Canadian National Railway

Sound bite for Twitter and StockTwits is: Dividend Growth Stock. This stock currently looks like it is selling at a reasonable price. Although the dividend is low the growth is good. I have had this stock for 11 years and I am making a dividend yield of 8.3% on my original stock cost. See my spreadsheet on Canadian National Railway.

I own this stock of Canadian National Railway (TSX-CNR, NYSE-CNI). I am following this stock because I own it. 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.

The dividend yield is low and the dividend growth is good. The current dividend at 2% is higher than the dividend yield generally is. The 5 year median dividend yield is 1.6% and the historical dividend yield is 1.5%. The dividends have grown at 18.3% and 17.5% per year over the past 5 and 10 years. The last dividend increase was in 2016 and it was for 20%.

This stock is considered to be a dividend growth stock. This means it increases it dividends on a regular basis. See my site for information on Dividend Growth Stocks.

The other thing to mention is that this company has good Dividend Payout Ratios. The DPR for EPS for 2015 was 28.5% and its 5 year median is 26%. The DPR for CFPS for 2015 was 18.6% and its 5 year median is 17%.

This company has been buying back its own shares recently. Shares on this company have increased due to Stock Options and decreased due to Buy Backs. The outstanding shares have dropped by 3.1% per year over the past 5 and 10 years. The outstanding shares have decreased every year since 2003. This means that things like EPS may not be as good as they appear. EPS has grown at 14.4% and 12.2% per year over the past 5 and 10 years. Net Income has grown at 11% and 8.6% per year over the past 5 and 10 years.

I get 5 year low, median and high median Price/Earnings per Share Ratios of 14.67, 17.28 and 19.90. The corresponding 10 years Ratios are lower at 12.00, 13.55 and 14.91. The current P/E Ratio is 16.54. This is based on a stock price of $76.24 and 2016 EPS estimate of $4.61. This stock price testing suggests that the stock price is reasonable and around the median.

I get a Graham Price of $44.38. The 10 year low, median and high median Price/Graham Price Ratios are 1.15, 1.29 and 1.43. The current P/GP Ratio is 1.75. This stock price testing suggests that the stock price is expensive. The problem is that the stock price has been increasing faster than the book value for this stock.

The current Dividend Yield is 1.97% based on a stock price of $76.24 and dividends of $1.50. This is some 34% higher than the historical median dividend yield and this suggests a reasonable to good stock price. However, the Dividend Payout Ratios have been steadily increasing since this company went public in 1995.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Sell recommendations. Most the recommendations are a Hold and the consensus recommendations is a Hold. The 12 month stock price is $78.08. This implies a total return of 4.38% with 1.97% from dividends and 2.41% from capital gains.

In this news CNR talks about it plans to spend on infrastructure. Joseph Solitro of Motley Fool talks about why you should buy CNR. Analysts' talk about this stock on Stock Chase.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see those blog entries here and here.

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 Canadian National Railway.

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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