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 12 months. 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 firms provide operational leverage and have maintained resilience amid persistent value volatility and commerce restrictions.
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High quality choose
Stella-Jones is near eclipsing its 52-week excessive of $101.31. At $97.60 per share, the prime lumber inventory has superior almost 20% within the final three months. Analysts’ excessive value goal is $107. The 1.27% dividend yield is modest however is secure 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 constructions that help transmission strains.
Stella-Jones is greater than 30 years previous 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 giant 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% 12 months to this point, however the numerous working losses all through 2025. Traders are trying ahead, anticipating lumber costs to recuperate quickly. In the meantime, diversification and enlargement into Europe is the tailwind. It’s going to counter excessive lumber duties in the US and excessive log prices in Canada.
In December 2025, Canfor Company entered into an settlement to amass excellent widespread shares (45.2%) of Canfor Pulp Merchandisewhich it doesn’t but personal. Based on 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% 12 months to this point), you’ll be able to partake within the 5.42% dividend provide. Canada’s solely totally 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 a large distribution community and a vertical mannequin that permits higher administration of your entire provide chain. Anticipate Doman to capitalize on the robust “restore and rework” market relatively than new development. Nonetheless, unstable development supplies prices have an effect on gross sales ranges.
Within the first three quarters of 2025, income and web earnings rose 26.6% and 50.9% 12 months over 12 months to $2.5 billion and $69.3 million, respectively. Based mostly on the Financial institution of Canada’s forecast, progress ought to strengthen steadily 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 possibly can select Stella-Jones for defensive progress or Canfor for an aggressive lumber rebound. Doman is a wonderful passive-income play.