Canadian National Railway's (TSE:CNR) Shareholders Will Receive A Bigger Dividend Than Last Year
Canadian National Railway Company (TSE:CNR) will increase its dividend on the 28th of March to CA$0.845, which is 7.0% higher than last year's payment from the same period of CA$0.79. This takes the annual payment to 1.9% of the current stock price, which is about average for the industry.
See our latest analysis for Canadian National Railway
Canadian National Railway's Earnings Easily Cover The Distributions
We aren't too impressed by dividend yields unless they can be sustained over time. However, Canadian National Railway's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.
Over the next year, EPS is forecast to expand by 13.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 36% by next year, which is in a pretty sustainable range.
Canadian National Railway Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was CA$0.86 in 2014, and the most recent fiscal year payment was CA$3.16. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
Canadian National Railway Could Grow Its Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Canadian National Railway has been growing its earnings per share at 8.2% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
Canadian National Railway Looks Like A Great Dividend Stock
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Canadian National Railway that investors need to be conscious of moving forward. Is Canadian National Railway not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
