Last night, as I struggled to fall asleep to the terrible sound of screeching railway cars I was reminded that sometimes you find investments when you're not looking for them -- or in the case of the railroad giant CSX (NYSE: CSX), when you'd really rather they not be there. But, it seems the blue and yellow trains are always there, which got me thinking about CSX's success and its potential as a dividend stock for my portfolio.
Back for seconds
CSX enjoyed a terrific second quarter this year, and the balance sheet looks great right now. Revenue rose 13% over last year, with increases coming from all of its major markets. Operating income was also up, and earnings per share beat analysts' estimates, coming in 28% higher than last year at $0.46.
Dividend stats
CSX's strong performance bodes well for income investors. The company raised its dividend 38% in May, and sports one of the better yields among industry competitors.
|
Company |
Forward Annual Dividend Yield |
Total Increase Over 5 Years |
|---|---|---|
|
CSX |
2.1% |
239% |
|
Canadian National (NYSE: CNI) |
1.8% |
134% |
|
Union Pacific (NYSE: UNP) |
2.1% |
161% |
|
Norfolk Southern (NYSE: NSC) |
2.7% |
134% |
Source: Yahoo! Finance.
Everyone likes solid dividend histories, and CSX proves its dedication with the numbers above.
Investing in the future
Looking forward, CSX plans to dedicate an average of 18% of its revenue to reinvestment projects over the next 3.5 years. It committed to spending $2.2 billion on capital investments this year, and is well on its way with a $15 million intermodal project in Kentucky.
Intermodal connections allow shipping containers to transfer from railcars to other modes of transport, like shipping and air, without touching the cargo. The CSX project in Louisville is an important one. Set outside the Louisville International Airport, the new facility will begin operations in 2012, meeting immediate market demands and providing capacity for future growth.
Foolish takeaway
CSX is a great-looking stock in an industry that rebounded nicely after the recent economic downturn. Sometimes it pays to dig in and research those stocks that keep you up at night. The result may lead to a good night's sleep -- one way or the other.
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