Tuesday, February 10, 2015

Canadian National Railway

I own this stock of Canadian National Railway (TSX-CNR, NYSE-CNI). In 2005 I was look for good companies to buy at a reasonable price. This stock met by criteria. This is a dividend growth company with a good record of dividend increases. I brought some more in 2009.

This stock has a moderate dividend with good increases. The current dividend is1.43% and the 5 year median dividend is 1.77%. The dividend growth is at 14.6% and 17.8% per year over the past 5 and 10 years. The last dividend increase occurred in 2015 and it was for 25%.

This company was a crown corporation until 1995. It started to pay dividends in 1996, some 19 years ago. The dividend yield was at its highest in 2009. Since buying this stock in 2005 I have earned $5.30 in dividends and my stock cost me $19.11 per share. One way of looking at this is that dividends have covered some 27.8% of the cost of my stock.

Another way of looking at the dividends is that the yield was 1.31% when I purchased this stock and using the original purchase price, I am getting a current yield of 6.54% now. My dividends are up over a 10 year period by 400% or 18.48% per year.

I color code the growth in Revenue, Earnings and Cash Flow on my spreadsheet. When I look at this spreadsheet I see blue and green. Also, you can see that 5 year growth is much better than 10 years growth. Overall, growth has been moderate to very good for this company.

The outstanding shares have decreased by 3% and 1.6% per year over the past 5 and 10 years. So looking at either just Revenue or Revenue per Share would not tell you the whole story. Because shares are decreasing the growth in Revenue becomes more important than the growth in Revenue per Share.

Revenue is up by 10.5% and 6.4% per year over the past 5 and 10 years. Revenue per Share has grown by 13.9% and 8.1% per year over the past 5 and 10 years. You can see that Revenue growth is not as good as Revenue per Share growth. This is due to the declining number of outstanding shares. However, overall Revenue growth is moderate to good.

You get the same thing with EPS and Net Income. EPS has grown by 14.5% and 13.5% per year over the past 5 and 10 years. Net Income is up by 11.3% and 9.7% per year over the past 5 and 10 years. Growth in earnings is very good as is growth in net income, even though it is lower.

CFPS is up by 19.7% and 9.5% per year over the past 5 and 10 years and Cash Flow is up by 16.2% and 7.8% per year over the past 5 and 10 years. You can see here also that CFPS is growing faster than Cash Flow. However, the growth in Cash Flow is still moderate to very good.

The Return on Equity has not been lower than 10% over the past 10 years. The ROE for 2014 is at 23.5% with a 5 year median of 23%. The ROE on comprehensive income has generally been lower than the ROE on net income. The ROE on comprehensive income was at 19.2% in 2014 and has a 5 year median of 19.23. The ROE on comprehensive income has not been lower than 10% over the past 10 years.

The Liquidity Ratio is low and has generally been low. However, if you add in cash flow after dividends, the ratio is generally above 1.50. The Liquidity Ratio for 2014 is 0.74. When you add in cash flow after dividends, the ratio becomes 2.77. This suggests that cash flow is important for the company to meet current liabilities.

The Debt Ratio is good and has always been good. The ratio for 2014 was 1.74. The Leverage and Debt/Equity Ratios are a bit high but quite normal for an industrial stock. For 2014 these ratios were 2.36 and 1.36.

Sound bite for Twitter and StockTwits is: Industrial dividend growth stock doing well. See my spreadsheet at cnr.htm.

This is the first of two parts. The second part will be posted on Wednesday, February 11, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Canadian National Railway Company and its operating railway subsidiaries, spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key metropolitan areas of Toronto, Buffalo, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, St. Louis, and Jackson, Miss., with connections to all points in North America. Its web site is here CNR.

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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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