When thinking of a lifetime of passive income, you have the Canadian Pension Plan (CPP) and Old Age Security. These benefits generally begin at age 65 and last till you die. However, the problem with these income sources is that they cannot be passed on to your children. Moreover, you cannot start CPP before 60, and the income is taxable. Investing in dividend stocks can help you start earning passive income irrespective of your age. And if you invest through the Tax-Free Savings Account (TFSA), the income is tax-free. You can also pass on the TFSA account to your spouse or common-law partner after your demise by making them your successor.
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A TSX dividend stock is down 15% this year
Canadian National Railway (TSX: CNR) stock has dipped 15% in the last year, continuing the downward trajectory that began in March 2024. The downtrend was triggered by labour issues that disrupted the operations. This year was supposed to be a year of recovery, but the tariff war reduced the trade volumes for metals and minerals.
Canadian National Railways has a vast rail infrastructure that connects Canada’s Eastern and Western coasts with the U.S. Midwest and the Gulf of Mexico. It helps transport bulk, merchandise, and consumer products like automotive, metals, grain, fertilizers, and more. Its major source of revenue is freight. The back-to-back headwinds have pulled the stock down closer to its five-year low.
Is this stock a buy at the low?
Despite the lower trade volumes between Canada and the United States, intermodal transport has been strong. The Canadian government is looking to diversify its trading partners, which will require connectivity to ports.
In the federal budget of 2025, the government has announced a $5 billion Trade Diversification Corridors Fund. The fund will be used to build new ports, airports, and railway infrastructure to improve Canada’s access to international markets. This transition will benefit Canadian National Railway in the medium term, but short-term headwinds will keep the stock grounded for some time.
The management is improving train efficiency, reducing costs, and capital spending to improve cash flow in the short term. This will help the company to sustain its dividend per share and maybe grow it by a modest 2-3%.
Can Canadian National Railway give you a lifetime passive income?
Business ups and downs will continue, but railways will remain a cost-efficient way to transport bulk goods on land and between provinces.
Canadian National Railway is a stock to buy for dividends. The company has been growing its dividend between 5% and 32% for the last 20 years. During this time, it has withstood several major crises, like the 2007 Global Financial Crisis, the 2016 oil crisis, the 2020 pandemic, and now the 2025 tariff war.
It has not only sustained but also grown its dividend, showing its resilient capital allocation. It can continue what it has been doing for the last 20 years for the next 20 years as Canada charts out new trade corridors. For an export-led economy like Canada, trade-related stocks will offer resilience as they get government support.
A $10,000 investment in Canadian National Railway today can buy you 77 shares at $129.85 per share. If the company increases its 2026 dividend by 5%, your 77 shares will learn you $287 in annual dividends. This amount may look small today, but the annual dividend growth will beat inflation and increase passive income.
In 2016, 77 CNR shares paid $115.5 in annual dividends, and today it has grown 150%. The next 10 years could see an accelerated dividend growth with new trade opportunities and possibly double your dividend income in five years instead of eight.
