The 1 Single Stock I’d Hold Forever in a TFSA

Canadian Pacific Kansas City looks like a “forever TFSA” candidate as it owns an irreplaceable rail network across North America and keeps finding new ways to improve profits.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published February 20, 4:40 pm EST

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Key Points

CP’s Canada-U.S.-Mexico rail moat makes it essential for moving goods, even in weaker economies.
Management is boosting efficiency, which can lift margins and earnings without needing perfect freight demand.
The dividend is small, but long-term returns can come from compounding earnings and improving free cash flow.

A single stock earns “hold forever” status in a Tax-Free Savings Account (TFSA) when it can compound through almost any economic mood without forcing you to babysit it. It needs a durable moat, pricing power, and a business model that stays essential even when consumers and companies tighten belts. It also helps if it can grow earnings while paying a modest, reliable dividend, because the TFSA rewards patient compounding more than flashy trading wins. So let’s look at one to consider on the TSX today.

Hourglass and stock price chart — Source: Getty Images

CP

Canadian Pacific Kansas City (TSX:CP) checks a lot of those boxes because it runs a transnational rail network that links Canada, the United States, and Mexico on a single line. That geography matters. Modern “nation building” does not just mean roads and bridges. It means moving grain, energy products, autos, and consumer goods efficiently across the continent. Rail sits in the unglamorous middle of that story, which is exactly why it can be powerful for long-term investors.

Over the last year, the theme has been steady execution in a choppy freight backdrop. Management kept pushing operational improvements under its Precision Scheduled Railroading playbook. In its fourth-quarter 2025 update, it highlighted record operating metrics like train weights and network speed. That kind of progress does not make headlines at dinner, but it shows up in margins, and margins drive long-run returns.

The other big “why now” factor has been the company leaning into a 2026 plan built around profitable growth instead of “growth at any price.” It pointed to a pipeline of unique opportunities, including record grain harvests and broader cross-border network advantages. If volumes improve, the network’s scale can turn that into outsized earnings growth. If volumes stay merely okay, better efficiency can still do real work.

Earnings support

The earnings numbers give you a clean snapshot of why this stock can feel like a forever hold. In the fourth quarter of 2025, it reported revenue of $3.9 billion. It delivered a reported operating ratio of 58.9%, which the company described as a record, and a core adjusted operating ratio of 55.9%. Reported diluted earnings per share (EPS) came in at $1.20, while core adjusted diluted EPS rose to $1.33.

Full-year results looked like a step forward, too. For 2025, revenue increased to $15.078 billion from $14.546 billion in 2024. Reported diluted EPS rose to $4.51 from $3.98, and core adjusted diluted EPS increased to $4.61 from $4.25. The reported operating ratio improved to 62.8%, and the company posted a core adjusted operating ratio of 59.9%. That’s the kind of steady margin story long-term investors want.

Looking ahead, management set expectations for 2026 that look like a classic compounding setup. It expects mid-single-digit volume growth, measured in revenue ton-miles, and low double-digit core-adjusted diluted EPS growth versus 2025’s $4.61 base. It also guided toward capital expenditures of about $2.7 billion, which it framed as roughly a 15% reduction from 2025. If it can grow earnings while easing capex pressure, free cash flow can look better fast.

Foolish takeaway

Valuation is where the “buy and hold” debate gets real. The stock does not look cheap on simple multiples, because rail quality usually carries a premium. It offers a dividend yield under 1%, and trades at 25.6 times earnings. That yield will not fund your retirement on its own, but it signals disciplined capital return while it reinvests to widen the moat.

So could it be the one single stock to hold forever in a TFSA? This is because it owns an irreplaceable network, keeps squeezing more efficiency out of the same rails, and has a clear plan to grow earnings in 2026 while controlling spending. It could also be the wrong choice if you want a high yield today or if you cannot handle a few dull years when freight demand softens and the stock goes nowhere. But if your goal is decades of compounding with minimal drama, a well-run rail can be the kind of “boring” that makes a TFSA quietly impressive.