There is a plethora of industrial stocks that are benefitting from Canada’s abundant natural resources. Industrial stocks may not be exciting like tech stocks or crypto investments. However, good industrial companies can deliver just as good returns, often at lower risk.
If you are looking for some steady, blue-chip industrial stocks to hold for years ahead, here are four to consider owning now.
Image source: Getty Images
A top industrial stock for dividends
Canadian Natural Resources (TSX: CNQ) is one of Canada’s best industrial companies. It produces over one million barrels of oil equivalent per day, making it Canada’s largest energy producer.
Canadian Natural has world-class assets with reserves that are expected to last several decades. These reserves and production capacity increased after it acquired Chevron’s Canadian assets late last year.
CNQ uses factory-like efficiency to extract its oil and gas. As a result, it has a low cost of production, and it generates substantial free cash flow.
Despite being in the cyclical energy industry, CNQ has grown its dividend for 25 consecutive years at a +21% compounded rate! That is impressive for any industry. If you want a mix of dividend income and modest growth, this is a great stock to hold in the long term.
A quality stock operating since 1881
Another industrial stock that is a great buy now is Canadian Pacific Kansas City (TSX: CP). This may not be a super exciting business. However, it is an economically crucial one. Rail is the only way to get major commodities and goods across the wide span of North America.
Its recent acquisition of Kansas City Southern gives it the only rail line that spans Canada, the U.S., and Mexico. This gives it a competitive advantage and several years of growth opportunities to exploit.
CP has been operating since 1881 (that’s 144 years). If you want a company that has stood the test of time, this is it.
A transportation company with a strong return record
TFI International (TSX: TFII) is another industrial stock worth holding in the coming years. It is one of the largest trucking companies in Canada and a growing player in the United States.
Its stock is up 543% in the past 10 years (a 20.5% compounded annual growth rate). That is not bad for a boring transport business.
TFI’s secret sauce is its low-cost operating model and regular acquisition activity. It buys both mom-and-pop shipping providers and larger carriers. It uses best industry practices to reduce overhead, streamline routes, and raise margins.
While the freight market has been weak in the past few years, TFI’s stock should be set to rise as that starts to reverse in 2025 and beyond.
An industrial stock that is a smart capital-allocation play
TerraVest Industries (TSX: TVK) is the best-performing industrial stock you have likely never heard about. Its stock is up 750% in the past five years!
TerraVest owns a mix of industrial businesses that include energy services, tank manufacturing, and HVAC and boiler manufacturing. These are boring businesses.
What is exciting is TerraVest’s ability to operate these companies at scale, generate substantial free cash flows, and then reinvest the proceeds into more cheap businesses.
Chances are good that it has some good merger and acquisition targets in 2025. The stock could continue to enjoy strong momentum as it makes more acquisition announcements in the years ahead.
