higher debt-to-equity than Canadian National at 64%, but given that the company has brought in $2.6 billion in operational cash flow over the trailing 12 months, there's little cause for concern. Now let's move on to the real draw of this company: its dividend growth!

Norfolk Southern sports a current yield of 2.3%, which is higher than the majority of its counterparts, such as Union Pacific (NYSE: UNP), CSX (NYSE: CSX), and Canadian Pacific Railway (NYSE: CP), which yield 1.9%, 0.7%, and 2%, respectively. Outside of slashing its dividend by 70% in 2001 after struggling to integrate Conrail into its fleet, Norfolk's dividend has been as solid as a rock. Over the past decade, shareholders have been treated to a compounded annual dividend growth rate of 21%. With a dividend payout ratio of only 34%, this is a figure that could even head higher.

Westinghouse Air Brake Technologies (NYSE: WAB) -- avoid it
Westinghouse Air Brake manufactures and supplies a lot of the key instrumentation that trains use. Unfortunately for shareholders, the company's positive earnings results are mucked up by management's unwillingness to share the wealth with investors.

In a true case of "why even bother," Westinghouse has paid out a quarterly dividend of $0.01 – yes, one cent -- for the past 15-plus years! For the past 62 quarters, shareholders have been strung along, expecting that one day management will raise the dividend. But no. Yielding an almost laughable 0.19% and paying out less than 2% of its earnings, shareholders should take this as nothing more than a slap in the face. It's for that reason I look upon Westinghouse with disdain and highly recommend you look elsewhere in this sector.

Foolish roundup
Remember that surprising dividend growth can come in a lot of forms, even nontraditional dividend-paying sectors. Canadian National Railway and Norfolk Southern offer a good mix of earnings growth and shareholder perks, and may make a nice addition to your portfolio.

What railroad dividends stand out to you? Share your ideas in the comments section below and consider adding Canadian National Railway, Norfolk Southern, and Westinghouse Air Brake Technologies to our free watchlist service so you can keep up on the latest news in the railroad sector.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong. Motley Fool newsletter services have recommended buying shares of Canadian National Railway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that looks both ways before crossing the railroad tracks.