The 2024 strikes for railways arrived, and just as quickly as they did, they stopped. For any investor interested in the strength and reliability of railway stocks, a prolonged strike could have had devastating results. Considering how valuable the railway network is to the Canadian economy, a stoppage in operations could have had a severe impact on the economy in a short span of time.
However, this was not the first time major Canadian railways went on strike. All things considered, it might not be the last time either. For long-term investors in major railways like Canadian National Railway (TSX:CNR), a stoppage might not be as bad as new investors might think it should be.
A quick end to the strike
As of this writing, we are a couple of weeks past the end of the railway strikes. Canadian National Railway said its operations have already recovered from the months of labour uncertainty it was facing and the complete shutdown of its Canadian network.
The company’s management had already been preparing for a potential strike, and its planning allowed the company to post a quick recovery in operations after the labour stoppage.
The stoppage began on August 22 but lasted less than a day as the board enforced Canada’s Minister of Labors and Seniors’ request to impose arbitration on getting thousands of union workers from Teamsters Canada Rail Conference back to work by August 26. The government’s intervention proved crucial in getting things going and did prevent a prolonged strike, but it hasn’t resolved the issue.
Days after returning to work, Teamsters mounted a legal challenge to the government’s binding arbitration order. While the move does not undo the government’s orders, it shows that the problem is far from over.
Canadian National Railway
While the strikes led to some pullback in share prices, trains are running again. The stoppage undoubtedly resulted in lost money from the brief disruption because many shippers diverted freight to truck carriers. However, the lost revenue might not be as relevant in the grand scheme of things.
As of this writing, CN Railway stock trades for $163.87 per share, which reflects a considerable discount of over 8% from its all-time highs. Year to date, CN Railway stock is down by almost 2%. Considering that a full stoppage was on the cards, the pullback seems almost insignificant. In fact, CN Railway stock has seen an 8.26% uptick from its share price on August 7.
Foolish takeaway
CN Railway has long been an excellent investment for Canadians who want to balance their portfolios with a reliable company with a strong market presence and financial stability. Despite the potential of a strike derailing the company, CN Railway stock has shown resilience and a quick recovery. Even in volatile markets, CN Railway historically remains strong.
CNR stock offers stable dividends, currently yielding 2.06%, and it maintains a payout ratio below 40%. The company’s leading position in the North American economy and strong operating margins make it a solid bet. While strikes might disrupt operations, they seem unlikely to derail CNR stock as a reliable long-term investment.
