What are we looking for?
Sustainable dividends from Canadian infrastructure stocks – already spurred by the proposed federal budget.
The screen
Prime Minister Mark Carney’s 2025-26 budget must still win parliamentary support, but aims to spend $115-billion on infrastructure projects to drive national and regional growth.
Highlights include the $50-billion Build Communities Strong Fund for local infrastructure projects in housing, transportation and health. Transport Canada would also oversee a $1-billion fund over four years for major transportation projects in the North, including airports, seaports, all-season roads and highways. In addition, the proposed Trade Diversification Corridors Fund would provide $5-billion over seven years for the construction of port, railway and airport infrastructure.
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Given the mandate to support Canadian business, that stimulus spending would be a boon for this country’s engineering, construction and heavy-equipment firms. It would also bolster the future dividends of their shareholders.
Our search started with a list of dividend-paying Canadian infrastructure/construction stocks. We then applied our TSI Dividend Sustainability Rating System to find those with strong growth prospects. Our system awards points to a stock based on key factors:
- two points if it has raised the payment in the past five years
- one point for management’s commitment to dividends
- one point for operating in non-cyclical industries
- one point for limited exposure to foreign currency rates and freedom from political interference
- two points for a strong balance sheet, including manageable debt and adequate cash
- two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments
- one point for being an industry leader
- one point for five years of continuous dividend payments
- and two points for more than five
Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; four to six, average sustainability; and one to three, below-average sustainability.
More about TSI Network
TSI Network is the online home of the Successful Investor Inc., the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.
What we found
Our TSI Dividend Sustainability Rating System generated six stocks. Edmonton-based Stantec Inc. STN-T and Montreal-headquartered WSP Global Inc. WSP-T provide engineering and consulting services integral to planning and building infrastructure. Montreal-based AtkinsRéalis Group Inc. ATRL-T (formerly SNC-Lavalin Group Inc.) has two main businesses: engineering services and nuclear. (All three stocks have seen sharp price climbs over the past couple of years or so, explaining their low yields.)
Bird Construction Inc. BDT-T, based in Mississauga, acquired rival Stuart Olson in 2020 to create a Canadian construction leader with top infrastructure experience. Headquartered just north of Toronto, Toromont Industries Ltd. TIH-T is a Canadian dealer of Caterpillar heavy construction equipment. Toronto’s Aecon Group Inc. ARE-T is one of the country’s largest construction companies, with the Vancouver Skytrain and Terminal 3 at Lester B. Pearson International Airport among its successes.
We advise investors to do additional research on investments we identify here.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.