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Transportation companies are not as trendy as high-growth technology firms but help stimulate economies. Five TSX transportation stocks are solid additions to your investment portfolio. Even if you invest only $5,000, you never have to sell. Besides the defensive attributes, each one can deliver healthy, long-term returns.
Railroad icons
For freight railroad operators, the choice is between Canadian National Railway (TSX:CNR) and Canadian Pacific Kansas City Limited (TSX:CP). The former’s rail network spans parts of Canada, Mexico, and the U.S., while the latter boasts a single-line network that connects the three countries.
Due to its dividend aristocrat status, CNR has the edge from a dividend perspective. The 106-year-old Class 1 railroad operator has raised dividends for 29 consecutive years. It facilitates end-to-end supply chains to generate long-term, profitable growth. If you invest today, the share price is $114.04, while the dividend offer is 2.5%.
Size-wise, CP’s market cap is $102.6 billion compared to $90.4 billion for CNR. At $109.88 per share, the yield is a modest 0.69%. The company is the result of the merger of Canadian Pacific Railway in Canada and Kansas City Southern in the U.S. Both companies play essential roles in North America and benefit from the favourable market dynamics in the region’s rail transport.
Integrated network
TFI International (TSX:TFII) has an integrated network of 100 operating companies. The $15.5 billion company’s e-commerce network spans more than 80 North American cities. Identifying strategic acquisitions and growing the network are ongoing concerns to increase shareholder returns further.
The three major business segments (Less-Than-Truckload, Truckload, and Logistics) operating in multiple geographies, along with industry verticals, contribute to revenues.
Some analysts consider this large-cap stock a deep-value dividend aristocrat (25 consecutive years of dividend hikes). At $182.50 per share, you can partake in the 1.4% dividend yield. The overall return in 20 years is +2,320%, a 17.3% compound annual growth rate (CAGR) of 17.3%.
Top cargo airline
Cargojet (TSX:CJT) trades at a discount ($109.13) but market analysts are bullish due to the impressive financial results last year. Their 12-month average price target is $161.09, a +48% upside potential. The $1.7 billion company provides time-sensitive overnight air cargo services.
Canada’s top cargo airline handles over 90% of the country’s available domestic overnight air cargo lift (25 million pounds weekly). The seven-year Pilots’ union contract (2019–2027) is a stabilizing factor due to the no-strike, no-lockout clause. In 2024, net earnings and comprehensive income climbed 191% year-over-year to $108.4 million.
Marine transporter
Algoma Central (TSX:ALC) transports dry and liquid bulk cargo via the sea with self-unloading dry-bulk carriers, gearless dry-bulk carriers, and product tankers, as well as ocean-going self-unloading dry bulk vessels. The $611.7 million company was established in 1899 and today has 89 ships in its fleet, with 16 under construction.
At $15.08 per share, current investors enjoy a 5.3% dividend yield. The small-cap stock’s quarterly payout should be safe and sustainable, given the 41.4% payout ratio and consistent profitability from 2020 to 2023 (average $82.7 million). Algoma will present its full-year 2024 results on February 27, 2025.
Recovery in 2025
Fitch Ratings maintains a ‘neutral’ rating for Canada’s freight transportation and logistics sector and sees the start of a cyclical recovery in 2025.