Why Now Is the Time to Invest in Canada’s Infrastructure Boom

Canada is on a quest to build back better, and this income ETF could be a good way to participate while earning a high monthly yield.

| More on:
Key Points
  • Canada is ramping up infrastructure spending, with plans totaling roughly $159 billion over five years plus additional targeted programs.
  • These investments support real assets like utilities, pipelines, railways, and telecoms, which form the backbone of the economy.
  • UMAX offers a way to access this theme while generating high montly income through covered calls, at the cost of capped upside.

Look, I’ve had my differences with the Liberal Party of Canada under Justin Trudeau’s leadership. But I have to admit, Mark Carney has been a bit of a reset. Between scrapping the carbon tax and ramping up defense and space investments, I’m a fan so far.

One piece that is still flying under the radar is infrastructure. If you are dealing with sluggish GDP per capita and running persistent deficits, one of the most direct ways to kickstart economic activity is to build. You are putting people to work, creating demand across industries, and building assets that can improve productivity long term.

These are the kinds of projects that ripple through the economy. Roads, transit, ports, energy systems. They create jobs upfront and support growth for decades after. And right now, Canada is going all in.

Here is a quick look at how big this push actually is, and one exchange-traded fund (ETF) that could be a simple way to get exposure.

construction workers talk on the job site

Source: Getty Images

The scope of Canada’s infrastructure ambitions

According to the Parliamentary Budget Office, Canada is expected to spend about $159 billion on infrastructure over five years, which works out to more than $30 billion annually. On top of that, the federal government has introduced additional targeted programs.

One notable example is the Build Communities Strong Fund, which earmarks approximately $51 billion in spending for projects like transit systems, hospitals, bridges, and water infrastructure.

There is also a growing defence and sovereignty angle to all of this. Recent announcements include roughly $32 billion directed toward northern infrastructure and military-related development, including roads, bases, and logistics hubs.

Zooming out even further, broader federal plans outline hundreds of billions in combined spending across infrastructure, housing, and defence over the coming years.

This is what people mean when they talk about “nation-building” projects. You are not just fixing potholes. You are expanding trade routes, strengthening supply chains, and building out the physical backbone of the economy.

For investors, that matters. Infrastructure spending tends to support sectors like utilities, energy, and industrials. These are often slower-growth areas, but they generate steady cash flow and benefit directly from long-term capital investment cycles.

The ETF to invest in Canadian infrastructure

There is one catch. There is no clean, pure-play Canadian infrastructure ETF. Most infrastructure ETFs available in Canada have a global focus, often with heavy exposure to the United States.

One unorthodox option is the Hamilton Utilities YIELD MAXIMIZER ETF (TSX: UMAX). Despite the name, this is effectively a Canadian infrastructure strategy.

The portfolio includes utilities, pipelines, telecoms, railways, and even exposure to waste management. These are all core infrastructure assets that benefit from long-term capital investment and stable demand.

What makes UMAX different is the income strategy layered on top. The ETF sells at-the-money covered calls on about 50% of the portfolio. That caps some of the upside but generates additional income through option premiums.

The result is a much higher distribution yield, currently around 13.8% as of April 7. That income can be attractive, especially in a low-growth environment, but it comes with trade-offs.

You are giving up some capital appreciation and taking on more tax complexity and higher fees compared to a plain index ETF. Still, if the goal is to tap into infrastructure with an income tilt, I think UMAX is one of the more direct ways to do it in Canada.

Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Investing

pregnant mother juggles work and childcare
Bank Stocks

Investing Doesn’t Have to Be Complicated – This 1 Stock Is Proof

TD Bank stock has been a reliable and resilient performer, creating long-term wealth for investors.

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

Before You Buy a Covered-Call ETF, Check These 3 Numbers

A covered-call ETF’s big “yield” can hide return-of-capital and capped upside, so check the numbers that show what you’re really…

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Monday, September 14

After suffering its worst weekly decline since March, the TSX faces another key session today as investors weigh Canada’s inflation…

Read more »

some investments are riskier than others
Stocks for Beginners

These 2 Popular ETFs Look Similar: 1 Could Carry Far More AI Risk

TEC and XQQ look similar, but TEC is far more concentrated in tech and Nvidia, making it a bigger AI…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

Which Canadian Dividend ETFs Pay the Most Right Now?

Hamilton Utilities Yield Maximizer ETF (TSX:UMAX) could be the ultimate passive-income play to outpace inflation and a lower-yield world.

Read more »

oil pumps at sunset
Energy Stocks

Enbridge Stock: Should Investors Buy, Sell, or Hold Right Now?

Is Enbridge now oversold?

Read more »

dividend stocks are a good way to earn passive income
Dividend Stocks

This Dividend Stock Is One I’ll Never Sell — Here’s Why

Fortis (TSX:FTS) stock stands out as a dividend-paying, sleep-easy kind of name to buy and never sell.

Read more »

rising arrow with flames
Dividend Stocks

Income Investors: 3 Dividend Stocks That Keep Raising Their Payouts

These stocks have delivered annual dividend growth for decades.

Read more »