If you’re looking for a Canadian stock that could quietly change your family’s financial future, Fairfax Financial (TSX:FFH) might be it. The name doesn’t get the same buzz as Canadian banks or flashy tech names, but what it lacks in hype it makes up for in disciplined execution and long-term compounding power. Over the past year, shares have surged nearly 55%, and the Canadian stock’s performance shows no signs of slowing.
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About Fairfax
At its core, Fairfax runs a global property and casualty insurance and reinsurance business. That means it collects premiums, invests the float, and compounds capital over decades. Where it stands out is in how well it’s been executing both sides of that model lately.
In the second quarter of 2025, Fairfax posted net earnings of $1.44 billion, up from $915 million a year earlier. That growth was fuelled by both underwriting profits and hefty investment gains. The insurance operations produced an underwriting profit of $427 million with a combined ratio of 93.3%. For context, anything under 100% means the insurer is making money on its core business before even factoring in investment income.
On top of that, Fairfax booked nearly a billion dollars in investment gains, mostly from equities. The Canadian stock’s book value per share jumped more than 10% in just six months, even after paying out a hefty $15 dividend earlier in the year.
More to come
This isn’t a one-off. Fairfax built its reputation on a patient, value-driven investment style under founder and CEO Prem Watsa. The Canadian stock leaned into U.S. treasuries for safety, while opportunistically buying equities that it believes can compound for years. With more than $67 billion in investments across its insurance subsidiaries and another $3 billion at the holding company, Fairfax has a war chest that allows it to move when opportunities arise. In May, it even expanded in Europe, buying a 33% stake in French insurer Albingia.
The strength of Fairfax lies in its ability to grow intrinsic value per share at a pace that outstrips most financials. The Canadian stock’s return on equity sits around 17%, well above many peers. Its price-to-earnings ratio is under nine, suggesting the Canadian stock is still attractively valued despite the run-up. That combination of growth, profitability, and low valuation is rare.
Considerations
There are risks, of course. Insurance is a cyclical industry, and catastrophe losses can hit earnings in any given year. Fairfax’s investment strategy, while successful in the long term, can also create volatility quarter to quarter. Currency fluctuations and global macro shocks are always a factor for a Canadian stock with such a wide reach.
But Fairfax has consistently shown that it can ride out downturns and emerge stronger. The balance sheet is healthy, with more than $10 billion in cash and short-term investments. Debt is manageable at under 26% of capital, leaving plenty of flexibility to keep investing and growing.
What makes Fairfax truly compelling for long-term investors is its compounding story. Watsa’s stated goal has always been to grow book value per share by 15% annually over the long term. While not every year hits that mark, the trajectory has been powerful. Book value has more than doubled over the past decade, and management continues to buy back shares opportunistically, further boosting per-share results. Add in a dividend that’s grown over time, and you have a recipe for wealth creation that can span generations. A $10,000 investment today would bring in a nice little $86 each year.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| FFH | $2,400.00 | 4 | $21.59 | $86.36 | Annual | $9,600.00 |
Bottom line
Fairfax isn’t a flashy stock. It doesn’t trade on hype or momentum, and it won’t double overnight. But that’s the point. This is a disciplined compounding machine with global reach, strong underwriting, and an investment engine that’s firing on all cylinders. For families thinking not just about the next few quarters but about the next few decades, Fairfax could be the kind of anchor stock that builds real generational wealth.
