The TSX is near its record high, but investors can still find deals for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) focused on income and long-term total returns.
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Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is a giant in the Canadian energy sector with a current market capitalization near $96 billion. The stock picked up a good tailwind in recent weeks adding $8 per share to the current price near $44, but it is still off the $52 it hit in October.
Oil prices have bounced on geopolitical risks in the Middle East. Traders are starting to position for a potential expansion of the hostilities between Iran and Israel to include the wider region now that the U.S. is officially involved. Analysts say oil could spike above US$120 per barrel if Iran decides to shut down the Strait of Hormuz, a narrow channel between Iran and Oman where at least 20% of oil production passes on route to international customers.
Fundamentals, however, suggest oil prices face headwinds in the coming months. Rising production from non-OPEC countries, including the U.S. and Canada, along with some quota cheaters in the cartel, are keeping the market in a surplus position. Analysts broadly expect the market to remain oversupplied into 2026, assuming there isn’t a major supply disruption in the Middle East.
CNRL continues to generate solid profits through the volatility. The company has both oil and natural gas assets to diversify the revenue stream. Management is good at making strategic acquisitions at opportune times, and the overall business is very efficient with a West Texas Intermediate (WTI) breakeven price of roughly US$40 to US$45 per barrel. WTI is currently US$74 per barrel.
The board increased the dividend in each of the past 25 years. Investors who buy CNQ stock at the current level can get a dividend yield of 5.3%.
Canadian National Railway
Canadian National Railway (TSX:CNR) trades near $140 at the time of writing, compared to $180 at one point last year.
This is a meaningful pullback for CN and gives investors who missed the big rally off the pandemic crash another chance to buy CNR stock at a discount.
CN is strategically important for the smooth operation of the Canadian and U.S. economies. The company operates roughly 20,000 route miles of tracks that run from the Atlantic to the Pacific in Canada and down to the Gulf Coast in the United States. CN moves cars, coal, crude oil, grain, fertilizer, forestry products, and finished goods. Revenue is generated in both Canadian and U.S. dollars, so the stock is a good option for investors who want exposure to the American economy through a top Canadian stock.
CN had a rough 2024. Labour disputes at both the company and key ports disrupted operations. This forced customers to seek out alternative options to move goods. Efficiency took a hit, driving up costs. Wildfires in Alberta also delayed shipments last summer. In the end, CN squeaked out a small increase in revenue compared to 2023, but profits dipped due to the higher expenses.
In 2025, management is more upbeat, even amid all the trade uncertainty. In the first-quarter (Q1) 2025 earnings report, CN said it expects to deliver 10% to 15% growth in adjusted diluted earnings per share (EPS) compared to last year. The board increased the dividend by 5% for 2025. This is the 29th consecutive annual hike to the distribution. CN is also buying back up to 20 million common shares under the current share-repurchase program.
As soon as the United States sorts out new trade agreements with Canada, China, and other major trading partners, CNR stock should see new interest from bargain hunters.
The bottom line
CNRL and CN pay good dividends that should continue to grow. If you have some cash to put to work, these stocks should be attractive at current levels and deserve to be on your radar for a buy-and-hold portfolio.
