CSX Hikes Quarterly Dividend Rate – Analyst Blog

Jacksonville, Florida-based, CSX Corporation’s (CSX) board of directors approved an 8.0% hike in the company’s quarterly dividend rate. The revised quarterly rate now stands at 26 cents per common share compared with 24 cents previously, resulting in an annual rate of $1.04 per common share. The revised dividend will be paid on December 15, to shareholders as of the close of business on November 30. 

CSX Corporation follows a consistent policy of returning cash to shareholders via dividend payments and share repurchases. For the last three years, the company paid dividends totaling $884 million. The recent enhancement is the company’s eighth dividend increase in the past five years.

During the first six months of fiscal year 2010, the company paid roughly $184 million in dividends and repurchased shares worth $823 million. Cash and cash equivalents at the end of the period was $633 million and net cash from operating activities was around $1,422 million.

CSX Corporation is one of the nation’s leading transportation suppliers. The company provides rail-based transportation services including traditional rail service and the transport of intermodal containers and trailers through its subsidiaries CSX Transportation Inc. and CSX Intermodal Inc.

The company posted encouraging second quarter results with net earnings per share of $1.07 surpassing the Zacks Consensus Estimate by 10 cents. Top-line results were also solid with an increase of 22% year over year due to volume gains across all major markets.

We anticipate that CSX will benefit from improved railroad fundamentals, increased coal demand, better pricing environment, cost-controls measures and productivity improvements. In addition, the company’s strong cash-rich balance sheet along with the shareholder’s return makes it attractive for long-term investment.

We currently maintain an Outperform recommendation on the stock.