Canadian National Railway shares have dropped significantly over the past year, drawing attention from contrarian, long-term investors. With the stock near multi-year lows, some see a potential buying opportunity for Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios focused on dividend growth and total returns.
Business Overview
CN operates roughly 20,000 miles of railway across Canada and the United States, connecting key ports on the Atlantic and Pacific coasts to the Gulf of Mexico. It transports about 300 million tons of cargo annually, including goods such as grain, coal, fertilizer, forestry products, crude oil, and cars.
The company earns revenue on both sides of the border, giving Canadian investors direct exposure to U.S. economic growth. A strong U.S. dollar also benefits CN, as its American income converts into more Canadian dollars.
Despite market challenges, CN continues to invest in long-term growth and efficiency, with a 2025 capital expenditure program totaling about $3.4 billion.
Also Read: Best Canadian AI stocks 2025
Why the Stock Fell
Several issues weighed on CN’s performance in 2024. Labour strikes at the railway and at Canadian ports, along with wildfires in Alberta, disrupted operations and drove up costs. Some customers were forced to switch to alternative transportation. As a result, while revenue rose slightly compared to 2023, earnings declined about 5% due to increased expenses.
Also Read: Top Canadian tech AI stocks
Looking Ahead to 2025
Investor concerns for 2025 centre around tariffs. Ongoing trade tensions between the U.S., Canada, and other global partners raise the risk of a potential recession, which would hurt demand for CN’s transportation services.
In its Q1 2025 earnings, CN projected 10% to 15% adjusted EPS growth for the year. However, in the Q2 update, management revised its guidance, now expecting less than 10% growth due to the continued uncertainty surrounding tariffs.
Upside Potential
Markets may be factoring in the worst-case scenario. If trade deals are reached in the near term, particularly with major partners like the U.S. and China, fears of a global recession could ease. Even if negotiations drag on, tariffs are unlikely to remain a long-term drag, and businesses, including CN, will adapt.
Once there’s greater clarity on trade policy, demand for CN’s services could recover, potentially driving the stock higher.
Dividends and Buybacks
CN has increased its dividend for 29 straight years, including a 5% boost for 2025. The company is also repurchasing up to 20 million shares through its current buyback program. At current prices, the stock offers a dividend yield of approximately 2.7%.
Bottom Line
Canadian National Railway stock may be oversold, and for long-term investors focused on dividend growth and total return, it could be a compelling addition to a TFSA or RRSP—especially if trade tensions ease and economic conditions stabilize.
Sign Up For our Newsletters to get latest updates
