The Best Canadian Stock to Own if Volatility Returns

When volatility returns, Canadian investors usually do best with businesses that keep earning even when the mood turns sour. Look for essential services, pricing power, and cash flow you can count on. Bonus points if the Canadian stock can buy back shares, raise dividends modestly, and stay disciplined on spending instead of trying to win headlines. So let’s consider one that looks like a stellar long-term buy in any market.

CNR

Canadian National Railway (TSX:CNR) runs one of the most important freight networks in the country. It hauls grain, energy products, autos, consumer goods, and industrial inputs across Canada and into the U.S. It also does the unglamorous job that matters most in a choppy market: it moves the real economy. When markets get jumpy, that “toll road” feel can become very appealing.

Over the last year, CN kept leaning into productivity and efficiency, and it showed up in the operating story. It talked about labour cost reductions and ongoing initiatives to run a tighter railroad, while still trying to keep service levels strong for customers. In short, it focused on doing more with what it already has, not just spending more money.

It also flagged some real-world friction that investors should not ignore. CN pointed to regulatory uncertainty that could constrain crew availability, which matters because railroads win or lose on staffing and fluidity when conditions get tough. Winter operations can also test everything at once, from locomotives to crew scheduling. Volatility does not only show up in stock charts, but in operations too.

Into earnings

The latest earnings give you a clean snapshot of why CN can hold up when markets get choppy. In Q4 2025, it reported revenue of $4.5 billion, up 2% year over year, and net income of $1.2 billion, up 9%. Diluted earnings per share (EPS) came in at $2.03, with an operating ratio of 61.2%, which improved from the prior year. That operating ratio improvement matters, because it shows cost discipline doing real work.

The full-year numbers stayed steady in the right places. For 2025, CN reported revenue of $17.3 billion, up 2%, and net income of $4.7 billion, up 6%. Diluted EPS came in at $7.57, up 8%, and free cash flow reached $3.3 billion, up 8%. It also repurchased about 15 million shares for roughly $2 billion, which can quietly boost per-share results over time.

Looking ahead, CN set its 2026 capital program spending at $2.8 billion, down about $500 million from 2025, which suggests its heavy investment cycle has started to normalize. That can help free cash flow, but it also puts pressure on execution, as the railroad still needs to keep the network resilient. On valuation, it trades with a dividend yield around 2.5%, which is not bargain-basement, but it is often the price of quality in a defensive compounder.

Bottom line

Could CN be the best Canadian stock to own if volatility returns? It could, if you want a business tied to the real economy, with strong cash generation and a proven ability to improve efficiency even when conditions feel messy. It could also be a pass if you need a big yield today, or if you worry about volume sensitivity in a downturn, weather disruptions, or regulatory and labour constraints. If volatility shows up, CN’s appeal is simple: you own the network, and you let time do the heavy lifting.

The post The Best Canadian Stock to Own if Volatility Returns appeared first on The Motley Fool Canada.

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More reading

• The Railway and Telecom Stocks Everyone’s Writing Off — Too Soon?
• What’s Coming Down the Line for Canadian National Railway in 2026
• 3 Top-Tier Canadian Stocks That Just Bumped Up Dividends (Again!)
• A Canadian Dividend Pick Down 22%: A “Forever” Hold
• The 3 Best Canadian Stocks to Buy With $1,000 Right Now

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.