When it comes to the health of the economy, one of the best barometers is the railroad industry. If the railroads are growing, that means that there is more need for the transportation of goods. If the railroads start to contract, it can be an early sign that the economy might also be slowing down.

Because the railroads are so integral to a strong economy, I believe every investor should own at least one. The one in particular that I think is a worthwhile investment is Canadian National Railway Company (TSX:CNR)(NYSE:CNI). There are three reasons why I believe this is a good move.

1. A wide moat

One of the primary reasons why I’m so bullish on railroads in general is because there is such a significant barrier to entry for new companies. Consider how much it would cost to launch a new railroad: a company would have to buy or lease land, place the tracks, buy engines and shipping cars, and then market to new clients.

The cost for this would be in the tens of billions. And even when it was done, it would take a significant amount of time before any profit was generated for that new company. Because of this, it is highly unlikely that a new company would come along and launch a competitive railroad, giving Canadian National a significant advantage.

2. Its network is getting stronger

One of the things that I love about Canadian National is that it is the only tri-coastal railroad in North America. What that means is that it hits the Atlantic Ocean, the Pacific Ocean, and the Gulf of Mexico. That gives it access to multiple markets, allowing it to diversify its revenue further.

The company is the exclusive railroad provider for the Port of Prince Rupert, which is owned by DP World of Dubai. This is the fastest growing port in North America; it accounts for a significant amount of shipping for Asia. Further, the port in Mobile, Alabama, is currently undergoing renovations that will give it a 90% increase in capacity.

Both of these ports are going to result in added demand on the Canadian National network of rails, which should push revenue and profits even higher.

3. It rewards investors

Because of its strong network and its even stronger moat, the company is able to generate significant revenue. In the most recent quarter, the company beat revenue expectations, showing $3.125 billion. This resulted in net income of $886 million.

Because of this, the company is able to pay a growing dividend. Recently, the company hiked the dividend by 25% to $0.31 per quarter. While this yield is small in comparison to other companies, the company also invests significant money in share buybacks.

The reality is, Canadian National is one of the strongest railroads that has access to ports all across North America. This should ensure that the company continues growing. And, if the company starts experiencing revenue problems, we’ll have an alarm telling us that the economy is slowing. That’s always good to know in a portfolio.

The one stock you want to own for 2015

Does your portfolio have rock-solid blue chips at its core, such as Canadian National Railway Company? 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 Jacob Donnelly 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 Natitonal Railway is a recommendation of Stock Advisor Canada.