On May 12, 2015, an Amtrak train traveling from Washington to New York derailed. The train had 243 people on board. At least five passed away and many were injured. On May 13 the major railroad companies dipped over 3%. Of those, Canadian National Railway Company (TSX:CNR)(NYSE:CNI) dipped more than 3%.

I’m saddened to hear the news, but at the same time, this is an example of an event causing a temporary dip on high-quality companies that haven’t changed fundamentally.

What Canadian National Railway is doing to improve safety

Canadian National Railway has the vision to be the safest railroad in North America by establishing a culture of safety. Every year the railroad invests a substantial percentage of revenue in safety training, technology, and infrastructure to ensure a safe environment for work and customer shipment delivery.

Canadian National Railway’s Safety Management System is a proactive, comprehensive program designed to minimize risk and continually reduce injuries and accidents.

Returns comparison

Although the railroad pays a seemingly low yield of 1.7%, it’s known to outperform the market as well as its peers. Below, we can compare the performance in different periods between Canadian National Railway and its peers.

 Company 1-Year 3-Year 5-Year 10-Year
Canadian National 19% 25% 20.9% 16.2%
Canadian Pacific 24.8% 45% 29.6% 18%
S&P/TSX 60 7.5% 12.9% 7% 7.9%

Source: Data from Morningstar.com. Performance includes dividend reinvestment

I’m surprised to find that Canadian Pacific Railway Limited beat Canadian National Railway in all four periods. I’ve been ignoring Canadian Pacific because it has lower credit ratings than Canadian National Railway. The former has an S&P credit rating of BBB+, while Canadian National has a rating of A.

Additionally, Canadian National Railway has lower debt levels than Canadian Pacific. The former has a debt-to-capital ratio of 35%, while the latter’s is 53%.

So, yes, you can probably get higher returns from Canadian Pacific because you’re taking on more risk comparatively.

You can count on Canadian National Railway to increase its dividends on schedule; it has an impressive record of hiking its dividend for 19 years in a row at a double-digit rate. On the other hand, Canadian Pacific has frozen its dividend at $0.35 per share per quarter since September 2012.

Is now the time to buy Canadian National Railway?

Just two months ago, Canadian National Railway cost $87 a share with a price-to-earnings ratio (P/E) of over 22. After what I believe to be a temporary dip today, it now only costs $74 or a P/E of 18.7. This 15% dip is certainly a nice opportunity to own more shares in Canadian National Railway.

The one stock you want to own for 2015

Does your portfolio have rock-solid blue chips at its core? If it does...GREAT! If not, you might want to reconsider your strategy.

Either way, we think you should take a look at what our analysts have identified as one TOP stock for 2015 and beyond--a stock with a tollbooth-like business; a solid management team; and a reliable, consistent, and rising dividend--and you can download the name, ticker symbol, and price guidance absolutely FREE.

Simply click here to receive your Special FREE Report, "1 Top Stock for 2015--and Beyond."


Let’s not beat around the bush – energy companies performed miserably in 2015. Yet, even though the carnage was widespread, not all energy-related businesses were equally affected.

We've identified an energy company we think offers one of the best growth opportunities around. While this company is largely tied to the production of natural gas, it doesn't actually produce the gas. Instead, it provides the equipment required to get natural gas from the ground to the end user. With diversified operations around the globe, we think it's a rare find in the industry.

We like it so much, we’ve named it as 1 Top Stock for 2016 and Beyond. To find out why, simply enter your email address below to claim your FREE copy of this brand new report, "1 Top Stock for 2016 and Beyond"!

Fool contributor Kay Ng own shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.