Canadian Pacific Railway

I do not own this stock of Canadian Pacific Railway (TSX-CP, NYSE-CP), but I used to. It is a stock I held from 1987 to 1999. I also held it 2006 to 2011. I decided in 2011 to have only one railway stock and choice CN as my railway stock. I am following this stock because it is a dividend growth stock.

I am just looking at dividends since 2002 which is what this company has paid after Canadian Pacific Limited split itself into 5 separate companies. The dividend yield on this stock is on the low side with moderate dividend increases. The current dividend is just 0.67% and the 5 year median dividend yield is 1.77. This historical median dividend yield is 1.53%. The 5 and 10 year growth in dividend is at 7.2% and 10.6% per year.

The company is paying out a moderate amount of their EPS and CFPS. The 5 year median Dividend Payout Ratio for EPS is 28% and for CFPS is at 34%. The corresponding DPR for 2013 is at 28% for EPS and 13% for CFPS.

This stock has done well for its shareholders recently with 5 and 10 years with total returns at 48.05% and 19.06% per year. The dividend portion of this return is at 2.02% and 1.23% per year over these periods. The capital gains portion of this return is at 46.03% and 17.83% per year over these periods.

Outstanding shares have increased by 2.7% and 1% per year over the past 5 and 10 years. Outstanding Shares have increased due to Stock Options and Share Issues and decreased due to Buy Backs. The growth in cash flow has been the best with moderate to very good increases over the past 5 and 10 years. EPS has increased moderately over the past 5 and 10 years. Revenue per Share has low to moderate growth over the past 5 and 10 years.

Growth in revenue per share was at 1.8% and 4.3% per year over the past 5 and 10 years. Growth in EPS is at 4.5% and 7% per year over the past 5 and 10 years. Cash Flow per Share has grown at 7.2% and 17.3% per year over the past 5 and 10 years.

Analyst feel that Revenue per Share will growth faster over the next two years, but they also expect better growth for EPS and Cash Flow. At some point, revenue will have to pick up the pace to match earnings and cash flow growth or earnings and cash flow growth will have to slow.

Over the past 10 years the Return on Equity has been below 10% and both these years were in the last 5 years. The ROE for 2013 was good at 12.3% and it has a 5 year median of 11.3%. The ROE on comprehensive income was better for 2013 at 30.2%, but the 5 year median was lower at 8.7%.

The Liquidity Ratio was ok at 147 in 2013 however this ratio has varied a lot and the 5 year median is just 1.03. When you add in cash flow after dividends the Liquidity Ratio is 2.71, but the 5 year median is quite a bit lower at 1.31. The Debt Ratios are good with a 2013 ratio of 1.71 and a 5 year median ratio of 1.55.

The Leverage and Debt/Equity Ratios are fine, but I would like to see them lower. The 2013 ratios were at 2.40 and 1.40 respectively. The 5 year median values are at 2.53 and 1.53.

Sound bit for Twitter and StockTwits is: dividend growth stock. I have Canadian Nation Railway (TSX-CNR) in my portfolio so I will not be buying this stock at this point in time. However, I can see the value of having a big railway stock in your portfolio. They are both dividend growth stocks. See my spreadsheet at cp.htm.

This is the first of two parts. The second part will be posted on Friday, October 17, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

This company is a transcontinental railway operating in Canada and the U.S. Its rail network serves the principal centers of Canada, from Montreal to Vancouver and the U.S. Northeast and Midwest regions. Alliances with other carriers extend its market reach throughout the U.S. and into Mexico. Canadian Pacific Solutions provides logistics and supply chain expertise. Its web site is here Canadian Pacific.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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