Canadian National Railway *New Buy*

Hey folks after taking a week off I am back with a new post. I added a new stock to my portfolio and thought I would share it with you. The stock was purchased in my Tax Free Savings Account (TFSA).

CN_med_red

On September 7th I started a position in Canadian National Railway. CN has been on my radar for awhile now, as a dividend investor one thing that attracted me to the company is their streak of 21 years of raising their dividend and that doesn’t appear to be ending anytime soon. CN is also one of the top railroads in North America if not the best.

What Does CN Do?

Canadian National Railway Company is engaged in the rail and related transportation business. The Company’s network of approximately 20,000 route miles of track spans Canada and mid-America, connecting approximately three coasts, including the Atlantic, the Pacific and the Gulf of Mexico and serving the cities and ports of Vancouver, Prince Rupert (British Columbia), Montreal, Halifax, New Orleans, and Mobile (Alabama), and the metropolitan areas of Toronto, Edmonton, Winnipeg, Calgary, Chicago, Memphis, Detroit, Duluth (Minnesota)/Superior (Wisconsin), and Jackson (Mississippi), with connections to all points in North America. Its network and connections to all Class I railroads provide its customers access to the three North American Free Trade Agreement nations. It carries over 300 million tons of cargo, serving exporters, importers, retailers, farmers and manufacturers. Its freight includes seven commodity representing a portfolio of goods.

(Source: Google Finance)

I created a few charts for this purchase hope you like them. I chose in my opinion important stats which the company itself views as important metrics.

Let’s get to the charts shall we πŸ™‚

 

Operating Ratio

The operating ratio isΒ a company’s operatingΒ expenses as a percentage of revenue. So the lower the better and CN’s ratio has been getting lower and lower.

 

Revenue

 

Revenue By Commodity Group

 

Operating Income

CN’s operating income continues to raise impressively.

 

Free Cash Flow

CN’s free cash flow continues to be very impressive. Back in 2013 the company redefined its free cash flow measure as the difference net cash provided by operating activities and net cash used in investing activities; adjusted for changes in restricted cash and cash equivalents and the impact of major acquisitions, if any.

(Above info was found in the 2013 company annual report)

 

Geographic Exposure

 

Dividend

Above I mentioned that CN has raised it’s dividend for the last 21 years, but if you look at the chart it shows that in 2012 it was $1.50 per share and the next it dropped to $0.86 so what gives you say. Well in 2013 CN split it’s stock 2 to 1 so that is why the chart looks a little weird they did raise the dividend in 2013. CN currently pays a quarterly dividend of $0.4125, and has a yield of 1.64%.

Transaction Details

On September 7th I purchased 15 shares at a price of $99.72 with a $9.99 trading fee my purchase cost me $1,505.79.

So with my 15 shares CN will pay me $24.76 annually.

 

So guys what do you think of my purchase? Do you own CN? Sorry for all the charts thought I would provide you with a visual of some of the company’s metrics. Please feel free to comment below I enjoy reading them.

Thanks for reading

Matthew

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17 thoughts on “Canadian National Railway *New Buy*

  1. Dear Matthew,

    Like you, I’ve been watching CNR (for at least a year) and on September 14, I purchased shares in my non-registered account (no cash in my RRSP or TFSA, not that it matters as I’m slowly cashing out my RRSP). I will continue to grow my position in the future.

    I was holding off for so long because of the low dividend (we’re building up our passive income for FI/RE), however, they increased it significantly this year and have stated that they want to continue to do so in the future.

    I read another book this week and it’s now in my top 5 favourites… The Strategic Dividend Investor by Daniel Peris.

    Besos Sarah.

    Liked by 1 person

    1. Thanks Sarah CN has been raising the dividend for 21 years so the yield can be a little deceiving. I will be planning on buying more shares in the future. I will have to check out that book. Thank you for sharing.

      Like

  2. CN had been on my radar for quite sometime now, but I still haven’t been able to pull the trigger. The Transportation sector is a great way to diversify your portfolio. I am a bit underweighted in this sector and waiting for my opportunity to jump in.

    Liked by 1 person

      1. @Sara, I had finally done something about CNR. I’d sold three put options that’ll give the purchaser of my option the right to sell me 300 shares of CNR @ $90/share anytime from now till Jan 2019. I’ll be able to buy it cheaper than the current price of about $101/share if the options were executed. If not, I get to keep the option premium (about $1,000) for free. I win both ways :).

        Liked by 1 person

      2. Dear Leo,

        Thanks for responding.

        I’ll be sure to watch the share price and if it goes as low as you’re “betting” (not sure if that’s the right word) then I’ll definitely buy more. I’m in it for the long haul.

        I really need to figure out this whole “put options” thing-a-ma-jing.

        Besos Sarah.

        Like

  3. Absolutely massive company, thanks for sharing. I have heard of them quite frequently but have never taken the dive into buying them. Maybe one day in the not too distant future I will look at them. Cheers

    Liked by 1 person

  4. I am not getting enough time to watch the shares and buy at the right time. Usually I save some money and then buy the stock I was thinking to buy at market price. disadvantage of not working in front of a computer all day…

    Liked by 1 person

    1. Thanks for stopping by, I am with you I don’t get a lot of time to watch stock prices as I am too busy during the day. I usually get maybe an hour and a half at the beginning.

      Like

  5. Very nice purchase! Love that their revenue streams are diversified and they are not married to one type of income (such as just coal or petroleum). It will help protect against slow-downs in one of those sectors. Those metrics are looking great by the way and the company appears to be trending in the right direction.

    Bert

    Liked by 1 person

    1. Thanks for stopping by Bert. CN’s revenue is very diversified that is very positive. So far the company is on a roll and this will allow them to continue to raise their dividend.

      Like

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