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Hop Aboard Canadian National Railway

Having celebrated its 100th anniversary in 2019, Canadian National Railway (CNI) has evolved from a collection of various railways into a major transportation and logistics company with a network that reaches from the Pacific to the Atlantic to the Gulf of Mexico, notes Ingrid Hendershot, president of Hendershot Investments Inc., an investment management firm. She is also the editor of Hendershot Investments a newsletter designed for clients.

“Since de-regulation of the rail industry – first in the United States in 1980 and later in Canada in 1987 and 1996 – the overall rail industry has embarked on a transformational journey with CNI becoming an industry leader in North America. Once a largely Canada-only enterprise, CNI’s operations today transport freight traffic over an approximately 20,000 mile rail network that handles more than C$250 billion of goods annually with over 25,000 employees.

Operating the largest rail network in Canada and the only transcontinental network in North America, the company serves close to 75% of the U.S. population and all major Canadian markets. CNI carries more than 300 million tons of cargo for exporters, importers, retailers, farmers and manufacturers. CNI’s freight revenues are derived from seven commodity groups representing a diversified and balanced portfolio of goods transported between a wide range of origins and destinations. This product and geographic diversity better positions the company to face economic fluctuations and enhances its potential for growth opportunities. Canadian National Railway leads the North American rail industry in terms of efficiency and operating margins. Scheduled Railroading and Supply Chain Collaboration Agreements with ports, terminal operators and customers helps Canadian National Railway drive efficiencies across the entire supply chain.

Profitable Operations

With a business model focused on cost efficiency and asset utilization, CNI generates highly profitable operations. Net profit margins have approximated 26% or better over the last five years. Over the same time period, the company has invested nearly $14 billion in capital expenditures to expand their network and build for the future.

CNI is committed to long-term shareholder value creation through strong financial performance, dividend payments and share repurchases. The railroad is loaded with strong free cash flows, which have totaled more than $12 billion over the last five years. Canadian National has boosted its dividend for 23 straight years with the dividend compounding at a 16% annual growth rate since 1995. In addition, Canadian National Railway has repurchased C$9 billion of its common stock over the last five years.

Long-term investors should hop aboard Canadian National Railway, a HI-quality industry leader generating solid growth and profitable operations while also rewarding shareholders with growing dividends and share buybacks. Buy.”

Editor’s Note: Hendershot Investments, is a quarterly investment newsletter, 1 year, $50, designed for long-term investors seeking capital growth at reasonable valuations. Founded in 1994, Hendershot Investments Inc. provides investment management, financial planning and a high level of personal service for those with $250,000 or more in investable assets. For more information on the services offered by Hendershot Investments visit www.hendershotinvestments.com.

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