Updated 3/6/25
CSX Corporation is a major player in the railroad industry, operating across 23 states and moving everything from coal to consumer goods. As a critical part of the North American supply chain, CSX has built a reputation for efficiency and strong financial performance. While it might not be the highest-yielding dividend stock out there, it has a history of reliable payouts and steady growth, making it an interesting choice for investors focused on long-term income.
Key Dividend Metrics
📌 Dividend Yield: 1.68% (Forward), 1.55% (Trailing)
📌 Annual Dividend Per Share: $0.52 (Forward)
📌 Payout Ratio: 26.82% (Low, leaving room for growth)
📌 5-Year Average Dividend Yield: 1.28% (Trending upward)
📌 Recent Dividend Increase: 8.33% bump from $0.48 to $0.52
📌 Next Dividend Date: March 14, 2025
📌 Ex-Dividend Date: February 28, 2025
Dividend Overview
CSX isn’t the stock you turn to for a high yield, but what it does offer is consistency. With a forward yield of 1.68%, it sits slightly above its five-year average of 1.28%, showing a pattern of gradual improvement. That’s a positive sign for dividend investors who want stable income with the potential for future growth.
The recent increase in its dividend from $0.48 to $0.52 per share—an 8.33% jump—highlights management’s confidence in the company’s financial position. More importantly, the payout ratio remains at a comfortable 26.82%, which means CSX retains a good portion of its earnings for reinvestment while still rewarding shareholders.
Dividend Growth and Safety
One of the more attractive aspects of CSX as a dividend stock is its ability to grow payouts without overextending itself. Over the years, the company has shown a steady pattern of increasing dividends, supported by strong free cash flow.
Generating $5.25 billion in operating cash flow and $2.14 billion in free cash flow over the past year, CSX has plenty of flexibility. That kind of cash cushion ensures dividends remain safe, even in times of economic uncertainty.
With the ex-dividend date coming up on February 28, 2025, and the next payout scheduled for March 14, 2025, CSX continues to show consistency in rewarding long-term shareholders.
Chart Analysis
Price Action and Trend
CSX has been in a clear downtrend over the past several months, with lower highs and lower lows forming consistently. The price has fallen below both the 50-day and 200-day moving averages, which is often a sign that momentum is weak and sellers are in control. The 50-day moving average crossed below the 200-day moving average a while back, forming a death cross, which can indicate prolonged downside pressure.
Recent price action shows that the stock attempted to bounce but failed to break back above either moving average, suggesting resistance remains strong. The most recent close at $37.03 is near the session’s low, which hints that there wasn’t much buying strength into the close.
Moving Averages
The 50-day moving average is sloping downward, confirming short-term weakness, while the 200-day moving average is also trending lower, reinforcing a broader bearish outlook. Whenever both moving averages are declining, it signals that buyers haven’t stepped in aggressively enough to shift the momentum.
Since the price remains well below both these averages, it’s clear that the stock is struggling to find support. A move above these levels would be the first sign that buyers are regaining control, but until then, the trend remains weak.
Volume and Market Participation
Volume has been relatively elevated on down days, indicating that selling pressure is backed by participation. Spikes in red bars over the past several weeks show moments where sellers took control, especially during sharp price declines.
There is a notable volume increase around October and again in late February, both of which coincide with price drops. When declines happen on high volume, it suggests that larger investors are reducing their positions rather than just normal market fluctuations.
Relative Strength Index (RSI)
The RSI is currently at 44.90, which places it just below the midpoint of the range. While it’s not yet in oversold territory, it does show that momentum is weak. Typically, an RSI below 50 suggests that selling pressure is outweighing buying interest. If RSI drops below 30, it could indicate that the stock is nearing an extreme oversold condition, which sometimes leads to a bounce.
On the flip side, there’s no clear sign of RSI diverging from the price action, meaning there hasn’t been any strong momentum shift yet. The stock is simply continuing its existing trend.
Analyst Ratings
📊 CSX Corporation (CSX) has recently seen a mix of analyst opinions, reflecting both optimism and caution about its future prospects. While some believe in the company’s strong fundamentals, others see short-term risks that could impact performance.
🔼 Upgrades
Several analysts have maintained a positive outlook on CSX. Investment firms such as Deutsche Bank and Barclays have reiterated their Buy or Overweight ratings, showing confidence in the company’s operational efficiency and strategic positioning in the transportation industry. These upgrades are largely based on CSX’s ability to control costs and maintain strong margins despite economic fluctuations.
🔽 Downgrades
On the other side, some analysts have taken a more cautious stance. Loop Capital recently downgraded CSX from Buy to Hold on February 3, 2025, pointing to concerns about short-term earnings pressure. A slowing economy and reduced freight volumes were cited as key reasons for the downgrade. These concerns highlight the cyclical nature of the railroad business, where downturns can directly impact profitability.
🎯 Consensus Price Target
The average analyst price target for CSX sits in the mid-$30 range, with a consensus of $36.74. Estimates range from a low of $28.00 to a high of $44.00, showing differing opinions on CSX’s future performance. The variation in price targets suggests that while some analysts see upside potential, others remain cautious due to external market conditions.
📌 Reasons for Ratings Adjustments
💰 Economic Trends – Trade volumes and commodity price shifts can significantly affect CSX’s revenue. Analysts watch these indicators closely when adjusting their ratings.
⚙️ Operational Strength – Strong cost management and improved efficiency have been key factors in CSX’s positive ratings. Any slip in execution could lead to a shift in sentiment.
📉 Industry Pressures – Railroad stocks often move with broader economic cycles. Concerns about slower freight demand and rising operating costs have played a role in recent downgrades.
🏛️ Regulatory Environment – Policies related to trade, tariffs, and infrastructure investment can impact CSX’s long-term profitability, leading analysts to revise their outlooks accordingly.
With opinions split between optimism and caution, CSX remains a stock that attracts attention from both value investors and those looking for income stability. The mixed sentiment reflects the complexities of the railroad industry and broader market forces shaping the company’s trajectory.
Earnings Report Summary
CSX Corporation wrapped up the fourth quarter of 2024 with net income coming in at $733 million, or about $0.38 per share. That’s a noticeable drop from the $882 million, or $0.45 per share, it reported during the same time last year. A big part of that decline was due to a non-cash goodwill impairment charge of $108 million, which weighed on the bottom line.
Revenue for the quarter landed at $3.54 billion, down 4% from the previous year. The biggest drag on revenue came from lower fuel surcharge collections and a dip in coal-related income. Even though CSX was able to push through some price increases and saw growth in merchandise volume, it wasn’t enough to offset those declines. Operating income for the quarter fell to $1.11 billion from $1.32 billion, with an operating margin of 31.3%. If you strip out the goodwill impairment charge, operating income would have been $1.21 billion, with a slightly stronger margin of 34.3%.
For the full year, CSX generated $14.54 billion in revenue, which was just slightly lower than in 2023. Operating income slid 5% to $5.25 billion, and net income for the year came in at $3.47 billion, or $1.79 per share, down from $3.67 billion and $1.82 per share the year before. Adjusting for that goodwill charge, net income would have been $3.55 billion, or $1.83 per share.
On the volume side, CSX moved 1.58 million units in the fourth quarter, up 1% from the same period a year earlier. Intermodal shipments were the main driver of growth, increasing 4%, while merchandise volume held steady. The coal business, however, took a hit due to lower global coal prices and reduced fuel surcharge revenue. For the year as a whole, merchandise revenue grew 3%, while intermodal volume increased by 2%.
CSX has been making strides in safety and customer service as well. The company reported its lowest total workdays lost due to safety incidents in its history, signaling an improvement in its workplace culture. Its customer satisfaction score, measured by its Net Promoter Score, hit an all-time high in the fourth quarter. The company also fast-tracked the completion of the Howard Street Tunnel project, cutting down what was supposed to be a three-year timeline to just six to eight months.
Looking ahead to 2025, CSX expects modest volume growth in the low to mid-single digits, largely driven by strength in its merchandise and intermodal businesses. However, coal shipments are likely to keep declining due to power plant closures and production issues at mining sites. The company is keeping a close eye on costs, planning to keep headcount stable while focusing on efficiency and productivity improvements. Capital expenditures should remain steady, aside from hurricane-related recovery efforts. CSX remains committed to boosting safety, service, and operational efficiency while continuing to invest in long-term growth.
Financial Health and Stability
For dividend investors, looking beyond the yield and into the company’s financial health is key. CSX checks most of the boxes, though there are a few concerns worth keeping in mind.
- Profitability is strong, with an operating margin of 35.38% and a net profit margin of 23.86%.
- The return on equity sits at 28.34%, a sign of efficient management.
- Revenue over the past year reached $14.54 billion, but quarterly revenue dropped by 3.8%, which could be a short-term issue.
- Earnings declined by 16.9% in the last quarter, something to watch moving forward.
Debt is a point of concern, with total borrowings of $19.19 billion and a debt-to-equity ratio of 153.39%. That’s high, but not unusual for a railroad company, where infrastructure costs require heavy capital investments. On the liquidity side, the current ratio of 0.86 suggests CSX may need to rely on incoming cash flow rather than cash reserves to cover short-term obligations.
Valuation and Stock Performance
At $31.17 per share, CSX is trading near the lower end of its 52-week range, which has seen highs of $38.35 and lows of $30.55. This suggests the stock may have found a floor, but it has struggled to gain momentum compared to the broader market.
- The price-to-earnings (P/E) ratio of 17.28 indicates the stock is fairly valued relative to its historical range.
- The forward P/E of 16.81 suggests modest earnings growth ahead.
- The PEG ratio of 2.12 is a bit on the high side, meaning some future growth may already be priced in.
- The price-to-book ratio of 4.69 is higher than some industrial peers but within range for a railroad.
From a technical standpoint, CSX has been under some pressure, with both the 50-day moving average ($32.47) and 200-day moving average ($33.63) above the current price. That signals a short-term downtrend, but long-term investors might see this as an opportunity to pick up shares at a discount.
Risks and Considerations
While CSX has a lot to offer dividend investors, there are a few risks that shouldn’t be ignored.
🔻 Revenue Decline – A 3.8% dip in quarterly revenue could indicate slowing demand. If this trend continues, earnings and dividend growth could take a hit.
🔻 High Debt Levels – With a debt-to-equity ratio of over 150%, CSX carries more leverage than some might be comfortable with. While railroads typically require significant capital investments, high debt can become an issue if economic conditions worsen.
🔻 Economic Sensitivity – The railroad business is cyclical. In a downturn, freight volumes can decline, putting pressure on margins. The 16.9% drop in quarterly earnings is a potential early warning sign.
🔻 Underwhelming Stock Performance – While the S&P 500 has gained 12% over the past year, CSX has dropped nearly 19% from its highs. That’s not ideal for investors looking for steady appreciation alongside dividends.
Final Thoughts
CSX is the kind of stock that dividend investors can count on for reliability rather than massive income. The 1.68% yield isn’t the highest out there, but it’s backed by a low payout ratio and strong free cash flow, which gives it room to grow over time.
On the financial side, profitability remains solid, but recent revenue declines and high debt levels warrant close monitoring. While the stock is trading at a discount compared to its past highs, it has yet to show signs of a strong recovery.
For those looking for a dependable dividend stock with long-term potential, CSX offers a good balance of income, stability, and future growth. It may not be the most exciting pick, but its consistency and financial strength make it a worthwhile consideration for patient investors.
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