North American railroad giant Canadian Pacific Kansas City (CP) has just increased its quarterly dividend by 18%.
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Going forward, Canadian Pacific Kansas City will pay it shareholders a quarterly distribution of $0.27 per share, an 18% increase from its previous dividend of $0.23. The new dividend is payable on July 27 of this year to shareholders of record as of June 26.
CP stock now has a dividend yield approaching 1%. The company is the only railroad that spans all three North American countries – Canada, the U.S. and Mexico. It was formed by the blockbuster 2023 merger of Canadian Pacific and Kansas City Southern, which cost $31 billion.
Rewarding Shareholders
Prior to the merger, Canadian Pacific railway had raised its quarterly dividend for 10 consecutive years. The railroad uses the dividend to reward shareholders even as its stock has struggled. Over the past five years, CP stock has risen only 14%, making it a laggard among transportation and industrial concerns.
The merger and internal integration of Canadian Pacific Kansas City took a while to finalize and weighed on the combined company’s financial results. But the merger is widely expected to lead to long-term synergies and benefits for the company and its shareholders.
Is CP Stock a Buy?
Canadian Pacific Kansas City’s stock has a consensus Moderate Buy rating among 11 Wall Street analysts. That rating is based on eight Buy and three Hold recommendations issued in the last three months. The average CP price target of $92.72 implies 9% upside from current levels.
