CP to buy back 3% of shares

Canadian Pacific Railway Ltd. announced a new round of stock repurchases, and will also hike its dividend payout by double digits.

The Calgary-based company said the normal course issuer bid (NCIB) for cancellation of 4,384,062 shares, or 3% of its as of at May 1, was accepted by the Toronto Stock Exchange. The offer is effective May 15, 2017 and terminates May 14, 2018.

CP will purchase shares at market price at the time of purchase, the company said in a statement, both as part of an automatic purchase plan during internal quarterly blackout periods, and at management’s discretion.

As of May 1, CP had 146,747,454 common shares outstanding.

“CP believes that the purchase of its shares from time to time is an appropriate and advantageous use of its funds,” the company said.

On Wednesday in early trading, CP shares were at $156.25 on the New York Stock Exchange, up a half-percent.

The railroad purchased 6.91 million common shares at a weighted average price of $175.01 under its previous normal course issuer bid, which expired May 1, 2017. In total, CP has repurchased 30.94 million of its common shares since 2014, or 21% of its public float, as at March 31, 2017.

At the same time, CP’s board declared a quarterly dividend of $0.5625 per share, an increase of 12.5% from the previous dividend of $0.50 per share. The dividend is payable on July 31, 2017 to holders of record at the close of business on June 30, 2017.

“A new share buyback program and increase in the dividend demonstrate CP’s confidence in the long-term growth prospects of the company,” said CP President and Chief Executiev Keith Creel. “CP’s strong cash flow generation enables us to return cash to shareholders while reinvesting in the franchise and maintaining the strength of the balance sheet.”