Back in the spring I’d discussed infrastructure and construction stocks and why investors with a long-term outlook should target them in 2018. The most recent wave of municipal elections that swept across Ontario was contentious as candidates sparred over the future of multi-billion-dollar projects. The federal Liberals came to power promising infrastructure spending, but few projects have managed to get off the ground.
John Tory managed to win re-election in Toronto. He will now attempt to push forward a long list of unfunded infrastructure projects including improvements to a gridlocked transit system and a housing affordability crisis that continues to worsen. This latter issue was also a massive factor in the Ontario provincial election.
The mayoral election in Hamilton boiled down to a referendum on the $1 billion light rail transit (LRT) project. Fred Eisenberger, who was in support of the project, came away with the convincing win.
The federal election now looms in the fall of 2019, and there will be pressure on municipalities to execute on infrastructure plans going forward. Investors should look to target companies that will see increased activity on the back of these large projects. Today we will look at three to stash for the long haul.
TFI International (TSX:TFII)
TFI International is a Montreal-based transportation and logistics company. Shares have dropped 12.8% month-over-month as of late morning trading on October 26. The stock has climbed 25.6% in 2018 so far.
TFI International released its third-quarter results on October 22. The company reported record operating income for the second quarter in a row, as it surged 107% year-over-year to $125.1 million. Net cash from operating activities rose 29% from Q3 2017 to $166.6 million. The board of directors also hiked its quarterly dividend from $0.21 per share to $0.24, representing a 2% dividend yield.
Stantec is an Edmonton-based global engineering and construction firm. Shares of Stantec have dropped 5% in 2018 so far. The company is expected to release its third-quarter results on November 8.
In the second quarter, Stantec saw gross revenue rise 3% year-over-year to $1.35 billion, while the company posted declines in adjusted net earnings and adjusted EBITDA. Its contract backlog hit $5.3 billion at June 30, 2018, with $4 billion in Consulting Services and $1.3 billion in Constructing Services.
Stantec offers a quarterly dividend of $0.1375 per share, which represents a 1.6% dividend yield.
Canadian National Railway has rail infrastructure that spans across the North American continent. Shares have increased 2.9% in 2018 so far. The company released its third-quarter results on October 24.
Net income climbed to $1.13 billion compared to $958 million in the prior year. CNR posted earnings per share of $1.50, which beat analyst expectations. Revenues in Q3 2018 also increased 14% year-over-year to $3.69 billion.
The company last paid out a quarterly dividend of $0.455 per share, representing a 1.6% dividend yield.