Then and Now – Canadian National Railway
Welcome to another Then and Now post, a continuation of my series where I revisit some older blogposts and either rip them to shreds (because my thinking has totally changed on such subjects) or I’ll confirm my position on various personal finance topics or specific stock and ETF investments.
Since it’s been some time that I’ve been running this series, I encourage you to check out some previous posts below:
When I started to own Canadian Apartment REIT and why I still own it.
How long I’ve owned Royal Bank and why.
My 10-year+ ownership in Procter & Gamble.
Why I own CIBC 11+ years later.
My bond-like income from owning Fortis.
Johnson & Johnson – my longest running U.S. stock in my portfolio.
Bell Canada (BCE) is my dependable telco dividend payer!
Bank of Montreal has been a dependable dividend grower with capital gains.
Check out my long-term love for Bank of Nova Scotia
H&R REIT – and why I no longer own it actually!
Enbridge – my first Canadian dividend paying stock and a company I own hundreds of shares in today
Today’s post is about a popular dividend paying stock: Canadian National Railway (CNR).
Then – Canadian National Railway (CNR)
- After buying and pouring lots of money into many other Canadian dividend paying companies in the early days of this blog (2009), companies like Royal Bank, CIBC, BMO, Fortis, and BCE to name a few – I started to expand my search for companies to own beyond financial, utility and telco sectors.
- I’ve always know about “TULF” stocks providing both dividend growth opportunities and capital gains. As a primer:
“T” for telecommunication companies (think Bell, Telus and Rogers)
“U” for utilities (think Fortis, Emera, Algonquin Power, Brookfield Renewable Partners, and others)
“L” for low-yielding dividend growth stocks with growth potential (think Canadian National Railway, Waste Connections, Nutrien, Metro, Alimentation Couche-Tard, Brookfield Asset Management, and others), and last but not least everyone’s sector favourite in Canada for dividends,
“F” for financials (you know the names).
- Around 2015-2016, I was considering adding CNR to the portfolio to help fit the gap in my “L” for lower-yielding but higher growth potential stocks.
- CNR was therefore high on my radar and new RRSP contribution room was coming up soon.
Then – Canadian National Railway (CNR)
- Well, in 2016, with new RRSP contribution room available and money contributed – I finally pulled the trigger and bought some CNR stock. Sure, it wasn’t much – but it was a start.
- With a railway network that spans some 20,000 miles, CNR has a foothold on the transportation business. Essentially, if you need to ship something across our continent, it’s probably coming via use of CN rail.
- CNR has been on my explict “buy” list for a few years now: 5 stocks I want to buy in 2020 AND 5 stocks I want to buy more of in 2021.
- I now own a couple hundred shares of CNR, but want to buy more over time.
- I have no plans to sell any portion of this company, just add.
Many of the individual stocks I own continue to reward me as a shareholder via growing dividends and capital gains. Dividend investing is a major part of my portfolio.
You can read more about my wealth-building path using dividend paying stocks here:
However, through a disciplined buy and hold and buy some more approach for the majority of my holdings, the dividends and distributions keep flowing in pushing my income stream higher and higher.
I’ll keep you posted on more holdings and changes as they happen!
Thanks for reading and I look forward to your comments.
Hi Mark – I also bought CNR (and CP) back at the “Covid crash” and have been rewarded big-time with both showing excellent returns. My one lingering concern with CNR is the whole “hostile takeover” talk by TCI – the UK-based hedge fund. As a shareholder, I received a very informative letter (booklet) from CNR that explained the whole situation – as well as where CNR hopes to go. I still really like CNR and plan to hold (and hopefully add to my position) – but I can’t help to have the “TCI thing” in my mind. What’s your take?
Ya, I’ll probably keep adding (CNR) and I doubt TCI will take it over given Canadian protectionism. Just a guess of course!
Thanks for the post, Mark. CNR was in my list in last January but I thought it over b/c it’s expensive stock. Now I need to keep eyes on it for next year. Recently, MFC & AQN are not doing well. I intend to sell them and buy CNR& CP. What’s your thought about these stock?
I own CNR and MFC and AQN. Intend to own all for the long-term and no intention of selling anything.
Heh heh, I want to buy more AQN!
I bought more this year in fact. Very bond like with some upside. Semi-retirement is 3 years out now James 🙂
I always enjoy your “then and now” blogs. Mainly because they make me feel good about buying decisions I have made in the past! Still own H&R though. High yield on cost is keeping me from selling.
Thanks again for your great content.
Great stuff Chuck. Rightly or wrongly, I sold HR and moved those proceeds into some renewable stocks. We’ll see long-term if that decision was smart 🙂
Hope you are well.
An excellent topic, Mark. Thanks for your list. For the record, I recently sold CNR, but of course, it was too soon. I keep telling myself not to mess with my portfolio.
I’ve been there too Doug! I’ve tried over time to keep my fingers off the keyboard other than the blog. 🙂
This email on CNR as a low yielding stock to add to your portfolio raises a few questions for me, some of which you also answer in your article. I too have looked at CNR but am hesitant to purchase given the cost of the stock and the low yield dividend. I ask myself whether it is better for me to purchase CNR or another “TULF stock, or a dividend aristocrat or a large moat stock.? Am I better off purchasing many shares of a less expensive stock with a DRIP component to get more return? I currently own many of the stocks you have listed (thanks in a large portion to your advice) and am thinking that I should add to these less expensive stocks and to continue with diversification. I think you answer my question by stating, “After buying and pouring lots of money into many other Canadian dividend paying companies…” you expanded your search for other dividend growth and capital gain potential. At what point is it better to seek out the low dividend yield and growth stocks over adding to your portfolio of less expensive and higher yielding stocks? Is it worth risking higher yield to invest more in growth? Thank you for keeping us so informed and for encouraging me to think more about investment strategies. Cheers.
The way I see it, dividends and growth are two sides of the same coin. You can’t have big dividends or dividend growth / high yield AND high capital gains. It doesn’t really work. So, what you can consider is low-yielding stocks that have higher capital gains potential and/or a mix of modest-yielding companies that should continue to growth their dividend over time.
The challenge with capital gains only is you simply don’t know when it will or will not happen – although you expect it.
The benefit of dividend paying stocks is you get paid, partially, to wait regardless.
I own a few low-yield stocks that have taken off in price: CNR, WCN and BLK are some examples. Just food for thought!
I think it also depends on at which stage you are in your life and in which account you have your investment.
If you are investing in non-reg account and you don’t need the money for a while, high growth is better as it will compound without tax leaking. However, if you need to withdraw money from your non-reg account and your income is less than $100K, then dividends might be better as you get a lower tax rate on dividends income. Also, if you are still very young, total return is the most important thing and high growth could be better.
But if you are near or in retirement, and a steady income stream might be more important and you don’t want bigger retreat of your portfolio, then dividend stocks are providing both and might let you sleep tighter in the night.
For myself, I began investment quite late in my life when I was. planning for retirement. So I focused on higher dividend yield so that I can have enough income to cover my living expenses without worrying about stock market ups and downs. Once I achieved that, I shift my focus to higher growth stocks.
Thanks May for your perspective. Everyone has a different strategy. I started investing late so I wanted to increase my portfolio first then income later. My approach is 50%/50% but I need to review it next year as the problem with growth stock is we never know when it up or down.
Re: Everyone has a different strategy.
That’s why personal finance is personal. I echo your thoughts on “with growth stock we never know when it up or down. ” When I began this, I didn’t know when I will retire, could be ten years later, could be next year. So my biggest worry is that I might retire at a year like 2000 or 2008. That’s why I wanted to establish this steady income stream with dividends first.
If you know for sure that there are still many years until you retire, I do think growth stocks would be better.
You bet: personal finance is (very) personal.
May, you’re in great shape I recall and saving a bunch to catch up per se. Do you have an “end date” in mind?
I had an “end date” before but it didn’t work. I guess I will just go with the flow. LOL.
The reason I began this journal is partly because of the stress from my job at that time. Strange thing is that I am ready for retirement now and also career-wise now I am in the most comfortable situation since I came to Canada. I am working a rewarding job right now in a friendly team. My work is being appreciated and not stressful at all. If it continues like this, I guess I don’t mind working for a few more years. Cannot go anywhere anyway with the kids still home.
That’s fair. When do you kick the kids out? 🙂
Also, both of us have income higher than ever right now. It certainly makes the decision to leave the money on the table even more difficult.
Yes, I have a good paying job as well but the reality is, life is short. I hope to be out of the full-time workforce in 3 years. Hope not too many of my co-workers or boss reads this comment 🙂 Kidding aside, I would like to stay on in a part-time capacity but not sure if our organization is that progressive yet. We’ll see!
May, many thanks for a reply. Yes, like today DG stocks would win. I need to be focus on keeping my goals as I don’t have many years. I don’t know if I retire next year or in 5 years. As an immigrant, my OAS& CPP won’t be enough so income investing would be more important. Holiday is in the corner that remind all of us that you spent another year of our life. Have a great weekend!
Same here. Cannot rely on OAS & CPP to retire. Also not likely to work until 65. Our line of jobs is for young people, not old ones. Surely I am so much relaxed now I know I can retire any time.
Good stuff…I’ve also found that I enjoy a mix of dividends AND growth as I get older. I’m becoming more patient as an investor. QQQ in my portfolio is a good example. Owned it for a couple of years now and been rewarded. I wouldn’t have invested that way 10 years ago, I wanted some income in case something happened to my job and I needed an income stream to survive for a bit.
Live and learn right?
I have similar comments on the account type. I’m working towards a goal of living of dividends but still own some growth stocks in my non registered account. There are two of them and they have done really well, so now my challenge is do I sell them, pay the capital gains, and buy dividend stocks to generate income, or do I just sell as I need the income in retirement (the so-called self-made dividends)? Retirement is still about six years out.
Part of my challenge is that there is a fairly high degree of risk with these two investments (they’re both on the Venture exchange) and so I have to be wary of a potential loss even greater than the capital gains tax.
My point is I don’t sweat these decisions with my dividend payers in my non-registered account, or my growth stocks in my registered accounts, but the “switchover” from growth to dividend payer in a non-registered account has some tricky challenges to it.
Never bought any for registered plan as I always balked at the low div yield. Probably should have but shoulda, woulda, coulda, right?
It would be interesting to get a comparison to see if CNR outperformed (cap appreciation + dividends) higher dividend payers e.g. RY, ENB, Telus over a 10 or 15yr period – I suspect CNR would win!
Well, I just looked at Portfolio Visualizer and CNR totally clobbered XIU over a 15-year period.
Also compared RY and ENB – those had about the same 15-year returns.
Portfolio Initial Balance Final Balance CAGR Stdev Best Year Worst Year Max. Drawdown Sharpe Ratio Sortino Ratio US Mkt Correlation
Royal Bank of Canada $1,000 $5,231 11.02% 17.21% 63.79% -25.80% -43.70% 0.63 0.99 0.64
CN Railway $1,000 $9,236 15.07% 17.54% 36.27% -5.36% -27.80% 0.83 1.37 0.48
Enbridge $1,000 $5,481 11.34% 17.40% 39.70% -20.42% -29.80% 0.64 1.03 0.26
iShares S&P/TSX 60 Index ETF $1,000 $3,058 7.32% 13.20% 31.31% -31.09% -43.08% 0.52 0.74 0.82
If only we could see the future!!!
haha, Mark, thanks for the quick analysis!
Do you get that info with the free version of Portfolio Visualizer?
PS yes, if only we could build a time machine out of a DeLorean
LOL. Yup, all free Peter 🙂
nice one just bought some CP eyeing CNR. want to hold both. Not worried about low yield much but growth and monopoly of these two is just amazing. Pretty much a no brainer.
I hear ya. Want to buy some more CNR and CP. All in good time 🙂