CN Announces New Normal Course Issuer Bid for Share Repurchase and 5% Dividend Increase

Rhea-AI Summary

CN (NYSE: CNI) has announced two significant shareholder-friendly initiatives: a 5% dividend increase for 2025 and a new share repurchase program. The company's Board approved a new normal course issuer bid to purchase up to 20 million common shares (3.18% of outstanding shares) between February 4, 2025, and February 3, 2026.

The quarterly dividend will increase to C$0.8875 per share, payable March 31, 2025, marking CN's 29th consecutive dividend increase. Under the previous buyback program, CN has already repurchased 13.9 million shares at an average price of C$168.00, returning C$2,342 million to shareholders.

The new share repurchases will be conducted through various methods including discretionary transactions and automatic repurchase plans on both Toronto and New York stock exchanges. CN maintains its adjusted debt-to-adjusted EBITDA target of 2.5x.

Positive

• 5% dividend increase, marking 29 consecutive years of dividend growth
• New share buyback program for 20 million shares (3.18% of outstanding shares)
• Strong execution of previous buyback with C$2,342 million already returned to shareholders
• Maintaining healthy debt-to-EBITDA target of 2.5x indicating financial discipline

Negative

• Reduced buyback size compared to previous program (20M vs 32M shares)

Insights

Financial Analyst

CN's latest capital return announcement presents a well-balanced approach to shareholder value creation, though with some notable shifts in strategy. The 5% dividend increase extends CN's impressive 29-year streak of consecutive raises, positioning it among the elite dividend aristocrats in the transportation sector. The new quarterly dividend of C$0.8875 per share reflects management's confidence in sustainable free cash flow generation.

The new share repurchase program, however, reveals a more measured approach compared to the previous year. The authorization for 20 million shares represents a significant reduction from the previous program's 32 million shares, of which 13.9 million were repurchased at C$168.00 per share. This more conservative stance likely reflects broader market conditions and strategic capital allocation priorities.

Several aspects of this announcement warrant attention:

• The execution flexibility built into the program, including derivative-based programs and accelerated share repurchase options, provides management with tactical advantages in timing purchases
• The daily purchase limit of 290,084 shares on TSX ensures market stability while executing the program
• The maintenance of the 2.5x adjusted debt-to-EBITDA target demonstrates continued commitment to balance sheet strength

The reduced buyback authorization, while potentially appearing conservative, actually represents prudent capital management. It maintains flexibility for potential strategic investments while still returning significant capital to shareholders through the enhanced dividend program. This balanced approach should resonate well with institutional investors who value both growth investment and reliable shareholder returns.

MONTREAL, Jan. 30, 2025 (GLOBE NEWSWIRE) -- CN (TSX: CNR) (NYSE: CNI) announced today that its Board of Directors has approved a 5% increase in the 2025 dividend on the Company's outstanding common shares as well as the repurchase of its shares under a new normal course issuer bid (Bid).

“We are confident in CN’s resilience and financial strength throughout business cycles and are pleased to continue to uphold our track record of enhancing shareholder returns through share repurchases and uninterrupted dividend growth. Including today’s announcement, CN has declared increases in its cash dividend 29 consecutive times.”
- Ghislain Houle, Executive Vice-President and Chief Financial Officer, CN

The Bid permits CN to purchase, for cancellation, over a 12-month period up to 20 million common shares, representing 3.18% of the 628,224,299 common shares issued and outstanding of the Company on January 23, 2025. On that date, 627,856,196 common shares not held by insiders were issued and outstanding. CN continues to manage to its adjusted debt-to-adjusted EBITDA target of 2.5x. ⁽¹⁾

The Bid will be conducted between February 4, 2025, and February 3, 2026, through a combination of discretionary transactions and automatic repurchase plans at market prices prevailing at the time of purchase, through the facilities of the Toronto and New York stock exchanges, or alternative trading systems in Canada and in the United States, if eligible, and will conform to their regulations. Purchases may also be conducted using derivative-based programs, accelerated share repurchase transactions, or other methods of acquiring shares, subject to any required regulatory and stock exchange approvals and on such terms and at such times as shall be permitted by applicable laws.

The decisions regarding the timing and size of future purchases of common shares under the Bid are subject to management’s discretion and are based on a variety of factors, including market conditions. The new Bid was approved by the Toronto Stock Exchange (TSX) today. TSX rules permit CN to purchase daily, through TSX facilities, a maximum of 290,084 common shares under the Bid.

CN believes that the repurchase of its shares represents an appropriate and beneficial use of the Company's funds.

CN's current normal course issuer bid, announced in January 2024 for the purchase of up to 32 million common shares, expires on January 31, 2025. As at the close of trading on January 23, 2025, CN had repurchased 13,940,250 common shares at a weighted-average price of C$168.00 per share, excluding brokerage fees, returning C$2,342 million to its shareholders. Purchases were made through the facilities of the TSX and alternative trading systems.

CN's Board of Directors also approved a first-quarter 2025 dividend on the Company's outstanding common shares. A quarterly dividend of eighty-eight and three-quarter cents (C$0.8875) per common share will be paid on March 31, 2025, to shareholders of record at the close of business on March 10, 2025.

(1) Non-GAAP Measures
CN reports its financial results in accordance with United States generally accepted accounting principles (GAAP). CN also uses non-GAAP measures in this news release that do not have any standardized meaning prescribed by GAAP. These non-GAAP measures may not be comparable to similar measures presented by other companies.

CN's adjusted debt-to-adjusted EBITDA target excludes certain adjustments, which are expected to be comparable to adjustments made in prior years. However, management cannot individually quantify on a forward-looking basis the impact of these adjustments on its adjusted debt-to-adjusted EBITDA because these items, which could be significant, are difficult to predict and may be highly variable. As a result, CN does not provide a corresponding GAAP measure for, or reconciliation to its adjusted debt-to-adjusted EBITDA target.

CN Forward-Looking Statements
Certain statements by CN included in this news release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws. By their nature, forward-looking statements involve risks, uncertainties and assumptions. CN cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Forward-looking statements may be identified by the use of terminology such as "believes", "expects", "anticipates", "assumes", "outlook", "plans", "targets" or other similar words. Forward-looking statements reflect information as of the date on which they are made. CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related matters, or any other forward-looking statement.

About CN
CN powers the economy by safely transporting more than 300 million tons of natural resources, manufactured products, and finished goods throughout North America every year for its customers. With its nearly 20,000-mile rail network and related transportation services, CN connects Canada’s Eastern and Western coasts with the U.S. Midwest and the Gulf of Mexico, contributing to sustainable trade and the prosperity of the communities in which it operates since 1919.

Contacts:

Media	Investment Community
Ashley Michnowski	Stacy Alderson
Senior Manager	Assistant Vice-President
Media Relations	Investor Relations
(438) 596-4329	(514) 399-0052
media@cn.ca	investor.relations@cn.ca

FAQ

What is the size of CN's new share buyback program announced in January 2025?

CN's new share buyback program allows for the purchase of up to 20 million common shares, representing 3.18% of outstanding shares, between February 4, 2025, and February 3, 2026.

How much did CNI increase its dividend in 2025?

CN announced a 5% increase in its dividend for 2025, with the quarterly dividend rising to C$0.8875 per common share.

How many consecutive years has CNI increased its dividend?

CN has increased its dividend for 29 consecutive years, including the 2025 increase.

How many shares did CNI repurchase under its previous buyback program?

Under the previous program, CN repurchased 13,940,250 common shares at a weighted-average price of C$168.00 per share, returning C$2,342 million to shareholders.

When will CNI pay its first quarter 2025 dividend?

CN will pay its Q1 2025 dividend of C$0.8875 per share on March 31, 2025, to shareholders of record as of March 10, 2025.