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Are rail transport stocks like CSX Corporation any good?

You may have heard famous investor Warren Buffet talk about railroads and his investment in BNSF Railway Company. Railroads can be great cash-generating machines. Would you also like to own some railroad stock? Then CSX Corporation is among the top railroad stocks to buy in 2020. Its stock has returned 7.51% so far in the year 2020 and it offers a 1.32% dividend yield as well. Let us take a closer look at the railroad company.

A background of CSX Corporation

CSX Corporation operates 21,000 miles of track, hauling coal products, chemicals, intermodal containers, automotive cargo, and other merchandise. CSX is a Class I railroad. In the US, railroad companies are identified as Class I, II, or III depending on their size. The classification is established by the Interstate Commerce Commission. Class I railroads are those that have annual revenues of $250 million or more in 1991 dollar terms. So, the $250 million is adjusted for inflation. Effectively, Class I railroad companies may be considered the blue chips among railroads.

CSX operates in areas that serve multiple population centers in 23 states located east of the Mississippi River. CSX also operates railroads in the Canadian provinces of Ontario and Quebec. CSX Corporation was incorporated in 1978 and is currently headquartered in Jacksonville, Florida.

Financial performances of top railroad stocks

Companies like Union Pacific Corporation, Canadian National Railway Company, CSX Corporation, Norfolk Southern Corporation, Canadian Pacific Railway Limited, and Kansas City Southern are the largest railroad companies listed on American stock exchanges.

Union Pacific has returned 12.26% year-to-date and 110.86% in the last 5 years. Canadian National Railway has returned 19.56% year-to-date and 76.57% in the last 5 years. CSX has returned 7.51% year-to-date and 170.6% in the last 5 years. Norfolk Southern has returned 10.19% year-to-date and 161.56% in the last 5 years. Canadian Pacific Railway has returned 19.91% year-to-date and 96.5% in the last 5 years. Kansas City Southern has returned 17.97% year-to-date and 87.22% in the last 5 years.

On a 5-year performance basis, CSX is clearly the best railroad stock.


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