Canadian Pacific raises quarterly dividend

Photo: The Canadian Press. All rights reserved.

Canadian Pacific Railway locomotives work in the Calgary yard Wednesday, May 16, 2007. The U.S. investment firm trying to replace the chief executive of Canadian Pacific Railway Ltd. says the railway's performance has deteriorated under the current leadership, despite improved financial results.THE CANADIAN PRESS/Jeff McIntosh

Canadian Pacific Railway Ltd. is raising its quarterly dividend as a U.S. investment manager seeking to replace its chief executive argued the railway's improved financial results were not due to improved management.

The Calgary-based railway said it now would pay a quarterly dividend of 35 cents to shareholders, up from 30 cents.

"Canadian Pacific is committed to enhancing value for shareholders through profitable growth, execution of our operating plan, balanced investment and dividend growth," CP chief financial officer Kathryn McQuade said.

"Our multi-year plan is clearly delivering record operating and service metrics with financial results and operating cash flow to fund our capital investments and increase our dividends 17 per cent."

Last week, the company reported a first-quarter profit of $142 million or 82 cents per share on $1.37 billion in revenue.

That compared with a profit of $34 million, or 20 cents per share, on $1.16 billion in the same quarter a year earlier when winter storms bogged down the railway and slowed shipments.

However, Bill Ackman, head of Pershing Square Capital Management, the New York hedge fund seeking to oust CEO Fred Green, said the improvement in earnings was not all due to improvements at the railway.

In a letter to shareholders issued Monday, Ackman said the railway benefited from a mild winter and an improved economy.

"The relief from headwinds and the benefit of a tailwind should not be confounded with 'successful execution'," Ackman said.

Ackman also said Monday that the company didn't set aside money for bonuses in its first-quarter results, which made operating ratios appear healthier.

"If things have really turned, then why aren't they paying bonuses to their team? The answer is to make their quarter look better," he said in an interview with the Business News Network.

But CP said late Monday that first-quarter accruals actually increased by $7 million due partly to a higher share price, while executive compensation accruals were $4 million higher compared to the first quarter of 2011.