Is it a good company at a reasonable price? I do not buy companies with dividend yields less than 1% as it takes too long for them to pay a good dividend yield on your original stock price. Not only is the dividend yield below 1%, the company has not increased the dividend since 2021. At this point I am personally glad that I went with CNR rather than this this stock. However, the total return on this stock has been good over the years. My stock testing is putting this stock price as expensive, however, the P/S Ratio test does say it is reasonable, but above the median.
I do not own this stock of Canadian Pacific Kansas City Ltd (TSX-CP, NYSE-CP). It is a stock I held from 1987 to 1999 so I am following it. I also held it 2006 to 2011. I decided in 2011 to have only one railway stock and chose CNR as my railway stock.
When I was updating my spreadsheet, I noticed that they have not increased their dividends since 2021 and the dividend yield is very low at just 0.66%.
The current dividend yield is low with dividend growth stopped. The current dividend yield is low (below 2%) at 0.66%. The 5, 10 and historical median dividend yields are also low at 0.81%, 0.89% and 1.21%. The dividend growth has stopped in 2021. However, analysts expect the dividends to increase this year.
If you had invested in this company in December 2014, for $1,029.25 you would have bought 23 shares at $44.75 per share. In December 2024, after 10 years you would have received $134.55 in dividends. The stock would be worth $2,393.84. Your total return would have been $2,528.39. This would be a total return of 9.66% per year with 8.81% from capital gain and 0.85% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $44.75 | $1,029.25 | 23 | 10 | $134.55 | $2,393.84 | $2,528.39 |
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is good at 19% with 5 year coverage at 19%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is good at 18% with 5 year coverage at 20%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 13% with 5 year coverage at 17%. The DPR for 2024 for Free Cash Flow (FCF 1) is good at 29% with 5 year coverage at 29%. The DPR for 2024 for Free Cash Flow (FCF 2, given by the company) is good at 26% with 5 year coverage at 29%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 19.10% | 18.89% |
| AEPS | 17.88% | 19.50% |
| CFPS | 13.49% | 16.76% |
| FCF 1 | 29.01% | 29.01% |
| FCF 2 | 26.38% | 29.43% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.20 and currently at 0.18. The Liquidity Ratio for 2024 is too low at 0.60 and 0.60 currently. If you added in Cash Flow after dividends, the ratios are still low at 1.40 and currently fine at 1.62. The Debt Ratio for 2024 is good at 2.26 and 2.26 currently. The Leverage and Debt/Equity Ratios for 2024 are good at 1.83 and 0.81 and currently at 1.83 and 0.81.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.20 | 0.18 |
| Intang/GW | 0.23 | 0.21 |
| Liquidity | 0.60 | 0.60 |
| Liq. + CF | 1.40 | 1.62 |
| Debt Ratio | 2.26 | 2.26 |
| Leverage | 1.83 | 1.83 |
| D/E Ratio | 0.81 | 0.81 |
The Total Return per year is shown below for years of 5 to 36 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 5.12% | 10.41% | 9.47% | 0.95% |
| 2014 | 10 | 10.50% | 9.66% | 8.81% | 0.85% |
| 2009 | 15 | 9.38% | 17.28% | 15.91% | 1.37% |
| 2004 | 20 | 10.46% | 14.83% | 13.58% | 1.26% |
| 1999 | 25 | 11.00% | 16.23% | 14.67% | 1.57% |
| 1994 | 30 | 11.14% | 15.40% | 13.92% | 1.48% |
| 1989 | 35 | 6.50% | 12.32% | 11.22% | 1.11% |
| 1984 | 36 | 6.93% | 12.83% | 11.54% | 1.28% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 22.53, 24.53 and 26.52. The corresponding 10 year ratios are 18.00, 20.82 and 24.17. The corresponding historical ratios are 13.06, 16.55 and 17.37. The current P/E Ratio is 22.91 based on a stock price of $110.58 and EPS estimate for 2025 of $4.94. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 23.21, 24.95 and 26.76. The corresponding 10 year ratios are 17.47, 22.16 and 25.68. The current P/AEPS estimate for 2025 is 22.38 based on AEPS for 2025 of $4.94 and a stock price of $110.58. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $75.51. The 10-year low, median, and high median Price/Graham Price Ratios are 1.62, 1.85 and 2.07. The current P/GP Ratio is 1.46 based on a stock price of $110.58. This ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 5.05. The current P/B Ratio is 2.16 based on a Book Value of $47,892M, Book Value per Share of $51.30 and a stock price of $110.58. The current ratio is 57% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have a Book Value per Share estimate for 2025 of $53.60. This estimate implies a ratio of 2.06 and a Book Value of $50,036M with a stock price of $110.58. This ratio is 59% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 15.42. The current P/CF Ratio is 15.96 based on Cash Flow per Share estimate for 2025 of $6.93, Cash Flow of $6,468M and a stock price of $110.58. The current ratio is 3.5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 1.21%. The current dividend yield is 0.69% based on a dividend of $0.76 and stock price of $110.58. The current dividend yield is 43% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 0.89%. The current dividend yield is 0.69% based on a dividend of $0.76 and stock price of $110.58. The current dividend yield is 23% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 6.25. The current P/S Ratio is 6.55 based on Revenue estimate for 2025 of $15,749M, Revenue per Share of $16.87 and a stock price of $110.58. The current ratio is 4.9% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably on the expensive side, but it could be reasonable. The dividend yield tests say that the stock price is relatively expensive. However, this test is not a particularly good one when dividends are flat. On the other hand, when a company stops raising their dividends, that is not a good sign. The P/S Ratio test says it is reasonable, but above the median. The rest of the testing go from cheap to reasonable but above the median.
When I look at analysts’ recommendations, I find Strong Buy (16), Buy (7), Hold (8) and Sell (1). The consensus would be a Buy. The 12 month stock price consensus is $123.50 with a high of $138.00 and low of $70.00. The consensus 12 month stock price of $12.50 implies a total return of 12.37% with 11.68% from capital gains and 0.69% from dividends.
All the analysts’ recommendations on Stock Chase in 2025 are a buy. Stock Chase gives this company 5 stars out of 5. Amy Legate-Wolfe on Motley Fool reviews both CNR and CP and says the choice between the two depend on your investment goals. Jitendra Parashar on Motley Fool thinks this is a blue chip stock for long term investors. The company put out a Press Release about their fourth quarter of 2024.
There is an article Zacks via Yahoo Finance.
Canadian Pacific Kansas City is a Class-1 railroad operating on track that spans across most of Canada and into parts of the Midwestern and Northeastern United States and down through Texas, the Gulf of Mexico, and into Mexico. Its web site is here Canadian Pacific Kansas City Ltd. There is also an article about this company at Insider Money via Yahoo Finance. Simply Wall Street gives this stock 2 and one half stars out of 5. They list one warning of has a high level of debt.
The last stock I wrote about was about was Canadian National Railway (TSX-CNR, NYSE-CNI) ... learn more. The next stock I will write about will be Allied Properties Real Estate Investment Trust (TSX-AP.UN, OTC-APYRF) ... learn more on Wednesday, February 12, 2025 around 5 pm. Tomorrow on my other blog I will write about Melanie Phillips.... learn more on Tuesday, February 11, 2025 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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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