Yahoo Finance Canadian National Railway (TSE:CNR) Is Increasing Its Dividend To CA$0.79
Canadian National Railway Company's (TSE:CNR) periodic dividend will be increasing on the 31st of March to CA$0.79, with investors receiving 7.8% more than last year's CA$0.733. This will take the annual payment to 1.9% of the stock price, which is above what most companies in the industry pay.
Check out our latest analysis for Canadian National Railway
Canadian National Railway's Dividend Is Well Covered By Earnings
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, Canadian National Railway's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share is forecast to rise by 25.1% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 35% by next year, which is in a pretty sustainable range.
Canadian National Railway Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was CA$0.75 in 2013, and the most recent fiscal year payment was CA$2.93. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.
Dividend Growth May Be Hard To Achieve
Investors could be attracted to the stock based on the quality of its payment history. Although it's important to note that Canadian National Railway's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. While growth may be thin on the ground, Canadian National Railway could always pay out a higher proportion of earnings to increase shareholder returns.
Canadian National Railway Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Canadian National Railway is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Canadian National Railway that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
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