Our analysis is based on comparing Canadian Pacific Railway Ltd. with the following peers – Genesee & Wyoming, Inc. Class A, Norfolk Southern Corporation, Kansas City Southern, CSX Corporation, Canadian National Railway Company and Union Pacific Corporation (GWR-US, NSC-US, KSU-US, CSX-US, CNI-US and UNP-US).
Canadian Pacific Railway Ltd.’s dividend yield is 1.00 percent and its dividend payout is 17.41 percent. This compares to a peer average dividend yield of 1.54 percent and a payout level of 35.95 percent. This relatively lagging dividend performance could spur some dividend action going forward – as long as the company’s relatively strong dividend quality score of 67 out of a possible score of 100 looks sustainable.
Dividend Quality Overview
- Over the last twelve months (prior to December 31, 2016), CP-US paid a high quality dividend, which represents a yield of 0.91% 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), CP-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 8.19x), investing cash flow (coverage of -4.19x), issuance cash flow (coverage of -4.85x) and twelve-month prior cash (coverage of 2.43x), for a total dividend coverage of 1.64x.
CP-US‘s issuance cash flow includes outflows from net debt repayment (coverage of -0.18x) and net share buybacks (coverage of -4.66x). Thus, the total coverage including share buybacks is 6.30x, 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 (%)||1.27||0.89||0.69||0.91||0.92||1|
|Dividend Payout (%)||48.39||28.23||16.55||16.67||17.41||17.41|
A complete list of metrics and analysis is available on the company page.
Canadian Pacific Railway Ltd. engages in the operation of transcontinental railway. It provides logistics and supply chain expertise. The company offers rail and intermodal transportation services to business centre of Canada from Montreal, Quebec, to Vancouver, British Columbia, and the U.S. Northeast and Midwest regions. It transports bulk commodities, merchandise freight and intermodal traffic. The company was founded in 1881 and is headquartered in Calgary, Canada.
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