The TSX continues to hit new record highs, even as U.S. tariffs threaten to push the Canadian and U.S. economies into a recession.
Investors who missed the big rally in the market after the April pullback are wondering which TSX dividend stocks still trade at reasonable prices and are good to buy today for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and total returns.
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Canadian National Railway
Canadian National Railway (TSX: CNR) has increased its dividend in each of the past 29 years and is buying back up to 20 million common shares under the current stock-repurchase plan.
Management is taking advantage of the steep pullback in the share price to reduce the float at a cheap cost. CN recently dipped to a new four-year low of around $130 per share after reducing its 2025 earnings growth guidance due to the ongoing uncertainty connected to the trade negotiations between Canada and the United States.
CN’s rail network, consisting of 20,000 route miles, connects ports on the Pacific and Atlantic coasts of Canada to the Gulf Coast in the United States. Approximately 300 million tons of cargo pass along the system every year. CN transports grain, coal, fertilizer, cars, forestry products, crude oil, and finished goods for both domestic and international clients. The company’s services are important for the smooth operation of the Canadian and American economies.
CN traded as high as $180 per share last year before going into an extended slide. Delays caused by labour strikes at both CN and key ports forced some customers to find different ways to transport their products during the shutdowns. Wildfires in Alberta added to the pain by disrupting services last summer. These interruptions drove up expenses and led to lower-than-expected revenue growth last year.
In 2025, investors are more focused on the threat that U.S. tariffs pose to trade between Canada and the United States. Uncertainty has businesses holding back on investments and delaying non-essential orders. If negotiations between the U.S. and Canada take too long, or tariffs are too high, there could be a meaningful economic downturn. This would be negative for CN.
In recent days, rumours of potential consolidation in the American rail industry have added to the uncertainty.
Opportunity?
Near-term risks remain, and CN’s share price could certainly fall to a new multi-year low. Contrarian investors, however, might want to start nibbling and look to add on any further weakness. A trade deal will eventually get done, and CN will benefit from long-term economic growth in Canada and the United States.
Management still expects the business to deliver growth in adjusted diluted earnings per share this year, and CN is maintaining its $3.4 billion capital program. The railway remains very profitable and generates attractive free cash flow.
Investors who pick up CN stock at the current level can get a dividend yield of 2.7%. Buying this stock on big pullbacks has historically proven to be a profitable move for patient investors.
