Infrastructure in our society today enables the transportation and storage of essentials like energy, water, freight, passengers, and data, easily navigating their way through the ins and outs of our nation’s daily functions.
Infrastructures are considered the physical backbone of the worldwide economy. Because of this ideology, well-maintained infrastructures are vital to the economy’s health and continued growth.
This notion paved the way for infrastructure stocks to come into reality. With the importance of infrastructures all across the globe, stocks invested and went along with it became essential and dramatically contributed to the economy’s success. Let us know some infrastructure stocks in the Canadian market and why they pose a great deal for investors.
What's in the Article:
- What are Infrastructure Stocks?
- Best Infrastructure Stocks in Canada
- Are Canadian Infrastructure Stocks a Good Investment?
- Infra-Takeaways for Infrastructure Stocks
What are Infrastructure Stocks?
Infrastructures cost a lot of budgets and require massive financing to build and maintain. US President Joe Biden’s $2 trillion infrastructure proposal plan makes this point quite clear. Biden’s plan includes many projects involving repairs in the highway sector, reconstruction of bridges, and upgrades in port, airport, and transit systems. But Biden’s proposal on such targeted spending plans is a bit modest when numerous global investments require over $69 trillion until 2035—rebuilding and expanding the infrastructures worldwide has never been estimated to be cheap at all.
This idea means governments alone don’t have the luxury of finances and cannot afford hefty expenses. This is why nations increasingly collaborate with huge companies, especially in the private sector. As a result, infrastructure companies can potentially own their infrastructure systems. In addition, they can also operate, build, maintain, or expand these systems. Different types of infrastructures include:
- Transportation infrastructure – physical assets like airports, railroads, toll roads, ports, or any means that move people and freight from point A to point B.
- Commodity infrastructure – physical assets involving the production, transportation, processing, and storage of essential and natural commodities like water, oil, natural gas, refined petroleum products, and electricity. Systems in commodity infrastructures include interstate pipelines, electrical grids, and systems in energy distribution.
- Data infrastructure – physical components and networks like communications towers and data centers that help enable movement and storage in terms of information.
Best Infrastructure Stocks in Canada
Bird Construction Inc.
Headquarters: Mississauga, Ontario. Canada
This company was once heavily weighted to commodities but now derives 60% top-line from the infrastructure sector. Although considered one of the more undervalued operators by the National Bank, it is also deemed a leading builder in Canada with numerous coast-to-coast offices. We’d consider this to be the best Canadian construction stock.
Bird Construction Inc. has been active in construction services, providing the best services to new and repeat clients since the 1920s. With a reflection of its broad scope, Bird’s clients are a pool of leading firms in numerous sectors such as civil, commercial, energy, industrial, institutional, mining, multi-tenant residential, nuclear, renewables, retail, and water and wastewater sectors. When selecting the best renewable energy Canadian stocks for your investment portfolio, make sure they match your investment objectives and risk appetite.
Bird Construction Inc. is a corporation that publicly trades, with employees that form a strong shareholder group. This mentality enhances the degree to which all employees commit to clients. In addition, Bird Corporation Inc.’s hands-on approach to their business has given them a competitive edge in making decisions quickly and adapting to their client’s needs and requirements. It’s an outstanding stock to own in the long term and one of the best Canadian stocks I could buy today.
IBI Group Inc.
Headquarters: Toronto, Ontario, Canada
The IBI Group Inc. is a Toronto-based firm specializing in architecture and engineering and generates 55% of its revenue in Canada, a huge chunk coming from vertical building and infrastructure. With an 8% expansion yearly, IBI Group Inc. is considered an excellent organic grower.
As they define the cities of tomorrow, IBI Group Inc. is an outstanding infrastructure stock. The company designs every aspect of truly integrated cities, from high-rises and industrial buildings, schools, top-quality hospitals, transit stations and highways, airports and toll systems, bike lanes and parks; IBI Groups Inc. covers all of these aspects for you. Their collaborative approaches focus on solutions and thinking future-forward. They slowly but surely bridge the gaps between good design and excellent technology while unlocking new potential in data-driven environments. The IBI Group Inc. believes in cities founded and built upon intelligent systems that have sustainable buildings, efficient infrastructure, and the essential human touch.
Pure Technologies Ltd.
Headquarters: South West Calgary, Alberta, Canada
Considered Calgary’s prime monitors in terms of water pipelines, Pure Technologies Ltd. has innovated and devised a simple swimming ball that can detect leaks, one cost-saving solution effective anywhere.
Pure Technologies took pride in their expertise and patented technology-driven solutions used across the globe in helping utility operators lessen the deterioration impact while maximizing capital budgets utilized for programs for rehabilitation and replacement. Utility stocks are relatively safe, but several market conditions can lower valuations.
Their dedication is steadfast and unwavering towards developing new technologies and improving existing tools that help infrastructure owners better understand the condition of their valuable assets. Nowadays, Pure Technologies Ltd. has more than 80 patents and pending patents worldwide, continuously developing more by the minute. They are one of the top water stocks on the TSX.
Pure Technologies Ltd. prioritizes its clients’ and employees’ safety and well-being with a non-negotiable principle. The company will never compromise the safety of everyone over mere schedule, amenable production or sheer financial gain. Pure Technologies Ltd. is committed to believing that it is feasible for an accident-free workplace. This promise is to be achieved by empowering employees via accountability and integrity ensured in the dedication of each employee to HSE. The highest standards and reliable programs will surely meet or exceed the industry’s standards through a committed and continuous improvement of HSE programs. In addition, the HSE principles integration should and will be present in all they do.
Headquarters: Edmonton, Alberta, Canada
Stantec Inc. is an Edmonton-based consultancy for engineering that has taken a massive hit from its vast exposure to oil and gas. Although undervalued, trading 14.6 times its 2017 earnings, it is still considered one of Canada’s best infrastructure stocks.
Stantec Inc. “designs with the community in mind” because communities are fundamental to them. Stantec promises to provide a strong foundation, a secure sense of place, and utmost belongingness in communities around the corner or anywhere across the globe; hence, Stantec claims to always design with the community in mind.
The company cares about the communities they serve. This mentality is because the company, Stantec Inc., is a massive community of vast communities. This mantra allows them to assess what is needed easily, connect it to their expertise, appreciate nuances, envision those usually never considered, and bring together diverse perspectives for effective collaboration toward shared success.
Consisting of a pool of talented and skilled designers, engineers, scientists, and project managers, all aim for innovation at the intersection of meaningful relationships among the three (3) C’s: community, creativity, and client. Balancing and prioritizing these three (3) C’s consequently results in projects that are advancements for the quality of life, especially in communities all across the globe.
WSP Global Inc.
Headquarters: Montreal, Quebec, Canada
Based in Montreal, WSP Global Inc. is a global hedge provider for those sensitive and who choose not to be too exposed to Canada— with 18% of WSP Global Inc.’s revenues generated here. “We value our people and our reputation” is the existing ideology of the company as a whole.
WSP Global Inc. takes extraordinary measures of effort in attracting, developing, engaging and retaining only the best professionals in their fields of expertise. This notion is important because it is what makes WSP Global Inc. great. The company puts the highest ethical standards at the center of all they do. Professionalism is naturally inherent and exhibited in all offerings they showcase. A humble and act full of moral and intellectual integrity, WSP Global Inc. keeps its word, treats everyone with the utmost respect, supports colleagues in all levels and fields, and embraces diversity towards unity. They care about each part of the organization and their progress, whatever their pace, believing that all progress is still progress. Additionally, they offer career development options most fulfilling for every professional part of their company. WSP Global Inc. also promotes their young recruits to believe that fresh perspectives bring forth greatness in ideas and new and raw positive energy.
Brookfield Infrastructure Partners L.P. (BIP.UN)
Brookfield Infrastructure Partners L.P. stands out as a compelling investment due to its diversified global portfolio, which includes utilities, transport, energy, and data infrastructure and telecommunications. This diversification helps mitigate risks associated with market fluctuations in specific sectors or geographies. The company’s focus on long-term, high-quality assets offers stable cash flows and potential for consistent growth. Brookfield’s expertise in identifying and managing infrastructure assets worldwide makes it a resilient choice for investors seeking exposure to the essential services sector while holding one of the Best Canadian Defensive Stocks. The stock’s performance is underpinned by the growing global demand for infrastructure development and maintenance, making it a strategic addition to investment portfolios.
SNC-Lavalin Group Inc. (SNC)
SNC-Lavalin Group Inc. is a prominent investment choice in the engineering and construction sector, with a significant presence in infrastructure projects globally. The company’s extensive experience and expertise in complex projects, from transportation to nuclear power, position it well for growth in a world increasingly focused on sustainable and innovative infrastructure solutions. SNC-Lavalin’s shift towards a more risk-averse business model, focusing on consulting and services rather than fixed-price contracts, aims to stabilize earnings and reduce volatility. The stock appeals to investors looking for a company with a broad international footprint and a commitment to adapting to the evolving demands of the infrastructure sector.
Aecon Group Inc. (ARE)
Aecon Group Inc. is a top investment choice within Canada’s construction sector, known for its involvement in major infrastructure projects, including transportation, energy, and mining. The company’s strong track record in completing large-scale projects positions it well to capitalize on Canada’s growing infrastructure needs. Aecon’s diversified operations across various construction segments provide a balanced revenue stream, reducing dependency on any single market. The stock is attractive for its consistent dividend payouts and potential for growth driven by Canada’s ongoing investment in infrastructure development. Investors looking for a stable company with a solid reputation in the construction industry may find Aecon Group Inc. an appealing option. You might want to look at Monthly Dividend Stocks Canada also.
Are Canadian Infrastructure Stocks a Good Investment?
Remember that we mentioned trillions of dollars being required worldwide for infrastructure stocks in the early parts of this article. This is because the rebuilding of ageing infrastructures and the construction of new assets need a hefty monetary figure to meet the steadily rising population demands. With such a paramount need and many ways for investment, adding these infrastructure stocks or ETFs to your expanding investment portfolio is a concrete and straightforward way to profit from this megatrend.
For example, they influence Canadian Shipping and freight Stocks as materials need to move across oceans and land.
Investing in Canadian infrastructure stocks offers several compelling advantages:
- Stable and Long-Term Returns: Infrastructure investments typically provide stable and long-term returns. These assets, like roads, bridges, and utilities, are essential services with consistent demand, leading to predictable cash flows.
- Resilience to Economic Fluctuations: Infrastructure is generally less sensitive to economic cycles than other sectors. Even during downturns, the demand for essential infrastructure services remains relatively stable, offering a defensive investment option.
- Government Support and Investment: The Canadian government often prioritizes infrastructure development, with significant investments in transportation, energy, and utilities. This government backing can provide a steady stream of projects and funding for companies in the sector.
- Diversification Benefits: Infrastructure assets often have a low correlation with traditional equity and fixed-income investments, providing diversification benefits to an investment portfolio.
- Inflation Hedge: Infrastructure investments can serve as a hedge against inflation. Many infrastructure projects have contracts with inflation-linked revenue streams, helping protect future cash flows’ purchasing power.
- Growing Demand for Modernization: With aging infrastructure across the country, there is a growing need for modernization and upgrades. This ongoing requirement for investment can drive growth in the sector.
- Sustainable and ESG Investing: Infrastructure projects increasingly incorporate sustainability and environmental considerations. Investing in infrastructure stocks can align with ESG (Environmental, Social, and Governance) investing principles.
- Public-Private Partnerships (P3s): Canada’s emphasis on P3s for infrastructure projects can offer opportunities for private investment and innovation in public infrastructure.
- Global Expansion: Many Canadian infrastructure companies are involved in projects worldwide, offering exposure to international infrastructure development and growth.
- Dividend Yields: Infrastructure stocks often provide attractive dividend yields, appealing to income-focused investors.
However, as with any investment, there are risks involved, including regulatory changes, project execution risks, and interest rate fluctuations.
Infra-Takeaways for Infrastructure Stocks
Anyone can surely be overwhelmed with the investment needed for infrastructure stocks. But remember that infrastructures are the backbone of any society, so paying hefty budgets to achieve this feat is understandable given what you can reap after you sow. In addition, it will take a considerable lengthy amount of time to enjoy the fruits of this megatrend labour fully, but it will all be worth it. So, check out what infrastructure stocks can do for your portfolio today.