Why I’d Buy Fairfax Stock for My TFSA and Never Sell

Written by Amy Legate-Wolfe at The Motley Fool Canada

If I could only pick one stock to hold in my Tax-Free Savings Account (TFSA) forever, Fairfax Financial (TSX:FFH) would be at the top of the list. This isn’t your typical high-flying tech stock or monthly dividend play. It’s a slow-burning wealth machine that’s steady, smart, and built for the long haul, which is why I’ll continue to drip-feed into it for decades.

Fairfax has quietly become a juggernaut in Canadian investing circles. The Canadian stock has a hand in insurance, reinsurance, investments, and even a growing collection of non-insurance businesses. It’s often compared to Berkshire Hathaway, and for good reason. Under the leadership of founder and CEO Prem Watsa, Fairfax compounded book value per share at an impressive pace for decades. This year has been no exception. Book value per share jumped 10.8% in just six months, even after factoring in a $15 dividend.

Let that sink in. Fairfax paid shareholders a hefty dividend in the first quarter (Q1), and it still boosted book value by double digits. That kind of performance shows up in the stock price, which has climbed nearly 50% over the past year. And yet, it still trades at a modest forward price-to-earnings (P/E) ratio of under 10.

In Q2 2025, the Canadian stock reported earnings of $1.44 billion, up from $915 million last year. Earnings per share (EPS) came in at $61.61. The big driver was investment gains. Fairfax booked $952 million in net gains, including $800 million from common stocks. As always, results like this aren’t guaranteed every quarter, but the long-term trend is compelling. Fairfax’s portfolio is heavily tilted toward U.S. treasuries and quality corporate bonds, giving it a stable base while it waits for equity investments to shine.

But it’s not just the Canadian stock portfolio doing the heavy lifting. The core insurance business is thriving, too. The company’s combined ratio in Q2 was 93.3%, well below the break-even mark of 100%. That means Fairfax is underwriting profitably, collecting more in premiums than it pays out in claims and expenses. Net premiums written grew nearly 5% this quarter, and underwriting profit jumped to $426.9 million.

Fairfax also earns big from its interest and dividend income, which totalled $580 million this quarter. On top of that, its various operating businesses added $126 million in income, helped by acquisitions like Sleep Country and Peak Achievement. The Canadian stock keeps finding smart ways to expand its empire.