10 Dividend Stocks With Low Payout Ratios and Strong Upside Potential

8. Canadian National Railway Company (NYSE:CNI)

Upside Potential as of June 24: 18.2%

5-Year Average Payout Ratio: 41.31%

On June 25, Evercore ISI upgraded Canadian National Railway Company (NYSE:CNI) to Outperform from In Line. It also raised its price target on the stock to $124 from $108. Analyst Jonathan Chappell said it appears CN is heading into its second-quarter earnings report with the potential for “a material beat & raise” for the first time in nearly three years. He noted that the company’s guidance ranges for this year “always seemed conservative.” With six months of results in hand and positive volume momentum continuing through the second quarter, the firm believes CN could deliver a meaningful earnings beat and raise its RTM and EPS growth targets for the year.

On June 24, RBC Capital raised its price recommendation on CNI to C$195 from C$178. It reiterated an Outperform rating. The update came as part of the firm’s broader preview of second-quarter results for Class I railroads. The analyst said CN is among the railroads expected to deliver the strongest earnings upside compared with consensus estimates, supported by solid volume trends. RBC also pointed to the company’s favorable network dynamics, GDP-plus growth opportunities, potential for margin improvement, and discounted valuation as reasons for its positive outlook.

Canadian National Railway Company (NYSE:CNI) is a transportation and logistics company. It provides rail, intermodal, trucking, and supply chain services.