Business & Investment

Why this railroad stock is suitable for all portfolios

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Railroad stocks are some of the best long-term investments you can add to your portfolio. Railroads are some of the most defensive options on the market. In addition, railroads are also known to provide a growing source of income. But which railroad stock should you consider buying?

Let’s see today Canadian National Railway (TSX: CNR)(NYSE: CNI)..

The charm of railway stocks

Why are railroad stocks like the Canadian National Railway so attractive? There are some compelling reasons to consider, but it ultimately results in cargo.

Railroads operate large networks spanning thousands of kilometers across the continent. For the Canadian National Railway, the railroad operates one of the largest networks on the continent. Incredibly, the Canadian National Railway’s network is over 32,000 kilometers long, from coast to coast, and from the Midwest to the Gulf region. This makes the Canadian National Railway the only railroad on the continent with direct access to three separate coasts.

The importance of access cannot be underestimated. Remember that the rail network was built well before the surrounding community. It’s almost impossible to even consider potential competitors to challenge the Canadian National Railways. Its competitors will have to pay decades of construction and billions of dollars.

The same is true for possible mergers. Following a series of mergers in the 90’s, strict standards were applied to approve mergers related to large railroads. In fact, the Canadian National Railway recently rejected the offer to buy a US railroad.

The Canadian National Railway’s envy network is important because of the sheer volume and variety of cargo transported. Cargo consists of everything from auto parts and raw materials to wheat, crude oil and finished products.

In total, railroads carry over $ 250 billion in freight each year. This factor alone makes rail stock an integral part of the North American economy as a whole.

Strong results.Growing Income Producer

The Canadian National reported its third quarter results last week. The result is, in a nutshell, Impressive.. During the quarter, Canadian National’s revenue surged from $ 182 million to $ 3,591 million. In addition, diluted EPS showed a significant increase of 72% during the quarter, at $ 2.37 per diluted share.

Finally, note that the results reflect the end of September. The impact of inflation costs seen in recent weeks could still spill over to the Canadian National Railway in the next quarter. In other words, great results from this past quarter could be a preamble to further profits in future quarters.

Looking at income, the Canadian National will offer investors quarterly dividends with a yield of 1.47%.At least initially, it may not sound like a great-earning stock, as there are others. Higher salary yield can be found.

Fortunately, there are some aspects of the Canadian National Railway’s dividends that are overlooked. When future investors take growth into account, the potential rise over the last decade is in the double-digit territory.

Even better, the Canadian National has an established precedent of offering a handsome annual uptick for its dividends, dating back more than a decade. If the existing rhythm continues, future investors can expect a juicy hike sometime early next year.

Final Thought: Should I Buy This Railroad Stock?

The Canadian National Railway boasts a solid earnings history. Dividend increase, And arguably has one of the largest defensive moats on the market, what do you like more? In my opinion, the Canadian National is the perfect railroad stock to buy now and hold for decades.

Why this railroad stock is suitable for all portfolios Why this railroad stock is suitable for all portfolios

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