Railroads seem to do quite well in 10 year cycles…I own CSX and CP which are doing well.
Were will I be in 10 years
Can’t answer that, but here’s how the RR stocks have fared since Aug 1996:
1996 Now %Gain
UP 47 81 74
CN 31 43 37 Note since 1/1/2000
BNSF 26 66 152
NW 27 42 55
CSX 24 30 23
S&P 500 65 130 100
Prices adjusted for splits.
If you had bought one share of each of the 4 U.S. railroads, your investment would be up 76%. This would be equivalent to having it in a savings account paying a 5.6% compounded interest rate. In that same time, the S&P 500 has doubled in value, equivalent to a savings account at 7%. Of course, the tax treatment is better for stocks. The S&P 500 consists of 500 companies and is well diversified.
Yes but does that include dividends and the fact that instrest rates have been at more like 2% in the past 8 years. My real reason for owning CSX and CP is that I am a Passenger on there railroad systems and by attending shareholder meetings I hope to have some influance .
There are like 400,000 train buffs in this country…If we put some of our portfo9lio into railroads perhaps the railroads would finally listen to us.
The prices are without re-investment of dividends. The latest cash dividend rates are
UP 1.42%
CN 1.39
BNSF 1.45
NS 1.60
CSX 1.27
S&P500 1.71%
I don’t have access to the historical dividend rates, but I’d guess they haven’t changed a lot. If the dividends had been re-invested, less income taxes, that would have increased the total return, obviously.
All the more power to you.
Here are some RR stock comments made earlier in the year by Jim Jubak:
Stock writeup
You will be ten years older.
No one knows how well rail stocks will perform
in the next decade.
Dave
Eastside:
CN has done a little better than that. Going back 10 years, the stock would have been at a split adjusted price of about $3. Today it is in the 40’s. It has split three times since then…99,04, and this year. CN has been quite a stock.
ed
That may be, but as I note I only had data going back to 2000. So I couldn’t check that and couldn’t include it in the average.
Kublics artical said the trade deficit means that railroads will carry less automobles…
This is not true as railroads carry large amounts of imported cars from ports…
Portland OR and Brunswick GA have huge autoports
A couple of observations…
The New York Times did a fine article Sunday, August 27, on mergers. They said that corporations are busy merging. They also said that insider trading before a merger should be regulated somehow (their opinion). A study was done showing heavy fluctuation of stock prices while initial negotiations were conducted in private towards mergers. Given all the talk about railroads merging on these forums, that would be an indicator to me about how stocks would go. Railroads have a bad track record with mega mergers, so if they were to do it, I would hope they would plan a lot better for the merger before they throw the switch.
The number of consumers in the US is not going down any. Bulk transportation will not go overseas like a lot of industry has. Railroads may change emphasis on what they carry and in what quantity, but they are still going to be busy. I don’t see a lot of change in the next ten years. If I were to invest, I would invest in a railroad that is working to expand their capacity now. That shows planning ahead, not reaction to current events. To me, the stock price of a Class I railroad will at least remain stable, if not a good investment over the next ten years.
I’m no expert. I got my economics training in stocks and bonds from my father, who did a school project on the stock market. He decided to invest in the Pennsylvania Railroad. It was stable, big, and he was familiar with it. Imagine his shock and surprise when stock prices on the PRR crashed in October, 1929…
Erik
Railroads have what a lot of companies dont have these days, Real not Virtual Assets
Railroads have tracks,Locomotives buildings and land.
If amazon.com goes under what do they have? A couple of large warehouses???
When the Erie-Laccawana went under they were selling off assets and distrubiting the proceeds to bondholders and shareholders for the next 15 years before they finally hung up there hat. The Erie-Laccawanna had a office in the Terminal Tower till 1995…
I like railroads because they are asset based and they can use those assets to do some intreting things like leveraging and finacing…and real estate development.