I've entered the Toll Free emergency numbers for NS and CSX (my home territory) on my cell phone in case I ever need to make a call. This way I won't have to fumble around.
Despite the service turmoil in our favorite industry, stock prices of rail carriers continue to soar with many at or near 52 Week highs. In the trailing 12 Months, we see these numbers against a 16% gain for the S&P 500 over the same time period. Norfolk Southern up 46% Union Pacific up 44% Union Pacific up 44% CSX up 43% Canadian Pacific up 28% Kansas City Southern up 11% Canadian National up 5%
Investing in rail carriers in the 1990s presented opportunities that don't exist today and it was interesting. A number of roads like CR, IC, Santa Fe and others were independent, well run, profitable and were enticing as potential merger candidates. It was fun to gather information and analyze potential investment outcomes. The rest is history. Who could have guessed back then that KCS would remain independent or that D&RGW would buy the SP and then be acquired by UP? CR was carved up by NS and CSX, while IC was taken by CN. FEC wasn't bought by NS as many predicted, but was instead sold to an investment group. And who foresaw the rapid growth of shortline operators like Genesee & Wyoming or Watco? The last chapter hasn't been written on rail mergers, but regulations, legal costs, shipper resistance and potential shareholder resistance present huge obstacles to be overcome and I don't think any carrier is much interested in such a battle at this time. Famous last words right?
Glad you added that, as rail dividends are often strong historic growers, even on common shares. I suspect that dividend growth has been impressive as well.
Well, I am not sure I'd call the dividend growth impressive but it has grown. I can tell you that for the last few years, NS was paying $0.68 in dividends per common share and that the last two dividend checks I got, the dividend per share is up to $0.80. I'm not going to get rich at that rate but not complaining. I will say that I am very happy with the difference in what I paid for the stock in the mid 90's and it's current price. Still not getting rich but if I sold now, it would be a nice bit for the government to tax.
I'm an NS shareholder too and we perhaps bought at about the same time. Let's combine our shares and buy the road ….. or maybe a cup of coffee in my case. I attended an NS annual shareholder meeting in Norfolk long ago and when CEO David Goode entered the crowded room, he made a special point to talk to an elderly woman seated behind me. She remarked that she liked his necktie color and they briefly chatted. At meeting's end, a guy seated next to me quietly asked if I knew who the elderly woman was. I did not. He smiled and said that she was one of the largest private shareholders of NS and that her father had originally bought Southern Railway stock in the teens. Now THAT is long term investing.
Business is strong and the numbers are looking very good across the sector. Too much business and not enough capacity has been the curious problem. Nothing grows to the moon though and the pace of gains will slow. We'll check back in a year and see what the future has brought.
I'd venture to guess the two of us combined might still need to pick up a few more shares to gather that kind of status. We are probably good on the coffee though. LOL. Never have had the chance to attend one of the meetings but maybe someday I'll be able to make time for it, who knows.
I agree it will slow down at some point. Just hope when it slows, that it levels out and doesn't decide to go the other direction.
Interestingly, on 09/06/18 the WSJ offered a short and positive piece on NS at https://www.wsj.com/articles/this-railroad-can-keep-rolling-1536226383. Given the growing shortage of transportation in the U.S. (including truck capacity), the writer thinks NS still has room to run.
Wall Street seems to have embraced a one-size-fits-all Precision Scheduled Railroading operational strategy without fully understanding it (aka "Why can't you be like CSX?"). I am pleased that the other Class 1s are selectively using some of its fundamentals, but not risking it all with a long jump into the deep end of the pool just to please investment analysts.
It sounds a lot like short sighted investors who have no care for the long term that are driving that train of thought. Let's just hope it doesn't damage the business too badly.
Higher interest rates and trade tensions are contributing to the current slide, as if nobody thought of this happening. Right. Selloffs are made worse from investors who buy on margin. When prices fall, they must make good on the money they borrowed to buy stocks and they're forced to sell good stocks to settle accounts. I can think of nothing crazier than to borrow money to invest in stocks. It's risky enough as is!
An element of 401k investing that drove me crazy before retirement were workmates who'd dart in and out of our company stock with no analysis. When shares fell, they'd buy on the bet that "it has to go up again" and then sell when they felt shares had topped ...… or had fallen further. It's a loser's game, but rarely could I convince them to stop. I even produced graphs which convincingly showed that in 1, 3, 5 and 10 Year periods, the S&P 500 nearly always far outperformed our company shares and did so with no trading whatsoever and arguably with much less risk by holding a basket of 500 company shares instead of 1. But alas, few cared for passive investing when the lure of the gamble and excited conversation awaited. Research continues to support my findings. YTD, my former employer's shares are down 25% and the S&P is up 5%. Happily my former employer is now putting guards in place to prevent employees from placing too much of their 401k accounts in company stock.
