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

2026-02-20 16:40:00 ET

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.

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.

The post The 1 Single Stock I’d Hold Forever in a TFSA appeared first on The Motley Fool Canada .

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

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