The robust momentum and bull run of fundamental supplies carried over into 2026 and seems poised to be the TSX’s top-performing sector for the second consecutive yr. Whereas mining heavyweights proceed to steer the surge, lumber shares are delivering market-beating returns.
Stella-Jones (TSX:SJ), Canfor Company (TSX:CFP), and Doman Constructing Supplies (TSX:DBM) are price watching proper now. These corporations provide operational leverage and have maintained resilience amid persistent worth volatility and commerce restrictions.
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High quality decide
Stella-Jones is near eclipsing its 52-week excessive of $101.31. At $97.60 per share, the prime lumber inventory has superior practically 20% within the final three months. Analysts’ excessive worth goal is $107. The 1.27% dividend yield is modest however is protected and sustainable (19.8% payout ratio).
The $4.5 billion firm manufactures infrastructure options, notably handled wooden merchandise used as railway ties and utility poles, in addition to residential and industrial lumber. It has additionally expanded into metal buildings that assist transmission strains.
Stella-Jones is greater than 30 years outdated and advantages from the infrastructure-driven markets. The multi-year demand for utility poles and railway ties is a powerful tailwind, pushed by substitute and upkeep. Additionally, sustaining massive inventories of handled and untreated wooden cushions in opposition to provide interruptions.
The total-year 2025 outcomes aren’t out but, though gross sales have elevated yearly over the past 24 years, together with 20 consecutive years of dividend will increase.
Restoration play
Canfor Company manufactures low-carbon forest merchandise, from structural lumber and premium boards to engineered beams, pulp, paper, and bioproducts. The $1.5 billion firm produces high-quality wooden merchandise sourced from numerous areas and operations in Western Canada (19), the Southeastern U.S. (17), and Northern Europe (30).
The lumber inventory is up 19.4% yr thus far, however the numerous working losses all through 2025. Traders are wanting ahead, anticipating lumber costs to recuperate quickly. In the meantime, diversification and enlargement into Europe is the tailwind. It should counter excessive lumber duties in the USA and excessive log prices in Canada.
In December 2025, Canfor Company entered into an settlement to accumulate excellent frequent shares (45.2%) of Canfor Pulp Merchandise, which it doesn’t but personal. In line with administration, the transaction rationale is the chance for a stronger mixed enterprise.
Passive-income supply
Doman Constructing Supplies attracts income-oriented traders for its beneficiant payout. At $10.43 per share (+10.4% yr thus far), you may partake within the 5.42% dividend provide. Canada’s solely absolutely built-in nationwide distributor, by its subsidiaries, distributes constructing supplies and residential renovation merchandise domestically and within the U.S.
The leverage of this $794 million firm stems from an enormous distribution community and a vertical mannequin that permits higher administration of all the provide chain. Count on Doman to capitalize on the robust “restore and transform” market fairly than new building. Nonetheless, risky building supplies prices have an effect on gross sales ranges.
Within the first three quarters of 2025, income and internet earnings rose 26.6% and 50.9% yr over yr to $2.5 billion and $69.3 million, respectively. Primarily based on the Financial institution of Canada’s forecast, progress ought to strengthen progressively over 2026 and 2027, with an annual progress common of 1.4%.
Select your technique
TSX lumber shares have saved tempo with the dominant mining shares. You’ll be able to select Stella-Jones for defensive progress or Canfor for an aggressive lumber rebound. Doman is a wonderful passive-income play.
