Investing in Canadian Domestic Stocks

Canada remains one of the wealthiest nations in the world and a premier destination for both domestic and foreign capital. Entering 2026, the Toronto Stock Exchange (TSX) maintains its formidable position as the 11th largest stock exchange globally, providing a sophisticated platform for investors to access world-class companies in a stable environment.

The investment landscape has evolved significantly over the past five years. From 2021 through 2025, the Canadian market demonstrated remarkable resilience, often acting as a stabilizing force in North American portfolios. While the U.S. S&P 500 led much of the period through the “AI revolution” and tech-heavy growth, the Canadian TSX surged in 2024 and 2025 (delivering returns of approximately 21.7% in 2024) as global demand for gold, copper, and energy reached multi-year highs.

This has narrowed the performance gap, with the TSX often outperforming the U.S. during periods of high inflation and rising commodity prices.

Today, the “Home Bias” for Canadian investors is backed by strong fundamentals:

• Sector Diversification: Unlike the tech-concentrated U.S. market, the TSX offers deep exposure to the “real economy,” led by Financials (30%), Energy (17%), and Materials (12%).
• Valuation Advantage: As of early 2026, Canadian stocks continue to trade at more attractive price-to-earnings (P/E) multiples (averaging ~15.9x) compared to the higher premiums seen in the U.S. tech sector (averaging ~21.3x).
• Dividend Reliability: Canada’s domestic “blue chip stocks” such as banking and utilities continue to provide some of the most stable and high-yielding dividends in the developed world.

If you’re new to investing, or you’re just looking for lucrative stock picks, Canada’s domestic stocks are a great place to start. Below we’ll break down the benefits of investing in Canada, as well as some domestic stocks you might want to add to your 2026 portfolio.  

Key Sectors in the Canadian Stock Market

Domestic stocks are companies that are truly “made in Canada.” These types of stocks trade on our exchanges (such as the TSX), they’re typically headquartered in Canada, and you’ll always see their share price in Canadian dollars. Domestic stocks are often contrasted with international stocks, which, as you can guess, are companies of non-Canadian origin. 

The Canadian stock market, particularly the TSX (Toronto Stock Exchange), is heavily weighted toward a few major market sectors. Understanding them helps you navigate where opportunities and risks may lie.

1. Financials

Banks, insurance companies, and asset managers dominate the Canadian financial sector. The Big Five banks—RBC, TD, Scotiabank, BMO, and CIBC—are globally recognized, stable, and dividend-rich. Bank stocks tend to perform well in stable and growing economies and offer consistent returns.

2. Energy

Oil and gas companies like Suncor Energy, Enbridge, and Canadian Natural Resources play a significant role in the TSX. While subject to commodity price volatility, they are often reliable dividend payers and perform well during periods of economic expansion or rising energy demand.

3. Materials and Mining

Canada’s abundance of natural resources makes it a leader in mining and materials. Companies like Barrick Gold and Teck Resources capitalize on global demand for metals and minerals. These are cyclical investments, tied closely to the health of the global economy.

4. Utilities

Utilities like Fortis and Emera operate in non-cyclical sectors. These companies are generally seen as stable, low-volatility investments that perform well during market downturns, thanks to their steady demand and reliable cash flows.

5. Telecommunications

Major players like BCE and Telus dominate the Canadian telecom space. These companies provide steady income and can act as defensive stocks during uncertain markets.

What are some domestic stocks to invest in?

When it comes to domestic stocks, you have plenty of great options to choose from. Here are just five Canadian domestic stocks you may want to consider adding to your investment portfolio.  

Shopify

Shopify (TSX:SHOP) is a Canadian tech stock that has experienced explosive growth even since the onslaught of the COVID-19 pandemic. In fact, in 2020, Shopify posted a record revenue growth of 86% YoY, which helped the stock post a gain of 178.4% in that year alone.

Even though Shopify has slowed slightly due to a tech-correction in the second half of 2021, it’s still a lucrative stock to buy. Many retailers across the country (indeed the world) are still shifting physical stores to an e-commerce platform, which means Shopify hasn’t reached its peak yet. 

Enbridge

Enbridge (TSX:ENB) continues to be one of Canada’s most reliable domestic stocks. The energy company has a massive pipeline network, which transports one-quarter of all crude oil in North America. In addition to being a safe stock, Enbridge also has a hefty dividend payout, which it has increased each year for the last twenty-five years. 

Dye & Durham

Dye & Durham (TSX:DND) gives business professionals access to public records and government registry data. In recent years, Dye & Durham has built an impressively large customer base, due in part to the 19 acquisitions it has made since 2013. Riding on a strong demand for its products and services, Dye & Durham is definitely a domestic stock you don’t want to ignore.  

Lightspeed 

Lightspeed POS (TSX:LSPD) is a Canadian growth stock that specializes in point-of-sale and e-commerce software, specifically to businesses in the retail and restaurant sector. Though it’s not as big as Shopify, Lightspeed POS has plenty of room to grow, especially if it can manage to expand outside of Canada. 

Docebo 

Docebo (TSX:DCBO) helps companies train employees from a distance. It’s client base is growing rapidly—Amazon and Walmart are two of its biggest customers—and though its stock has been on a rocky ride since 2021, it’s still a strong company with a solid customer base that’s poised to grow even more. 

Other domestic stocks you might want to consider include: 

• TC Energy Corp (TSX:TRP)
• Suncor Energy Inc (TSX:SU)
• Telus (TSX:T)
• Brookfield Renewable Partners (TSX:BEP.UN)
• Nuvei (TSX:NVEI)
• Royal Bank of Canada (TSX:RY)
• Canadian National Railway (TSX:CNR)
• CIBC (TSX:CAFR)
• Constellation Software (TSX:CSU)
• Loblaws (TSX:L)
• Bank of Montreal (TSX:BMO)
• Thomson Reuters (TSX:TRI)

Types of Domestic Stocks to Consider

When building a domestic portfolio for 2026, the goal is to leverage Canada’s unique “real economy” strengths—specifically its dominance in banking, energy, and infrastructure—while capturing the niche growth of its high-performing tech sector.

Below is an expanded look at the three primary categories of domestic stocks that form the foundation of a Canadian portfolio.

1. Dividend Stocks: The Income Engine

Canada is a world leader in dividend reliability. Many Canadian companies, particularly in the financials (30% of the TSX) and utilities sectors, offer regular dividend payments. These can provide steady income while reducing volatility. Look for companies with a long history of maintaining or increasing dividends.

• Sector Focus: In 2026, the Big Five banks (like TD and RBC) and utility giants like Fortis remain the gold standard. Fortis, for instance, has a legendary streak of over 50 consecutive years of dividend increases.
• Why they matter: These stocks provide a “cushion” during market downturns. Even when stock prices are flat, the quarterly cash payments provide a tangible return on investment, making them ideal for investors seeking lower volatility.

2. Growth Stocks: Capitalizing on Innovation

While Canada’s tech sector is smaller than that of the U.S., it is highly concentrated with “high-conviction” companies. Unlike dividend payers, growth stocks typically reinvest 100% of their earnings back into research, acquisitions, or scaling their operations.

• Key Players: Shopify (TSX:SHOP) continues to be a dominant force in global e-commerce, while Constellation Software (TSX:CSU) has become a “compounding machine” by acquiring hundreds of smaller vertical-market software firms.
• Strategy: These stocks are more volatile and sensitive to interest rate changes. However, for a 2026 portfolio, they offer the best chance for “multibagger” returns—where the stock price doubles or triples over several years.

3. Blue-Chip Stocks: The Portfolio Backbone

Blue-chip stocks are the “titans” of Canadian industry. These are large-cap companies (typically $10B+ market cap) with household names and deep “moats” that protect them from competitors. They are often a hybrid of the two categories above, offering both moderate growth and reliable dividends.

• Core Examples: CN Rail (TSX:CNR): A duopoly player in North American logistics; if the economy is moving goods, CN Rail is making money.
  • Enbridge (TSX:ENB): A massive energy infrastructure play that transports a significant portion of North America’s crude oil and natural gas.
  • RBC (TSX:RY): Canada’s largest company by market cap and a global leader in wealth management and banking.
• Why they matter: These firms have the scale to weather any economic storm. For a conservative investor, blue-chips represent the “sleep-well-at-night” portion of the portfolio.

Why invest in domestic stocks? 

When building an investment portfolio, many Canadians are tempted by the allure of international markets. While investing abroad can provide diversification, there are solid reasons to keep a significant portion of your investments in domestic stocks. Canadian companies are not only more familiar to the average investor, but they also come with fewer complications in terms of taxation, regulation, and currency exchange. For investors looking to reduce risk and simplify their investment strategy, domestic stocks offer a more straightforward, accessible path to building wealth.

Here are some of the main advantages:

• Easier to understand: It’s simpler to research and follow Canadian companies, especially compared to companies in countries where English isn’t the main language. Reading financial documents in another language—like Chinese, Russian, or Portuguese—can be a challenge. Even with English-speaking countries like the U.S. or U.K., tax rules can be more complicated when selling stocks and reporting capital gains.
• No currency risk: When you invest in foreign stocks, you often have to convert Canadian dollars into another currency. If exchange rates change in the wrong direction, you could lose money—even if your investment performs well. With domestic stocks, this isn’t a concern.
• Fewer Tax Complication: Taxation on domestic capital gains, dividends, and interest is far more straightforward than with foreign assets. Investing internationally may trigger foreign withholding taxes or require special tax filings, particularly in countries like the United States where estate and capital gains tax rules can get complex for non-resident investors.
• Lower fees: Most Canadian stocks are easy to buy through Canadian brokerages. While you can buy international stocks too, brokers often charge higher fees for foreign trades.

Should you invest in international stocks, too? 

At a certain point, you’ll probably want to add international stocks to your domestic ones. In fact, considering that the Canadian market is only about 3% to 4% of the total world market, you might achieve greater diversification by buying shares in international companies. 

Some experts recommend you dedicate a maximum of 20% of your portfolio to international stocks with the other 80% invested in domestic stocks. While portfolio balance is ultimately your decision, you don’t want to overextend yourself, especially if you’re investing in numerous foreign markets at once. 

But don’t rush it. While, true, you can diversify with international stocks, you can achieve diversification with Canadian domestic stocks, too. Start with Canadian companies you’re familiar with, then you can try your hand at foreign stocks. 

Starting investing in Canadian domestic stocks today! 

If you’re new to investing, Canadian domestic stocks can offer you an excellent opportunity to capitalize on growth, not to mention help you achieve your long-term financial goals, like saving for retirement or your childrens’ college. 

To get started, you can buy domestic stocks through any one of Canada’s online brokerages. You can also buy shares in an ETF or index fund that tracks the Canadian economy, which can also help you diversify your holding if you don’t have a lot to invest.