Canadian National Railway

I am reviewing this stock (TSX-CNR) today as I have received its annual report. I bought this stock in 2005 and I have earned a return of just over 10% per year on it. This includes dividends received, a price ending at the end of March 2009 and another purchase on this stock at the end of January 2009 this year.

This stock has great growth in earnings, dividends and the stock price over the last 5 and 10 years. The growth in book value is not bad, and there is a lower growth in the revenues and cash flow. This stock has grown the dividends at the rate of 22% and 18% for the last 5 and 10 years. If you look at the spreadsheet, you will see this great growth until 2008 and from 2008 to date growth has slowed to just under 10%.

Since I looked at this stock when I updated my spreadsheet initially in connection with the 2008 annual report, the stock price has moved from slightly below the Graham Price to above the Graham Price. The TSX has been steadily gaining since it crashed in March 2009. So it is no surprise that this stock has moved up. If you look at the Liquidity Ratio, it is rather low at .93. This means that current assets do not quite cover current liabilities. However, the Asset/Liability Ratio at 1.65 is strong. Looking at the Return on Equity (ROE) Ratio is quite nice at 18% for both 2008 and the 5 year average. The last thing to look at is the Accrual Ratio and it is rather high. This could point to earnings being from non cash items (or accruals) and therefore of a lesser quality.

By and large, I am quite happy with this stock and I am glad I have bought it. This is a stock that is on everyone’s lists. It is on the Dividend Achievers list at www.dividendachievers.com, the Dividend Aristocrats list at www.tmxmoney.com/en/individual.html (see indices) and also on Mike Higgs’ list at www.dividendgrowth.org/Report.htm.

They 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 www.cn.ca. See my spreadsheet at www.spbrunner.com/stocks/cnr.htm.

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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.