Building Wealth: The Construction Companies Cementing Their Place in the Market

Construction stocks should continue to build up your portfolio in the next year and beyond, with essential infrastructure paving a path to returns.

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There’s an old saying that in Canada we have two seasons: winter and construction. It goes to show that only a worldwide pandemic would be the reason for construction to stop, and even then it was back up and running as soon as possible.

This is important for investors to note as well, especially as we potentially move towards a recession. Canadians can get in on the action of stable growth from construction stocks that will keep building, no matter what happens.

And in that case, these are the top construction stocks to consider these days.

WSP Global

WSP Global (TSX:WSP) is an engineering services company with locations around the world. It focuses on the planning, engineering, and management of construction projects. These services are provided mainly to sectors such as transportation, infrastructure, and the environment.

But the best part of WSP stock is that it has a stable future. The company continues to bring on new projects, while working through it’s backlog. Furthermore, it works with essential infrastructure development that continues to grow. Especially as demand increases for environmentally safe infrastructure as well.

The large-cap stock currently operates in over 40 countries, with shares currently up by about 150% in the last five years alone. WSP stock also has a long history of stable dividend payments, with a current payout ratio at 40.8%, and a yield of 0.9%.

Aecon

Aecon Group (TSX:ARE) is another strong choice if you’re seeking out construction stocks. As one of the largest construction companies in Canada, it too is involved with infrastructure development in transportation, energy, and more.

Aecon stock has seen a steady increase in its assets over the last two years as the company looked to come back from the pandemic. It now has US$3.6 billion in assets, as of writing, but is still working to get its free cash flow back to where it was before the pandemic hit. This certainly has been influenced over the last year or so with rising costs and loans taking a hit on company finances.

Even so, shares of Aecon stock are still down 23% in the last five years, though up 25% year to date. This growth comes as the company continues to beat out earnings estimates quarter after quarter. It now offers a 6.1% dividend yield, which is far higher than its five-year average of 4.21%.

SNC Lavalin

Finally, another strong choice for investors to consider among construction stocks is SNC Lavalin (TSX:SNC). While the company has had a past drowning in controversy, over the last few years there has been a shift as it seems investors may now believe that the company trades for a steal.

Similarly to the other construction stocks, the company operates as a global engineering and construction company across multiple infrastructure sectors. It’s this diversification that’s allowed investors to enjoy a long history of sustained revenue.

Shares of SNC stock are now up about 58% in the last year alone, though still down by about 40% in the last five years as it continues to get over both lawsuits and the pandemic. That makes now a potentially strong time to pick up this stock and hold long term, as it looks like there is a far more prosperous future ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends WSP Global. The Motley Fool has a disclosure policy.

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