If I could only own one stock inside my Tax-Free Savings Account (TFSA) for the rest of my life, it would be Canadian National Railway (TSX:CNR).
I know that’s a bold claim, but after digging through the company’s recent investor conference appearances and its 2026 annual meeting, I feel more confident in this pick than almost any other name on the TSX.
A TFSA rewards patience, and every dollar of capital gains or every dividend you collect inside it stays completely tax-free, forever. An ideal TFSA stock is one poised to deliver steady capital gains and consistent dividend hikes year after year.
CN checks that box better than almost any other Canadian company I follow.
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The bull case for the TSX dividend stock
Canadian National Railway moves grain, potash, oil products, chemicals, and shipping containers across a rail network stretching from the Pacific coast of Canada down to the U.S. Gulf Coast.
What impressed me most is how CN keeps squeezing more performance out of the same network.
Chief Financial Officer Ghislain Houle told shareholders at CN’s Annual General Meeting in May that the company’s adjusted operating ratio improved by 1.2 percentage points to 61.7% in 2025, while adjusted diluted earnings per share rose 7% to $7.63. Free cash flow exceeded $3.3 billion, up roughly $250 million from the prior year.
At the Wells Fargo Industrials & Materials Conference in June, Chief Operating Officer Patrick Whitehead explained that CN’s train and engine crew productivity climbed 13% year over year, while the entire employee base increased productivity by 9% on a per-gross-ton-mile basis.
The Canadian dividend stock is also running its most fuel-efficient locomotive fleet ever, using about 15% less fuel per gross ton mile than the industry average.
Chief Commercial Officer Janet Drysdale told analysts at the Bernstein Strategic Decisions Conference in May that revenue ton miles grew about 3% in the first quarter and were tracking close to 4% by June, driven largely by record grain crops in both Canada and the United States.
CN recently announced the ACE terminal, a partnership with energy companies Keyera and AltaGas to move natural gas liquids from the Montney Shale region in Alberta and British Columbia to Prince Rupert for export.
CEO Tracy Robinson called the partnership a decades-long growth opportunity, pointing to expanding fractionation capacity and rising global demand for propane, butane, and ethane. Management expects that segment to grow at double-digit rates for years to come.
Additionally, metals shipments, which faced steep tariffs, have proven more resilient than expected, and aluminum has started moving into the U.S. market again despite a 50% tariff.
CNR is a top dividend stock
CN has increased its dividend every year since the company was privatized in 1995. The board approved another 3% increase in January 2026. The company’s annual dividend per share has risen from $0.08 in 1997 to $3.66 per share in 2026.
Further, CN has returned over $25 billion to shareholders over the last five years through dividends and buybacks, including $15 billion in share repurchases.
Alternatively, CN faces uncertainty around the proposed Union Pacific and Norfolk Southern merger, ongoing trade negotiations, and a weak housing market that has impacted lumber shipments.
But CN has spent four years building extra capacity, cutting costs through its Fast Tracking initiative, which has already saved about $40 million, and positioning itself atop some of the richest natural resource deposits in North America.
The combination of a protected network, disciplined cost management, growing energy and grain volumes, and three decades of uninterrupted dividend growth is what I want anchoring my TFSA.
