Canadian National Railway Company (CNI): A Bull Case Theory

We came across a bullish thesis on Canadian National Railway Company on Investing Lawyer’s Substack. In this article, we will summarize the bulls’ thesis on CNI. Canadian National Railway Company’s share was trading at $97.25 as of August 27^th. CNI’s trailing and forward P/E were 18.43 and 17.48 respectively according to Yahoo Finance.

Canadian National Railway (CNI) stands as a leading North American rail operator with a deeply entrenched competitive moat. The company’s 20,000-mile rail network is irreplaceable, handling a wide range of goods from grain to consumer products, ensuring stable demand across economic cycles. The structural barriers to entry in the railroad industry are immense, requiring billions in capital investment and extensive regulatory approvals, which effectively eliminate the risk of new competitors. This entrenched position makes CNI a critical backbone of North American supply chains and the transport safety network.

From a financial perspective, the company is conservative yet shareholder-friendly, offering a dividend yield of roughly 2.1% backed by a 28-year track record of consecutive dividend increases and a payout ratio of only 48%, underscoring sustainability. CNI also maintains a prudent balance sheet with a low debt-to-equity ratio of 0.7, affording it resilience and flexibility even in periods of market stress. These characteristics make CNI not just a stable income generator but also a defensive asset in downturns, appealing to long-term investors seeking capital preservation.

Looking forward, CNI’s strategic importance to trade flows, combined with its ability to generate reliable free cash flow, positions it well to remain a dependable income source with room for gradual capital appreciation during economic recoveries. While growth prospects are modest compared to high-growth industries, the combination of a durable moat, disciplined financials, and consistent dividend growth makes Canadian National Railway a compelling investment for those prioritizing stability and dependable returns.

Previously we covered a bullish thesis on Canadian National Railway Company (CNI) by Max Dividends in May 2025, which highlighted its wide-moat network, dividend strength, and resilience against tariff disputes. The company’s stock price has been flat, appreciated by 0.4% since our coverage. This is because the earlier concerns proved temporary. The thesis still stands as fundamentals remain intact. Investing Lawyer shares a similar view but emphasizes its defensive income appeal.

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Disclosure: None.