When it comes to long-term holds, security and stability are the top points to consider. That’s why today we’re considering Canadian National Railway (TSX:CNR), part of the railway duopoly in Canada that simply isn’t going anywhere. Today, let’s look at reasons to get in on this stable stock, and why it can turn any portfolio from good to great.
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1. Safe during downturns
Despite headwinds, CNR stock has proven to maintain its operational excellence. In fact, its second-quarter results demonstrated this in spades. CNR proved it can squeeze more profit out of its network even when trade is sluggish. Its operating ratio for the second quarter hit 61.7%, down 2.3% year over year, showing CNR stock is as efficient as ever in turning revenue into profit.
Furthermore, earnings per share (EPS) rose 7% year over year, despite revenue dipping by 1% during the quarter. Grain and fertilizer shipments rose in that time by double digits, however, helping offset weakness from its intermodal and forest products. All in all, the numbers showed CNR stock can keep earnings flowing, as well as cash, even when volumes stall, showing it’s an industrial stock to buy and hold long term.
2. Offering value
Alright, so is CNR stock valuable with all this going on? In short, yes. During the last year, shares of CNR stock have come down by 21%. Yet during that time, profitability and free cash flow (FCF) remain robust. Now it offers a forward price-to-earnings (P/E) ratio of 15.4 times, which is well below the 18 to 20 times range that CNR often commands even during better times.
Meanwhile, FCF came in at $922 million during the second quarter, adding up to $1.55 billion during the first half of 2025. This was up 5% year over year for CNR stock. And with a beta of just 0.86, the dividend stock is far less volatile than the broader market. And that’s pretty unusual considering it’s a stock that just had a double-digit pullback! That means investors could be getting in on an undervalued company before the market catches on.
3. Durable dividends
So, we have value and performance, but we also have dividends. This can really add up for long-term investors seeking a cash flow compounder. CNR stock has one of the most reliable dividend growth records on the TSX today. Right now, the dividend is at about 2.7%, paying out $3.55 per share on an annual basis. And what’s more, this is while offering a conservative 48% payout ratio!
Now, you have a company with a strong history, but also one that provides room for growth. And that’s likely, given it’s a stock with a long history of annual dividend hikes. For now, a $7,000 investment could bring in $188 in dividends alone for investors.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| CNR | $130.57 | 53 | $3.55 | $188 | Quarterly | $6,922 |
Bottom line
If you’re an investor interested in CNR stock, these three reasons demonstrate just why it’s been a strong stock for decades. If you can ignore macro noises of trade issues and softer intermodal demand, under the hood, you’ll see it’s strong. The stock now runs more efficiently, trades at a discount, and continues to pump out cash — perfect for any long-term holder on the TSX today.
