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CSX Corporation Stock Continues its Climb; Reports Record Earnings

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CSX Corporation Stock Continues its Climb; Reports Record Earnings
By Lou Phelps
SBJ Staff
Feb. 14, 2011 - In much of Chatham County, train whistles can be heard on any given night, moving products to and from the Savannah port. And, as the U.S. economy begins to turn upward, it’s carrying the port tonnage numbers and the railroad industry along with it.
For the Port of Savannah and the Port of Brunswick, rail service is provided CSX Corporation and Norfolk Southern.
CSX Corporation (NYSE: CSX) had a banner week last week, with its stock rising five percent from a close on Feb. 4 at $69.70 to close on Feb. 11 at $73.24.
Friday, the company also approved a 26 cent per share quarterly dividend, payable on March 15 to shareholders of record as of Feb. 28, due to a record $430 million in earnings in the 4th quarter 2010.  CSX’s earnings reports were released on Jan. 25. On that date, the company also announced an additional $2 billion in capital investment in the company’s lines and services. This follows a $1.8 billion investment last year.
Major institutional investment houses are buying rail stocks in increasing numbers. For example, on Friday, Capital Research Global Investors announced that it had increased its holdings in CSX to 46,384,988 shares of the company as of 12/31/2010, now controlling 12.4% of all outstanding shares. As of 12/31/2009, the investment firm owned approximately 41 million shares or 10.5% of all shares.
Capital Research Global Investors is one of two equity divisions of Capital Research and Management Company (CRMC), led by James F. Rothenberg CFA. Rothenberg also serves as Treasurer of Harvard, and in that role serves as a member of both the Harvard Corporation and the Board of Overseers.
Back in April 2007, respected investor Warren Buffet announced that he was going to buy rail stocks and purchased 11% of the stock of  Burlington Northern Santa Fe, which was the largest railroad company in North America that year.
Historically, railroad stocks were one of the most secure investments one could own; new competitors don’t just spring up – as it’s tough to start a new railroad - and product has got to be moved.
As the U.S. economy begins to improve in 2011, and consumers buy more products, there will be more products to be moved.  It’s good news for CSX which operates the rail lines that service the Savannah port.
On Friday, Capital Research Global Investors also announced that it had increased its holdings in Norfolk Southern Corporation railroad company to 21,107,071 shares, or 5.8% of all shares outstanding.
Norfolk Southern’s Financial Reports
The last week of January, Norfolk Southern Corporation also released its 4th Qtr. 2010 results, reporting a 14 percent increase in revenues to $2.4 billion, and a 17 percent increase in railway operations revenue to $642 million. Net income increased 31 percent to $402 million.
The company announced a 4th Qtr. per share dividend of $.40 cents per share, up from $.36 cents in the prior year.
In summary for 2010 vs. 2009, railway operating revenues increased 19 percent to $9.5 billion; income from railway operations improved 36 percent to $2.7 billion; net income increased 45 percent to $1.5 billion; diluted earnings per share rose 45 percent to $4.00; and the railway operating ratio improved by 5 percent to 71.9 percent.
Since its inception in 1982, Norfolk Southern has paid dividends on its common stock for 114 consecutive quarters.

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