Canadian National Railway Company (TSX:CNR)(NYSE:CNI) has pulled back nearly 13% in the past six months, and investors who missed the big rally over the past two years are wondering if this is a good time to buy the stock.

Let’s take a look at the current situation to see if CN deserves to be in your portfolio.

Backbone of the economy

CN transports the raw materials and finished goods that keep the economy going. This means the company gets revenue from a wide range of business segments, and that provides a nice revenue hedge when one group is going through a tough time.

The boom in oil-by-rail shipments helped drive CN’s earnings and stock price to new highs, but growth in that line of business is slowing as shale-fracturing companies demand less sand and high-cost producers shut down production.

Trouble for oil producers tends to be good news for other industries, and those groups are helping offset CN’s lower oil revenues.

For example, the Canadian dollar has weakened significantly as a result of the drop in oil prices, and that is helping improve forestry shipments. CN is also seeing strong demand from the auto sector.

Stable earnings

The diversified revenue stream is showing up in CN’s numbers. The company delivered Q2 2015 net income of $1.10 per share, up from $1.03 for the same period last year.

Cost control is also a big factor in the strong results.

CN is often recognized as North America’s best-run railway and the Q2 operating results suggest management is still doing a great job. The operating ratio for the second quarter came in at 56.4%, down from 59.6% in 2014. A lower number is better because it indicates the amount of revenue the company is using to run the business.

Dividend growth and share buybacks

Long-term investors want to see steady dividend growth and a strong share-repurchase program. CN offers both.

Earlier this year the company increased its dividend by 25% and said that moving forward the payout ratio will rise towards 35%. Management is also aggressively buying back stock. In fact, the company spent more than $400 million on share repurchases in the second quarter.

Should you buy CN now?

The oil sector continues to struggle and Canada is working through a mild recession, but the overall picture for the North American economy is pretty good.

CN has pulled back enough that the stock looks attractive at the current price. Investors with a long-term outlook should be comfortable stepping in at this point.

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Fool contributor Andrew Walker has no position in any stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.