We recently compiled a list of the 12 Best International Dividend Stocks To Buy Now. In this article, we are going to take a look at where Canadian National Railway Company (NYSE:CNI) stands against the other international dividend stocks.
Dividend stocks have been grabbing investors’ attention for a while now. According to JP Morgan, over the last two decades, global dividends per share have increased at an annual rate of 5.6%, but analysts expect this to rise to 7.6% in the future, driven by historically low payout ratios. During the 2020 pandemic, many companies cut dividends, but as earnings have recovered, especially in Big Tech and AI, dividends have not kept up. With payout ratios at 25-year lows, simply returning to normal could add 2% annual growth over the next five years.
After slowing down post-COVID, global dividend growth made a surprising comeback last year, increasing 8% and adding an extra $180 billion in payouts despite ongoing economic and geopolitical challenges. According to S&P Global, this was largely driven by record dividend initiations in US tech, European banks, Japan’s auto industry, and solid growth from China. Even oil and gas companies held strong despite market volatility. Looking ahead, experts predict global dividends will hold steady at $2.3 trillion in 2025.
Regionally, developed Asia, which includes Japan, Hong Kong, Australia, South Korea, and Singapore, is looking at a 3% rise in dividends this year. Europe, on the other hand, is expected to see a 3.4% decline. In emerging markets, the trends are mixed. Asia, led by China, India, and Taiwan, is on track for a 5% increase, while dividends in the Middle East and Africa could drop by 20%, mainly because Saudi Aramco’s special dividend program ended. Latin America is also expected to see a small dip of around 4%.
When it comes to sectors, banks and energy companies remain the biggest dividend payers. Banks are expected to distribute around $380 billion globally, but after four years of rapid 20% growth, they are now down to just 2%. Banks are playing it safe, waiting to see how interest rates move. Given this, we will take a look at some of the best international dividend stocks.
Our Methodology
For this article, we used the BlackRock International Dividend ETF to filter out dividend stocks listed on US exchanges but headquartered internationally. We focused on picking stocks that were most popular among hedge funds. The list below is ranked in the ascending order of Q3 2024 hedge fund sentiment, and dividend yields are mentioned as of February 11.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
A driverless train traversing vast countryside, illustrating the companies long-distance rail transport services.
Canadian National Railway Company (NYSE:CNI)
Dividend Yield as of February 11: 2.23%
Number of Hedge Fund Holders: 44
Canadian National Railway Company (NYSE:CNI) is a transportation and logistics company that provides rail, intermodal, trucking, and marine services, catering to industries like automotive, coal, agriculture, and consumer goods. On January 31, 2025, Stifel raised their price target on CNI to $125 from $120 while maintaining a Buy rating on the shares. The adjustment follows a decent but unremarkable Q4 earnings report. With strong profit margins of 54.63% and solid financial health, analysts see growth potential but warn that hitting the upper spectrum of the guidance may be ambitious.
Canadian National Railway Company (NYSE:CNI) generated $3.1 billion in free cash flow in 2024, down $800 million from last year due to higher capital spending and lower operating cash flow. The company repurchased over 13 million shares for more than $2.3 billion as of December 2024 under its latest buyback program. The Board approved a 5% dividend increase for 2025, marking 29 consecutive years of growth. It also authorized a new buyback program for up to 20 million shares from February 2025 to February 2026. CNI is one of the best dividend stocks to invest in.
According to Insider Monkey’s Q3 data, 44 hedge funds were long Canadian National Railway Company (NYSE:CNI), compared to 42 funds in the earlier quarter. Bill & Melinda Gates Foundation Trust is the leading stakeholder of the company, with 54.8 million shares valued at $6.4 billion.
Overall CNI ranks 6th on our list of the best international dividend stocks to buy. While we acknowledge the potential of CNI as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CNI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
