Wednesday, February 24, 2016

I bought 10 shares of Canadian Pacific Railway $CP

Today I bought some more shares of Canadian Pacific Railway (CP). 

I bought 10 shares at 162.24$ for a total of 1 622.40$

I now own 50 shares of CP. With an annual dividend of 1.40$ it gives me 70$ in dividend per year.

Needless to say, this stock is lagging a little bit in terms of its dividend, which hasn't been increased since 2012 and is now yielding under 1%. That's very low and unusual for a Dividend Investor like me. It's also a reason why a lot of investors (especially in the bloggers community) have shy away from this particular stock.

But they shouldn't! There are many reasons why this stock weights more than 5% in my portfolio.

The low yield is mostly due to the share going up drastically since the arrival of activist investor Bill Hackman and new CEO Hunter Harrison. It went as high as 250$ (and more). Currently, since the beginning of the year, it took a 30% drop...

I originally bought the stock in 2011 around 56$... I bought 100 shares back then. It just gives you an idea how much the share price has rocketed over the last few years.

I was a fool for selling more than 60% along the way. My stake in CP would be well over 16K$ by now...(oh well, let's move on...)

At the time, the dividend yield was pretty much the same as its competitor Canadian National Railway (CNR). It's not the same anymore obviously. CNR has been increasing its dividend, while CP hasn't and its share has gone up the ceiling.

Right now, CP is still focusing on its merger with Norfolk. One has to presume it is keeping its cashflow for this purpose (although they have had a strong shares buyback policy as of late).

I'm confident in the capabilities of its CEO to create wealth for the CP shareholders in the future. He has done so with CNR and is currently putting CP in a good spot to replicate his past success.

Are you an investor-fan of trains? If so, do you hold CP or CNR?



4 comments:

  1. Finally found a fellow Quebecer! Great site by the way - I will be checking it out often.

    I'm curious why you've chosen CP over CNR.. since CNR's yields are higher, and there's history of dividend increases? Are you more interested in the capital gain?

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  2. Hey André! Thanks for the nice comment. I actually own both companies : CP and CNR. My stake in CP is bigger, simply because I was lucky enough to buy the stock when it was trading below 60$. Hence the bigger weight in my portfolio. It was a time, not long ago, that both stocks were trading at relatively same price and same dividend. It was before Hunter Harrison operated its magic for CNR. He's now doing the same for CP. I am not interested in capital gains. I bought therefor the long run. Merci d'être passé! ;)

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  3. Great buy! CP is something we wish to own one day as we own CNR in our portfolio.

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  4. Thanks Tawcan! Yeah, CP and CNR are a good duo to hold! Thanks for coming down here. Much appreciated ! ;-)

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Thanks a lot for your comment.