These two railways, which are now both publicly traded, are major beneficiaries of transportation demand for large quantities of goods and materials. As a resource-producing nation, Canada is home to large resource companies and an assortment of smaller developers and upstarts. Together, the transportation of these resources creates demand for Canadian National Railway (USA) (NYSE:CNI) and Canadian Pacific Railway Limited (USA) (NYSE:CP), since train transportation is far more economical than truck or air transportation. Among the resources produced in Canada is oil, and the demand for black gold is expected to continue increasing for the foreseeable future. With the construction of oil pipelines being a controversial topic due to environmental concerns, railway companies stand to benefit if oil is transported via train due to both large quantities and growing demand. Even with trains not being the primary mode of transportation for people traveling large distances, Canadian National Railway (USA) (NYSE:CNI) and Canadian Pacific Railway Limited (USA) (NYSE:CP) are both solidly profitable, and offer dividends as well. It appears that whether you choose the former Crown Corporation or its Western settlement promoting rival, both offer a play on resource demand growth along with a regular dividend.
Trains and planes
Air Canada and Canadian National Railway (USA) (NYSE:CNI) are not the only privatized former Crown Corporations of Canada but they are among the best known. The position these corporations enjoyed under government ownership set up large market shares for them in the Canadian market with some international operations as well. But they are not monopolies and both face competition in their respective markets. WestJet has proven itself a strong competitor seeing major expansion since its founding and Canadian Pacific Railway Limited (USA) (NYSE:CP) played a key role in the development of the Canadian west. Since these former Crown Corporations are now open to investment by average investors, investors should decide for themselves whether these companies fit with their overall investment strategy.
The article A Look At Former Crown Corporations originally appeared on Fool.com and is written by Alexander MacLennan.
Alexander MacLennan owns shares of Air Canada. This article is not an endorsement to buy or sell any security and does not constitute professional investment advice. Always do your own due diligence before buying or selling any security. The Motley Fool recommends Canadian National Railway. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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