Canadian National Railway Co. (TSX: CNR, NYSE: CNI) reported strong first-quarter earnings thanks to a rebound in freight volumes. Earnings per share jumped 15% year over year, and the dividend was increased by 10%.

Revenue climbed 8% due to a 9% increase in carload volumes coupled with a 2.7% freight-rate increase. All the main categories saw higher volumes except forest products. Grain and fertilizers were especially strong, with volumes surging 24%.

Operating expenses were up 9%, mainly due to a 46% jump in fuel costs. Other costs were well contained, resulting in a marginal increase in the operating ratio (operating expenses as a portion of revenue) to 59.4%.

Canadian National’s cash-flow generation remains abundant, and the balance sheet is solid. These attributes are among the company’s key strengths and support further share repurchases and dividend growth. The company reduced its shares outstanding by 8% over the past three years, which helped grow earnings per share during a time when business conditions were quite difficult.

Management previously forecast that 2017 could see a moderate rise in volumes and mid-single-digit growth in earnings per share. This projection now seems conservative in light of the company’s excellent first-quarter results.

Canadian National is our highest-quality Dividend Champion, but the stock’s valuation remains full in absolute terms, with a premium valuation compared to its North American peers. Shares of Canadian National currently yield 1.6%, and we estimate the stock’s fair value at C$92, or US$70.

Choice Properties REIT (TSX: CHP-U, OTC: PPRQF), which primarily serves as the landlord to top Canadian retailer Loblaw, delivered another quarter of steady progress.

Funds from operations per unit increased 5.2% year over year, while the distribution per unit was 6.0% higher than a year ago. Choice announced a further increase in the distribution, to an annualized C$0.74 per unit, effective with the June 15 distribution.

Rental revenue climbed 5.8%, as same-store rents rose 2.7% while occupancy decreased marginally to 98.8%. Operating expenses were well controlled, rising just 1.6%, resulting in growth in net operating income of 7.5%.

With a yield of 5.1%, Choice Properties’ valuation remains reasonably attractive at current levels.