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Why Canadian National (CNI) is a Great Dividend Stock Right Now
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Canadian National in Focus
Canadian National (CNI - Free Report) is headquartered in Montreal, and is in the Transportation sector. The stock has seen a price change of -9.65% since the start of the year. The railroad is paying out a dividend of $0.58 per share at the moment, with a dividend yield of 2.09% compared to the Transportation - Rail industry's yield of 0.87% and the S&P 500's yield of 1.74%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.32 is up 18.1% from last year. In the past five-year period, Canadian National has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.76%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. CN's current payout ratio is 48%. This means it paid out 48% of its trailing 12-month EPS as dividend.
CNI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $5.44 per share, with earnings expected to increase 14.77% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, CNI is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Why Canadian National (CNI) is a Great Dividend Stock Right Now
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Canadian National in Focus
Canadian National (CNI - Free Report) is headquartered in Montreal, and is in the Transportation sector. The stock has seen a price change of -9.65% since the start of the year. The railroad is paying out a dividend of $0.58 per share at the moment, with a dividend yield of 2.09% compared to the Transportation - Rail industry's yield of 0.87% and the S&P 500's yield of 1.74%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.32 is up 18.1% from last year. In the past five-year period, Canadian National has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.76%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. CN's current payout ratio is 48%. This means it paid out 48% of its trailing 12-month EPS as dividend.
CNI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $5.44 per share, with earnings expected to increase 14.77% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, CNI is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).