Get On Track With CN Rail (CNI)

Canadian National Railway exhibited its force in the railroads market with the financial results released today.

The company said that it will be raising its dividend by 29%, citing fourth quarter profits of $499 million and 2006 revenues of $2.09 billion.

The Case for Canadian National

Net income for 2006, amounted to $3.91 per diluted share, up from $2.77 per share or $1.6 billion in 2005. Fourth-quarter profit amounted to 95 cents per share, compared to 78 cents per share or $430 million in the prior year.

The Montreal-based company also reported record annual revenues of $7.72 billion for 2006, up from $7.24 billion in 2005. In the fourth quarter, revenues rose to $1.94 billion from $1.89 billion.

CNI benefited from strength in coal, grain and fertilizers, intermodal, petroleum and chemicals, and metals and minerals, in 2006. However, they were also affected by the a $255-million translation impact citing a stronger Canadian dollar and its impact on U.S. dollar revenues.

One of the key things that I focus on here at Dividend Money is Dividend Growth! Canadian National come through, although not consistently, in that department, hiking its cash dividend 11 times since its initial public offering of shares in 1995.

The last dividend increase was announced in January 2005. I would like to see a more consistent track record of increasing dividends, but one can’t argue with the recent capital gain returns.

Quick Facts

Profit Margin (ttm): 26.35%
Operating Margin (ttm): 39.09%
Management Effectiveness
Return on Assets (ttm): 8.32%
Return on Equity (ttm): 21.86%

Take A look at the Chart

Canadian National Railway CNI

Source: Globe and Mail

Leave a Reply

Your email address will not be published. Required fields are marked *