Canadian National Railway: My Top Railroad For Dividend Growth Investors

Core Viewpoint - Canadian National Railway Company (CNI) is highlighted as a top choice for dividend-focused investors due to its consistent performance, long dividend growth streak, and stability during market volatility [14][18]. Company Overview - Canadian National operates the largest rail network in Canada and one of the largest in the U.S., covering nearly 20,000 miles and providing essential services with a diversified cargo base [3]. - The company has an industry-leading operating ratio, although it saw a slight increase in Q1 2024 [3]. Financial Metrics - Revenue growth rates for Canadian National are as follows: - 10-Year CAGR: 4% - 5-Year CAGR: 3% - 3-Year CAGR: 7% - Year-over-Year: -5% [6]. - Profitability metrics indicate stable performance: - ROE (10Y avg.): 20% - ROIC (10Y avg.): 14% [6]. - Canadian National's P/E Non-GAAP (TTM) is 22.4, which is below its 5-Year average of 23.2, indicating potential undervaluation [7][12]. Dividend Analysis - Canadian National has a 27-year streak of dividend growth, with a forward yield of 2.08% and a 5-Year CAGR of 9.98% [10]. - The payout ratio stands at 44.6%, reflecting a balanced approach to returning capital to shareholders [10]. Valuation and Price Target - The current price of Canadian National is $120.00, with an estimated EPS of $5.83, suggesting a fair value of $131.51, indicating it is approximately 8.75% undervalued [9][12][17]. - Analysts have a price target of $134.62, suggesting a potential upside of around 12% [12]. Investment Thesis - Canadian National is positioned as a solid option for dividend-focused investors, outperforming peers like Union Pacific and CSX in terms of stability and dividend growth [14][18].