Our analysis is based on comparing Canadian National Railway Co. with the following peers – Canadian Pacific Railway Limited, Norfolk Southern Corporation, Kansas City Southern, CSX Corporation, Union Pacific Corporation and Genesee & Wyoming, Inc. Class A (CP-US, NSC-US, KSU-US, CSX-US, UNP-US and GWR-US).
Dividend Quality Overview
- Over the last twelve months (prior to December 31, 2016), CNI-US paid a high quality dividend, which represents a yield of 1.61% at the current price.
- Dividends paid during each of the last five years were consistently of high quality.
- The ending cash balance is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
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Over the last twelve months (prior to December 31, 2016), CNI-US paid a high quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 4.49x), investing cash flow (coverage of -2.31x), issuance cash flow (coverage of -1.19x) and twelve-month prior cash (coverage of 0.56x), for a total dividend coverage of 1.57x.
CNI-US‘s issuance cash flow includes outflows from net share buybacks (coverage of -1.73x). Thus, the total coverage including share buybacks is 3.30x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||1.68||1.48||1.32||1.78||1.7||1.63|
|Dividend Payout (%)||24.51||27.83||25.97||28.47||32.12||32.12|
A complete list of metrics and analysis is available on the company page.
Canadian National Railway Co. is engaged in the rail and related transportation business. The company offers integrated transportation services: rail, intermodal, trucking, freight forwarding, warehousing, and distribution. It offers movement of a diversified and balanced portfolio of goods including petroleum and chemicals, grain and fertilizers, coal, metals and minerals, forest products, intermodal and automotive. The company operates in three geographic regions: Western, Eastern and Southern. Canadian National Railway was founded on June 6, 1919 and is headquartered in Montreal, Canada.
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