Investigating the Dividend Performance of Canadian National Railway Co
Canadian National Railway Co (CNI, Financial) recently announced a dividend of $0.79 per share, payable on 2023-12-28, with the ex-dividend date set for 2023-12-06. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Canadian National Railway Co's dividend performance and assess its sustainability.
What Does Canadian National Railway Co Do?
Canadian National Railway Co's railway spans Canada from coast to coast and extends through Chicago to the Gulf of Mexico. In 2022, CN generated roughly CAD 17.1 billion in revenue by hauling intermodal containers (29% of consolidated revenue), petroleum and chemicals (19%), grain and fertilizers (16%), forest products (12%), metals and mining (11%), automotive shipments (5%), and coal (5%). Other items constitute the remaining revenue.
A Glimpse at Canadian National Railway Co's Dividend History
Canadian National Railway Co has maintained a consistent dividend payment record since 1996. Dividends are currently distributed on a quarterly basis. Canadian National Railway Co has increased its dividend each year since 1996. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 27 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Canadian National Railway Co's Dividend Yield and Growth
As of today, Canadian National Railway Co currently has a 12-month trailing dividend yield of 1.96% and a 12-month forward dividend yield of 1.96%. This suggests an expectation of the same dividend payments over the next 12 months.
Over the past three years, Canadian National Railway Co's annual dividend growth rate was 10.90%. Extended to a five-year horizon, this rate increased to 11.60% per year. And over the past decade, Canadian National Railway Co's annual dividends per share growth rate stands at an impressive 14.40%.
Based on Canadian National Railway Co's dividend yield and five-year growth rate, the 5-year yield on cost of Canadian National Railway Co stock as of today is approximately 3.39%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Canadian National Railway Co's dividend payout ratio is 0.42.
Canadian National Railway Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Canadian National Railway Co's profitability 9 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Canadian National Railway Co's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Canadian National Railway Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Canadian National Railway Co's revenue has increased by approximately 6.40% per year on average, a rate that outperforms approximately 52.55% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Canadian National Railway Co's earnings increased by approximately 8.80% per year on average, a rate that outperforms approximately 46.42% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 6.30%, which outperforms approximately 44.96% of global competitors.
Next Steps
Considering Canadian National Railway Co's consistent dividend payments, robust dividend growth rate, moderate payout ratio, high profitability, and strong growth metrics, the company presents an attractive profile for value investors focused on dividend income. The data indicates that Canadian National Railway Co is not only rewarding shareholders with regular dividends but is also positioned to sustain and potentially increase these dividends in the future. Investors considering adding a stable dividend-paying stock to their portfolios might find Canadian National Railway Co to be a compelling option.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
