CNR & CP

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Hello,

I was wondering if you could go into further detail about why you chose CN as a foundational stock over CP.

They both look identical to me. What made you pick CNR?
Was it the dividend? Earnings? Future Growth?

Does it make sense to have both companies in the same portfolio?

Also, what is the 5-year dividend growth average for CNR?

Thank you!

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Asked on December 17, 2020 12:04 pm
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Private answer

Hi there,

Both CNR and CP are foundational stocks. At the time, we chose CNR because it provided better value, at similar growth rates, a higher yield and had a more reliable history of dividend growth. Much like Canada's banks - each will have their periods of outperformance and underperformance against each other. But both are solid long-term investments.

A number of years ago, CP had operational issues which led to the suspension of dividend growth for period of about three years which also meant, it lost its status as a reliable dividend growth stock. CNR has been more consistent, and its 25-year dividend growth streak tied for the 10th longest streak in the country. Over the past five years, it has growth the dividend by an average annual rate of ~16.5%. Of note, CP will regain its Aristocrat status next year as it will exit 2020 with a streak of five-years. It has raised dividends by an average of ~17.5% over that time.

Overall however, both make solid foundational stocks.

Mat

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Posted by Mathieu Litalien
Answered on December 17, 2020 3:50 pm