1 Canadian Dividend Stock Down 10% to Buy and Hold for Decades

The pullback in the TSX is giving dividend investors a chance to buy Canadian stocks at discounted prices for their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios focused on income and long-term total returns.

Canadian National Railway

Canadian National Railway (TSX:CNR) trades near $139 at the time of writing compared to $155 a few weeks ago. The pullback gives investors who missed the surge earlier this year a chance to buy the stock on a meaningful dip.

CN’s share price was on a downward trend for most of 2024 and 2025, but started to stabilize late last summer and has trended higher in a choppy pattern over the past six months.

Bad weather and labour disputes caused most of the grief in 2024. Delays related to wildfires in Alberta and strikes at key ports disrupted volume across CN’s rail network and drove up expenses. In early 2025, management initially predicted better days for the business, but tariffs imposed by the United States forced CN to reduce its guidance last year.

CN entered 2026 on a more cautious note, citing ongoing uncertainty over the tariff situation. The railway operates roughly 20,000 route miles of tracks that connect ports on the Atlantic and Pacific coasts of Canada with the Gulf Coast in the United States. CN moves everything from coal, cars, and crude oil to forestry products, fertilizer, and finished goods. Tariffs have not only disrupted trade across the border, but also with international customers.

Soaring oil prices in recent weeks have added to the uncertainty. A prolonged spike in the price of oil would put pressure on the global economy, potentially triggering a recession in Canada and the United States. At the same time, Canada, the U.S., and Mexico have a July 1 deadline to decide on whether they will extend, amend, or end the Canada-U.S.-Mexico Agreement (CUSMA) that currently determines which products are able to move tariff-free between the three countries.

Another item to keep in mind is the proposed merger in the United States between two major American railways, Union Pacific and Norfolk Southern. Analysts are still trying to figure out what the impact would be on the other industry players, including CN. Regulators could block the deal on competition concerns, but until there is clarity on the outcome, the situation will likely be an additional headwind for CN’s share price.

As such, investors should brace for more near-term turbulence.

Opportunity

Contrarian investors started to buy the stock in recent months on the expectations of resolution on the trade issues. Despite all the uncertainties, CN remains a very profitable company. The business generates significant free cash flow and the board is using excess cash to buy back stock, while still supporting dividend growth. CN has increased the dividend for 30 consecutive years.

Trade deals will eventually get sorted out between the U.S., Canada and Mexico, as well as between the United States and the rest of its key trading partners. High oil prices will drive up inflation and could cause an economic downturn in the near term, but the market will eventually stabilize.

When the headwinds get removed, CN’s share price should rebound.

The bottom line

Investors will need to be patient. It wouldn’t be a surprise to see CN’s share price slide back to the 12-month low if the broader market sells off on recession fears in the coming weeks or months. That being said, investors with a buy-and-hold strategy might want to start nibbling today and look to add to the position on additional weakness.

The post 1 Canadian Dividend Stock Down 10% to Buy and Hold for Decades appeared first on The Motley Fool Canada.

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More reading

• 4 TSX Stocks to Buy if the Economy Slows but Doesn’t Break
• 3 TSX Dividend Stocks for Investors Who Want to Stop Watching the Market
• The Best Stocks to Invest $1,000 in Right Now
• The Railway and Telecom Stocks the Market’s Writing Off Too Soon
• The Best Canadian Dividend Stocks to Buy and Hold Forever in a TFSA

Fool contributor Andrew Walker has no position in any stock mentioned. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.