CN Approves 3% Dividend Increase and Launches New Share Repurchase Program Under Normal Course Issuer Bid
Canadian National Railway Company (CN) (TSX: CNR) (NYSE: CNI) has announced a series of shareholder-focused capital allocation measures, underscoring the company’s confidence in its long-term financial strength and cash-generation capabilities. The company confirmed that its Board of Directors has approved a 3% increase in the dividend payable in 2026 on its outstanding common shares, alongside the authorization of a new normal course issuer bid (NCIB) that will allow CN to repurchase a substantial portion of its shares over the coming year.
Together, the dividend increase and the renewed share buyback program reflect CN’s continued commitment to balancing reinvestment in its core rail network with meaningful returns of capital to shareholders, while maintaining a strong balance sheet to support future growth and resilience.
Reinforcing a Disciplined Capital Allocation Strategy
Commenting on the announcement, Ghislain Houle, Executive Vice-President and Chief Financial Officer of CN, emphasized that the company’s latest capital allocation decisions are grounded in both operational performance and financial discipline.
These actions reflect CN’s strong cash flow and our disciplined approach to managing capital,” Houle said. “We are investing in the business, returning capital to shareholders and maintaining a strong balance sheet to support long-term performance.
This approach has been a consistent feature of CN’s financial strategy in recent years. As a critical transportation backbone for North America, CN operates an extensive rail network that spans Canada and reaches deep into the United States, connecting key ports, industrial hubs, and consumer markets. Maintaining and upgrading this network requires sustained capital investment, even as shareholders increasingly expect predictable and growing returns.
By approving both a dividend increase and a new share repurchase authorization, CN signals that it believes it can meet these dual objectives simultaneously.
Details of the New Normal Course Issuer Bid
Under the newly approved normal course issuer bid, CN is authorized to purchase for cancellation up to 24 million common shares over a 12-month period. This represents approximately 3.9% of the company’s issued and outstanding common shares, based on 613,523,348 shares outstanding as of January 22, 2026.
Of these outstanding shares, 613,155,320 were not held by insiders as of the same date, meaning the vast majority of the company’s equity remains publicly traded and available for repurchase under the program.
The bid will be in effect from February 4, 2026, through February 3, 2027, subject to market conditions and regulatory requirements. During this period, CN may repurchase shares through multiple channels and transaction structures, giving management flexibility in executing the program efficiently.
Multiple Execution Methods to Enhance Flexibility
CN indicated that share repurchases under the bid may be conducted through a combination of discretionary purchases and automatic repurchase plans, with shares acquired at prevailing market prices at the time of purchase. Transactions may be executed through the facilities of the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE), as well as through eligible alternative trading systems in both Canada and the United States.
In addition to open-market purchases, CN may also utilize more sophisticated mechanisms, including derivative-based programs, accelerated share repurchase transactions, or other permitted methods of acquiring shares. Any such transactions would be subject to applicable regulatory approvals and stock exchange rules, and would be executed on terms and at times consistent with governing laws and regulations.
This broad range of execution options is designed to allow CN to respond dynamically to market conditions, optimize the timing and pricing of repurchases, and minimize potential disruption to trading liquidity.
Regulatory Approval and Daily Purchase Limits
The new normal course issuer bid received formal approval from the Toronto Stock Exchange on January 29, 2026, clearing the way for CN to commence purchases under the program.
Under TSX rules, CN is permitted to repurchase a maximum of 395,423 common shares per day through TSX facilities. This daily limit is designed to ensure that buyback activity does not unduly influence market pricing or trading volumes, while still allowing meaningful progress toward the overall repurchase authorization.
Management retains full discretion over the timing and volume of repurchases within these limits. Decisions will be informed by a range of factors, including share price levels, broader market conditions, liquidity considerations, and alternative uses of capital.
Rationale for the Share Repurchase Program
CN stated that it believes the repurchase of its shares represents an appropriate and beneficial use of corporate funds. Share buybacks can serve multiple strategic objectives, including reducing the number of shares outstanding, enhancing earnings per share, and providing a flexible mechanism for returning excess capital to shareholders without committing to permanent increases in fixed payouts.
For long-term investors, buybacks may also signal management’s confidence in the intrinsic value of the company’s shares and its future earnings power. By canceling repurchased shares, CN effectively increases the ownership stake of remaining shareholders, potentially improving per-share financial metrics over time.
The company’s decision to pair the buyback program with a dividend increase further reinforces its commitment to delivering shareholder value across multiple channels.
Building on the Previous Share Repurchase Program
The newly announced bid follows the conclusion of CN’s current normal course issuer bid, which was announced in January 2025 and authorized the repurchase of up to 20 million common shares. That program is scheduled to expire on February 3, 2026, just one day before the new bid comes into effect.
As of the close of trading on January 22, 2026, CN had already repurchased 15,250,222 common shares under the existing bid. These shares were acquired at a weighted-average price of C$134.44 per share, excluding brokerage fees.
In total, the company returned approximately C$2.05 billion to shareholders through these repurchases. All purchases were conducted through the facilities of the TSX and eligible alternative trading systems, in compliance with applicable rules and regulations.
The transition from the expiring bid to the newly approved program ensures continuity in CN’s capital return strategy, without interruption or uncertainty for investors.
Dividend Increase Signals Confidence in Future Cash Flows
Alongside the new share repurchase authorization, CN’s Board of Directors approved a 3% increase in the company’s 2026 dividend on its outstanding common shares. While modest in percentage terms, the increase reinforces CN’s long-standing track record of consistent dividend growth and reflects management’s confidence in the company’s ability to generate sustainable free cash flow.
Dividends remain a core component of CN’s shareholder return framework, particularly for income-focused investors seeking stability and predictability. The increase aligns with the company’s broader objective of delivering balanced returns through a combination of dividends, share repurchases, and reinvestment in its operations.
Balancing Investment, Returns, and Financial Strength
CN operates in a capital-intensive industry where long-term success depends on the reliability, safety, and efficiency of physical infrastructure. As such, the company continues to allocate significant capital toward network maintenance, capacity expansion, technology upgrades, and safety initiatives.
The approval of both a dividend increase and a new share repurchase program suggests that CN believes its current and projected cash flows are sufficient to fund these investments while still returning excess capital to shareholders.
Maintaining a strong balance sheet remains a priority, particularly in an environment characterized by economic uncertainty, evolving trade patterns, and regulatory complexity. By adopting a measured and flexible approach to capital returns, CN aims to preserve financial resilience while rewarding investors.
With the new normal course issuer bid set to commence in early February 2026 and the dividend increase approved for the coming year, CN enters the next phase of its capital allocation strategy with clear priorities. The company’s actions reflect confidence in its operational performance, its financial position, and its ability to navigate both near-term challenges and long-term opportunities in the North American transportation landscape.
For shareholders, the announcement provides further evidence of CN’s commitment to disciplined capital management and long-term value creation—an approach that has underpinned the company’s performance over many years and remains central to its strategic outlook.
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