In a three-part announcement, Canadian National Railway (NYSE:CNI) announced today a bevy of measures to return value to shareholders including a 15 million-share stock buyback program, a 2-for-1 stock split, and the announcement of the company's fourth-quarter dividend.
With a rail network spanning Canada and mid-America, running from the Atlantic and Pacific oceans to the Gulf of Mexico, the railroad operator said its new share repurchase program would seek to purchase for cancellation up to 15 million shares before adjusting for the stock split, which would represent approximately 4.1% of its outstanding shares as of Oct. 15. The buyback program will begin on Oct. 29 and end no later than next year on Oct. 23.
Under its previous share repurchase program announced last October, Canadian National repurchased 14.7 million shares at a weighted-average price of $95.35 Canadian per share. Its stock on the NYSE closed today at $106.72, suggesting the new program would be valued at around $1.6 billion.
Under the 2-for-1 stock split, shareholders will receive one additional share for each share owned and will take the form of a stock dividend, which will be payable on Nov. 29 to shareholders of record at the close of business on Nov. 15. The railroad operator says the stock split will have no tax consequences for either Canadian or U.S. shareholders and will not dilute shareholders' equity.
Saying the new programs reflect the company's confidence in its future, Canadian National Railway Executive VP and CFO Luc Jobin said, "In addition to significant investments in the business and increasing cash dividends over the years, CN has returned approximately $4.8 billion Canadian to shareholders through share repurchases since 2010."
The company also said its fourth-quarter dividend of $0.215 Canadian per share is payable on Dec. 31 to the holders of record at the close of business on Dec. 30.
Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Canadian National Railway. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.