After Stockaholic's analysis and talk about Bombardier being a good pick, I figured I'd follow up by analyzing a couple of Railway stocks. In the next two weeks I will be comparing the Canadian National Railway (TSE: CNR ) and Canadian Pacific Railway (TSE: CP) to see which one is currently the better Dividend Based Stock. This week, we will be looking at Canadian National Railway (TSE: CNR)
About the company:
Here is Google Finance's description of what Canadian National Railway does, which can be found on their website here
"Canadian National Railway Company (CN) directly and through its subsidiaries, is engaged in the rail and related transportation business. CN’s network of approximately 20,400 route miles of track spans Canada and mid-America, connecting three coasts: the Atlantic, the Pacific and the Gulf of Mexico. The Company’s network, in addition to co-production arrangements, routing protocols, marketing alliances and interline agreements, provide CN customers access to all three North American Free Trade Agreement (NAFTA) nations. CN’s freight revenues are derived from the movement of a portfolio of goods, including petroleum and chemicals, grain and fertilizers, coal, metals and minerals, forest products, intermodal and automotive."
What the professionals think:
| Source |
Value |
Score |
| Is it a Dividend Aristocrat: |
Yes |
0.5 |
| Is it a Dividend Achiever: |
Yes |
0.5 |
| Globe Investor Rating: |
4 Stars |
0.5 |
Score: 1.5/1.5
Dividend performance:
Dividend Information acquired at DividendInvenstors.ca
| Measurement |
Value |
Measurement |
Value |
| Dividend Rate: |
$0.92 |
Quarterly Dividend Rate: |
$0.23 |
| Current Dividend Yield: |
1.70% |
5 yr. Avg. Dividend Yield: |
1.30% |
| 3 yr. Dividend Growth: |
22.17% |
5 yr. Dividend Growth: |
22.94% |
| Payout Ratio: |
21.00% |
5 yr. Historic Payout Ratio: |
20.00% |
| Measurement |
Value |
Score |
| Is current Yield > Avg Yield: |
Yes |
1 |
| > 10% dividend growth per year: |
Yes |
1 |
| > 5 yrs of dividend growth: |
Yes |
1 |
| payout ratio <= historic payout ratio: |
|
0 |
Score: 3.0/4.0
Fundamentals:
All fundamentals based on 2007 annual report, and the latest market close share price of $53.89
| Measurement |
Value |
Score |
| Earnings per share (EPS): |
4.56 |
- |
| Is EPS growing: |
Yes |
0.5 |
| Net Profit Margin: |
0.27 |
- |
| Is Net Profit Margin growing: |
Yes |
0.5 |
| Price/Book Ratio (P/B) < 0.80: |
2.51 |
0 |
| Price/Earnings Ratio (P/E) <15: |
11.82 |
0.5 |
| Price/Sales Ratio (P/S) <1.5: |
3.23 |
0 |
| Is the Graham Number > stock price: |
$46.96 |
0 |
Score: 1.5/3.5
Technicals:
Chart Acquired at StockCharts.com
| Measurement |
Value |
Score |
| 200 day Simple Moving Average direction: |
Up |
0.5 |
| Indicators show a good time to buy (MACD, SSTOCH, RSI): |
Yes |
0.5 |
Score: 1.0/1.0
Total Score: 7.0/10
Summary:
So how does CNR stack up as a dividend based investment? coming out with a score of 7.0 out of 10.0 shows that it is a very good investment if you are looking for increasing dividends in the long term. Personally I would like to see the stock price drop below the Graham number of $46.96, and the low dividend yield of 1.7% is another factor. But with a steady dividend growth of 20% per year, both could be easily forgivable. In the end I think CNR is a great opportunity for someone who is looking to add a bit of transportation to their portfolio. Especially since as gas prices go higher and higher, more people and companies will be looking to the railways for cheaper alternatives. This could be a great time to get in on a good solid industry.
What are your thoughts on CNR? please share in the comments below!
Stay tuned for next week, when I do an analysis of Canadian Pacific Railway (TSE: CP).
Recommendation:BUY
