Canadian National Dividend Increase

Canadian National Railway (CNR.TO) (CNI) announced that its board of directors had approved increasing its dividends by 25%. The quarterly cash dividend will increase from $0.25 to $0.3125 per share payable on Mar 31, 2015 for shareholders on record as of Mar 10 & ex-div date of Mar 6. Yield going forward based on today’s closing price is 1.47%.

From the earnings release statement:

Fourth-quarter and full-year 2014 financial highlights

  • Fourth-quarter 2014 net income was C$844 million versus net income of C$635 million for the same period of 2013.
  • Q4-2014 diluted earnings per share (EPS) increased 36 per cent to C$1.03 from diluted EPS of C$0.76 for the final quarter of 2013.
  • Full-year 2014 net income was C$3,167 million, or C$3.85 per diluted share, compared with net income of C$2,612 million, or C$3.09 per diluted share, for 2013.
  • Full-year 2014 adjusted diluted EPS increased 23 per cent to C$3.76, with adjusted 2014 net income of C$3,095 millionversus adjusted net income of C$2,582 million in 2013. (1)
  • Full-year 2014 volumes reached record levels, with carloadings up eight per cent and revenue ton-miles up 10 per cent.
  • Q4-2014 operating income increased 30 per cent to C$1,260 million, and full-year 2014 operating income rose 19 per cent to C$4,624 million.
  • The fourth-quarter 2014 operating ratio improved by 4.1 points to 60.7 per cent; the full-year 2014 operating ratio improved by 1.5 points to 61.9 per cent.
  • 2014 free cash flow totalled C$2,220 million, compared with free cash flow of C$1,623 million for 2013. (1)

Claude Mongeau, president and chief executive officer, said: “CN is optimistic about its future prospects. The Company is aiming to deliver double-digit EPS growth in 2015 over adjusted diluted 2014 EPS of C$3.76. In addition, CN plans to increase its capital spending by roughly C$300 million for a total 2015 investment of approximately C$2.6 billion. Given CN’s strong balance sheet and its solid outlook for earnings and free cash flow generation, I am pleased to announce that the Company’s Board of Directors has approved a 25 per cent increase in CN’s 2015 quarterly common-share dividend. CN has increased its dividend per share by 17 per cent per year on average since its privatization in 1995.

My portfolio consists of 40 shares of CN, which increases my annual dividends from $40 to $50, an increase of $10.

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