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CSX Continues to Run on the Share Buyback Tracks

How Did CSX Perform in 1Q16?

(Continued from Prior Part)

Market capitalization

The ordinary shares of CSX are listed on the NASDAQ under the ticker CSX. In February 2016, the company became a component of the NASDAQ 100. This index is made up of the 100 largest non-financial stocks listed on the NASDAQ stock exchange. On April 15, CSX had a market capitalization of $24.6 billion and the closing price of its equity was $25.9 per share.

CSX’s share buyback program

CSX rewards its shareholders through dividends and stock repurchases. In April 2015, the company announced a new $2.0 billion stock buyback program. It expects stock buybacks under this program to be completed in April 2017. The company has the practice of retiring shares immediately on re-purchase.

In the first quarter of 2016, CSX repurchased shares worth approximately $249.0 million. This was roughly double the 1Q15 share repurchase of $127.0 million. By looking at the above graph, you can observe that CSX’s share repurchases have gone up sharply in the second half of 2015. In 2015 alone, the company bought back shares worth $804.0 million, up by 56% from the previous year. This might be due to investors’ concerns regarding the prospects of freight business amid the sluggish growth of the US economy and the soft commodity price environment.

CSX’s dividend

The company declared a cash dividend of $0.18 per share in the first quarter of 2016, up by 12.5% from $0.16 per share in the corresponding period last year. Based on 1Q16 dividends, this translates into a dividend yield of 3.0%. CSX’s dividend yield is relatively better when compared with its peers, which have the following dividend yields:

  • Norfolk Southern (NSC): 5%

  • Kansas City Southern (KSU): 1.2%

  • Union Pacific (UNP): 2.8%

  • Canadian Pacific Railway (CP): 1.1%

  • Canadian National Railway (CNI): 2.5%

All the US originated Class I railroads make up nearly 4% of the portfolio holdings of the iShares Global Industrials ETF (EXI).

In the next article, we’ll look at CSX’s overall outlook for 2016 and beyond.

Continue to Next Part

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