Friday, August 1, 2008

Canadian National Railway

I bought this stock (TSX-CNR) in July 2005, and since that date, I have made, including dividends, a return of 12.3% per annum. This stock is of medium risk and it is on both the Mergent’s Dividend Achievers’ list and the S&P/TSX Canadian Dividend Aristocrats List. I also sometimes look at a web site of Mike Higgs at Mike gives a quarterly report showing Canadian Dividend Paying Growth Stocks and if they are cheap based on the dividend yield. This stock is on his list and he shows it cheap in respect to its current dividend yield.

I also have a spreadsheet on this stock. It shows that the Earnings per Share (EPS) have been increasing over the last 5 years at the rate of 24% per annum. Over the last 10 years, the EPS has increased at just 7.8%. As you can see, it has done much better over the last 5 years. This company was also, a crown corporation until 1995.

The dividends have been increasing very well at 24% over the last 5 years per annum and 18.5% over the last 10 years per annum. However, the yield is low as it is averages only 1.3%. You can see this also in the total return on this stock, where for the last 5 years the stock has increased at 17% per annum and the total return (price plus dividends) has increased by 18.9% per annum. The Graham price on this stock at December 31, 2007 is $44.79 and is not far from the closing stock price of $46.65.

The other good things about this stock are that the Operational Cash Flow has been increasing, over the last 5 years at almost 13% per year and the Book Value at a not bad 8%. Also, the Accrual Ratio is not bad at 2.4%.

The negatives are that the Revenues have only increased in the last 5 years by 5% per year and the Current Asset/Current Liability Ratio is only .66. (However, the Asset/Liability Ratio is a much healthier 1.77.) The last negative thing is the Book Value is decreasing in connection with the stock price. However, its value is still higher at 2.22 that the 10 year average of 1.88.

CNR have railways lines that cross the North American continent and serve ports on the Atlantic, Pacific and Gulf coasts. They link customers to all three NAFTA nations. Its web site is See my spreadsheet on this company at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets on web site.

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