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Canadian Pacific Railway Dividend Stock Analysis 2015

Canadian Pacific is the smaller of the two Canadian railroads.

The company has turned around with its operating margin doubling in a matter of three years.

Dividend investors are rewarded with a lowly 0.75% and no growth, as the company has frozen dividends since 2012.

CP has started buying back its shares and intends to continue doing so.

Canadian Pacific Railway Ltd. (NYSE:CP) is the smaller of the two Canadian railroad companies operating approximately 13,700 miles of network, serving business centers from west coast to east coast Canada and the United States Northeast and Midwest regions. CP's peers include Union Pacific Corp. (NYSE:UNP), Canadian National Railway (NYSE:CNI), CSX Corp. (NYSE:CSX), Norfolk Southern (NYSE:NSC), and Kansas City Southern (NYSE:KSU).

CP operates in one of the widest moat industries - railroads. The company has a diversified traffic volume including intermodal, vehicle & automotive parts, chemicals & plastics, crude oil, forest products, metals, minerals, and consumer products.

Corporate Profile (from Yahoo Finance)

Canadian Pacific Railway Limited, through its subsidiaries, operates a transcontinental railway in Canada and the United States. The company provides logistics and supply chain expertise services. It transports bulk commodities, including grain, coal, fertilizers, and sulphur; and intermodal traffic comprising retail goods in overseas containers that can be transported by train, ship, and truck, as well as in domestic containers and trailers that can be moved by train and truck. The company also transports merchandise freight consisting of finished vehicles and automotive parts, chemicals and plastics, crude oil, and forest products, as well as metals, minerals, and consumer products. It provides rail and intermodal transportation services over a network of approximately 13,700 miles serving the business centers of Canada from Montreal, Quebec, to Vancouver, British Columbia, and the United States Northeast and Midwest regions. The company was founded in 1881 and is headquartered in Calgary, Canada.

The Railroad Industry

Railroads are the pulse of the economy. Whether transporting crude, lumber, merchandise, agricultural or industrial products, railroads are what keep the economy moving. While the transportation for entities such as coal (which used to be the largest users of railroad services a few years ago) has fallen due to the fall in crude prices and rise of green energy alternatives, the transportation need for crude saw significant rise in the recent past. However, the recent turn of events with falling energy prices has put a damper on crude transportation via railroads. The following charts from Association of American Railroads show the drop in traffic from the peak in Sept./Oct. 2014 for petroleum products coupled with the steady decline in coal transportation. It is interesting to note that coal traffic picked up quite a bit in August.

Since most of CP's operations are based in Canada...


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