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Why Canadian National (CNI) is a Top Dividend Stock for Your Portfolio
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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
Headquartered in Montreal, Canadian National (CNI - Free Report) is a Transportation stock that has seen a price change of -2.88% so far this year. The railroad is currently shelling out a dividend of $1.17 per share, with a dividend yield of 2.01%. This compares to the Transportation - Rail industry's yield of 1.41% and the S&P 500's yield of 1.76%.
Looking at dividend growth, the company's current annualized dividend of $2.32 is up 3.1% from last year. Over the last 5 years, Canadian National has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.73%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, CN's payout ratio is 38%, which means it paid out 38% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CNI expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $5.84 per share, representing a year-over-year earnings growth rate of 1.74%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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 Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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
Headquartered in Montreal, Canadian National (CNI - Free Report) is a Transportation stock that has seen a price change of -2.88% so far this year. The railroad is currently shelling out a dividend of $1.17 per share, with a dividend yield of 2.01%. This compares to the Transportation - Rail industry's yield of 1.41% and the S&P 500's yield of 1.76%.
Looking at dividend growth, the company's current annualized dividend of $2.32 is up 3.1% from last year. Over the last 5 years, Canadian National has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.73%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, CN's payout ratio is 38%, which means it paid out 38% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CNI expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $5.84 per share, representing a year-over-year earnings growth rate of 1.74%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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).