The Toronto Stock Exchange endured the U.S.-initiated tariff war in 2025, even surpassing the double-digit returns of 2024. Some analysts believe Canadian stocks will again show resilience in 2026, though a repeat of the stellar performance is unlikely.
Market conditions have changed, with the U.S. introducing new headwinds through a military intervention in Venezuela at the start of the year. Given persistent trade uncertainty and geopolitical tensions, investors should consider a more tactical approach that balances growth and stability.
Finning International (TSX:FTT) and Granite REIT (TSX:GRT.UN) form an excellent combination to navigate the headwinds. You have a growth leg and a stability leg to stand on.
Image source: Getty Images
Infrastructure play
Finning International, the world’s largest Caterpillar equipment dealer, benefits from the vastly improved industrial sentiment. The $11.3 billion company sells, rents, and provides parts and service for equipment and engines. It serves customers across various industries, including construction, energy, and mining.
FTT continues to gather momentum, aided by the strong demand in mining and power systems. The industrial stock delivered a total return of +99.5% in 2025. At $85.71 per share, the year-to-date gain is 15.25%. Current investors also partake in the modest but safe 1.21% dividend (27.5% payout ratio).
In the third quarter (Q3) of 2025, new equipment revenue rose to a record $1.04 billion, while net income from continuing operations climbed 60.4% to $154 million compared to Q3 2024. The power systems backlog increased 23% year over year to almost $1 billion. According to its president and CEO, Kevin Parkes, the diverse business produces excellent results and is Finning’s competitive advantage.
Under its nation-building push this year, Canada will spend around $115 billion in federal infrastructure over the next five years. Finning International is well-positioned to supply heavy equipment and machinery as well as provide maintenance services for the major projects.
The strategic role Finning will play in resource-driven sectors such as energy, forestry, mining, and public infrastructure will further drive earnings. Moreover, the high demand for copper and lithium is a strong tailwind for its South American operations.
FTT is the logical choice for investors looking to capitalize on the global infrastructure and mining super cycle. Some analysts project an 11% earnings growth in 2026.
Income stock
Granite is the perfect complement to Finning International. The $5.5 billion real estate investment trust (REIT) owns and manages industrial, logistics, and warehouse properties in North America and Europe. You’d be investing in a top-tier income stock paying monthly dividends.
If you invest today, GRT trades at $90.85 per share and pays a 3.76% dividend. The 4% dividend hike announced on January 16, 2026, marks 15 consecutive years of dividend increases. Also, the one-year trailing return of +39.2% indicates a steady performance amid an unstable real estate market.
Granite boasts a high-quality and creditworthy tenant base. Magna International is the largest tenant, contributing 27.4% of total annualized revenue estimated at $507 million. The REIT enjoys a 97.1% committed occupancy rate and a 5.5-year weighted-average lease term.
Resilient combination
Finning International and Granite REIT are a resilient and prolific combination for 2026. There is a balance between chasing aggressive infrastructure growth and capital compounding.
