When the economy expands and the government spends money on infrastructure projects, it’s a good indication that industrial stocks may be a suitable addition to your investment portfolio. Innovations and clean energy solutions can help make industrial stocks even more appealing.
From manufacturing and construction to transportation and industrial machinery, they are all considered part of the industrial sector in Canada.
Here, we’ll explore the top Canadian industrial stocks, industrial manufacturing companies and explain what you should consider whether industrial stocks are a good investment for your portfolio.
Top 10 industrial stocks in Canada
Here’s a list of Canada’s leading industrial stocks that includes the key metrics and the industry sectors they belong to:
| Industrial manufacturing companies | Fast facts | Description |
|---|---|---|
| Thomson Reuters (TSX:TRI) |
Sector: Corporate services
Market cap (billions): $108.23 Dividend yield: 1.26% |
Strong revenue growth and global presence |
| Canadian Pacific Kansas City (TSX:CP) |
Sector: Transportation
Market cap (billions): $102.95 Dividend yield: 0.69% |
A key player in the NA rail network to drive long-term revenue growth |
| Canadian National Railway Co. (TSX:CNR) |
Sector: Transportation
Market cap (billions): $91.60 Dividend yield: 2.32% |
Massive freight network in Canada and US to help with trade |
| Waste Connections (TSX:WCN) |
Sector: Waste management
Market cap (billions): $69.34 Dividend yield: 0.61% |
Stable revenue growth and market expansion in waste disposal |
| WSP Global (TSX:WSP) |
Sector: Construction and engineering
Market cap (billions): $32.57 Dividend yield: 0.60% |
Specializes in infrastructure and sustainability |
| GFL Environmental (TSX:GFL) |
Sector: Waste management
Market cap (billions): $24.89 Dividend yield: 0.12% |
Bold expansion strategy to increase revenues |
| RB Global (TSX:RBA) |
Sector: Diversified trading and distributing
Market cap (billions): $23.42 Dividend yield: 1.22% |
Auctions and sells industrial equipment with market presence |
| CAE Inc. (TSX:CAE) |
Sector: Aerospace and defense
Market cap (billions): $10.52 Dividend yield: N/A |
Does well when there’s an increase in global defence spending and pilot training |
| ATS Corporation (TSX:ATS) |
Sector: Industrial machinery
Market cap (billions): $4.73 Dividend yield: N/A |
Drives innovation in automation solutions and robotics
|
| Cargojet (TSX:CJT) |
Sector: Air freight and logistics
Market cap (billions): $2.42 Dividend yield: 1.07% |
Air cargo leader with rising demand in e-commerce |
Note: The market cap and dividend yields fluctuate. Be sure to find out the most recent data when making investment decisions.
Top 10 best industrial stocks chart: TSX
How to buy industrial stocks
What are industrial stocks?
Industrial stocks are companies that facilitate manufacturing, transportation, logistics and infrastructure. These businesses are integral to the economy as they provide essential goods and services that support various industries.
The industrial sub-sectors include:
- Aerospace and defense
- Airlines
- Construction and engineering
- Electronics
- Freight
- Logistics
- Machinery
- Marine ports
- Railroads
- Semiconductors and computers
- Textiles
- Transportation and trucking
- Waste management
The key factors that drive growth in Canadian industrial stocks are:
- 1 Economic cycles: Industrial stocks perform well during economic expansion.
- 2 Government spending: Infrastructure, renewable energy and defence investments spur growth.
- 3 Supply chain trends: E-commerce and international trade boost demand for transportation and logistics services.
- 4 Advancements in technology: Clean energy, automation and AI help to drive innovation.
Canada’s largest industrial manufacturing companies
Our country has some of the biggest industrial manufacturing companies. Each of these companies helps to provide jobs and economic stability and are important stakeholders in trade with the United States and internationally.
The following companies operate across various sectors, including aerospace and automotive parts. These are examples of the top industrial manufacturers in Canada:
- ATS Corporation (TSX:ATS): Based in Cambridge, ON, this company focuses on providing automation systems to North American and European markets.
- Bombardier (TSX:BBD.B): An aircraft and business jet manufacturer with revenues generated from North America and has global operations.
- Magna International (TSX:MG): A Canadian automotive parts manufacturer with global operations.
The industrial sector’s performance hinges on the economy, investments in infrastructure and global trade. Additionally, these companies generate billions in revenues annually, helping to contribute to the country’s gross domestic product (GDP).
Best TSX industrial stocks by sector
- Bombardier (TSX:BBD.B)
- CAE (TSX:CAE)
- MDA (TSX:MDA)
The increased global demand for advanced aviation technology and government contracts help to boost aerospace stocks. CAE is at the forefront of pilot training solutions and Bombardier’s business jets are in steady demand. MDA is also a leader in space and satellite technology.
- Andlauer Healthcare (TSX:AND)
- Cargojet (TSX:CJT)
The rise of e-commerce fuels the demand for fast logistics and supply chain efficiency. For example, Cargojet is a major player in overnight freight, ensuring consistent revenue from long-term contracts. Andlauer focuses on healthcare logistics and capitalizes on the increasing demand for pharmaceutical and medical transportation.
- Badger Infrastructure (TSX:BDGI)
- Stantec (TSX:STN)
- WSP Global (TSX:WSP)
Government spending on infrastructure projects supports these companies' stock performance. WSP Global is a construction and engineering company providing services to international clients. Stantec is an engineering and architectural consulting firm that’s also expanding globally. Badger specializes in utility and construction services.
- ATS Automation (TSX:ATS)
- Ballard Power (TSX:BLDP)
- Savaria (TSX:SIS)
Advances in automation and renewable energy innovations are driving growth. For instance, ATS stands out in factory automation, and Ballard Power is a top performer in hydrogen fuel cell technology. Meanwhile, Savaris is known for mobility solutions that help meet the needs of the aging population.
- Canadian National Railway (TSX:CNR)
- Canadian Pacific (TSX:CP)
- TFI International (TSX:TFII)
Railroads are essential for moving goods across North America, providing economic stability. CP and CNR operate extensive rail networks, reaping the benefits from increased demand in trade and freight. CNR is one of the most extensive railroads in North America, and it transports goods such as intermodal containers, petroleum, grains and forest products. TFI International has a diversified transportation portfolio that reduces risk and enhances long-term growth potential.
- Waste Connections (TSX:WCN)
- GFL Environmental (TSX:GFL)
- Secure Energy (TSX:SES)
Growing environmental regulations and sustainability initiatives propel long-term demand for waste management services. Waste Connections and GFL Environmental earn steady revenue from municipal and industrial contracts. In addition, Secure Energy provides waste treatment and recycling. These stocks offer strong dividend potential as long-term contracts provide predictable cash flow.
Industrial ETFs in Canada
Investors who prefer a simple way to have diversified exposure to industrial stocks should consider industrial ETFs. Here are the top industrial ETFs in Canada:
What to know before investing in industrial stocks
Industrial stocks are known as cyclical stocks, meaning they perform well when there’s economic growth but may be sluggish during economic downturns.
Investors may reap the rewards with a long-term growth mindset. However, the risks of industrial stocks are that they’re susceptible to interest rate changes, government support for technology and innovation, and global demand.
As a result, businesses that are dependent on exports may face barriers during trade wars or when the economy slows for an extended period of time. Other emerging markets, such as China and India, can also make it challenging to remain competitive.
To manage the volatility of investing in industrial stocks, consider choosing an industrial ETF or having exposure to multiple industrial sectors to spread your risk. Another option is to have an industrial stock that pays out a dividend. Furthermore, there are complementary defensive stocks such as utilities, consumer packaged goods and healthcare stocks that can help balance out your portfolio holdings.
Are industrial stocks right for you?
Industrial stocks may be suitable for investors who seek long-term growth and can ride out the ups and downs of the stock market. They offer exposure to various industries, including construction and manufacturing, which make up the backbone of the economy.
Cyclical traders who buy and sell stocks based on how the economy is performing may also profit from investing in industrial stocks. For example, companies may spend more on sectors such as construction equipment or aerospace manufacturing when the economy grows.
Generally, dividend stocks focus on providing higher yields but keep in mind that industrial stocks may not consistently achieve this. However, with infrastructure projects and government contracts, they may provide some stability.
Compared to blue chip investments (regarded as safe and stable investments), industrial stocks tend to be cyclical and may be more volatile. Also, tech stocks may provide higher returns, but they come with higher risk than industrial stocks.
You can build a diversified portfolio that includes industrial stocks. Doing so can help balance out any higher-risk investments you may have exposure to. By having a brokerage account, you can buy and sell stocks and ETFs within your investment portfolio.
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Sandy Yong is the author of the award-winning book, The Money Master: Inside Secrets On How To Make Your Money Grow and Stay Safe. She has been featured in the Toronto Star, NBC News and Yahoo! Finance.
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