Industrials are the companies that keep the economy running. They build and move essential goods, maintain critical systems, and provide services that businesses and governments rely on every day.
For investors, industrial stocks offer a mix of stability and cyclical upside. Some operate steady, cash-generating businesses that can withstand downturns. Others are more sensitive to economic growth, benefiting when construction, manufacturing, and global trade accelerate. The best long-term industrial investments tend to share a few traits: durable demand, strong balance sheets, and the ability to keep investing through economic cycles.
Industrial stocks include companies across a wide range of real-economy activities, such as commercial and professional services, transportation and logistics, aerospace and defense, industrial machinery, construction equipment, electrical equipment, and waste management. Because the sector touches so many parts of the economy, industrial performance often reflects broader business conditions, making company quality and financial strength especially important.
Here are some of the best industrial stocks to consider, along with a framework for how to evaluate the sector.
Top industrial stocks to consider
These industrial stocks are some of the sector’s most durable long-term investments:
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| WM (NYSE:WM) | $95.0 billion | 1.45% | Commercial Services and Supplies |
| FedEx (NYSE:FDX) | $86.3 billion | 1.60% | Air Freight and Logistics |
| GE Vernova (NYSE:GEV) | $242.2 billion | 0.19% | Electrical Equipment |
| Lockheed Martin (NYSE:LMT) | $143.3 billion | 2.17% | Aerospace and Defense |
| Caterpillar (NYSE:CAT) | $333.7 billion | 0.83% | Machinery |
1. Waste Management
NYSE: WM
Key Data Points
Waste Management (WM +1.91%), or WM, is one of the leading waste management companies in North America. It provides waste collection, transfer, and disposal services, as well as recycling and resource recovery. The company is also a leading developer and operator of landfill gas-to-energy facilities that produce renewable natural gas (RNG).
It provides its services to residential, commercial, industrial, and municipal customers. With demand for waste hauling relatively stable, its business is more recession-resistant than other industrial companies.
Over the years, WM has invested in automating its collection truck fleet and converting it to run on cleaner, cheaper natural gas, including RNG. Moves like these have enabled WM to consistently generate free cash flow, allowing it to fund acquisitions. It's investing $3 billion through 2026 on new or upgraded recycling facilities and RNG production facilities, and plans to make another $100 million to $200 million of tuck-in acquisitions in 2026. These investments drive its expectation of delivering nearly 30% free cash flow growth in 2026.
The company also routinely returns money to shareholders via dividends and share repurchases while maintaining an investment-grade balance sheet. It hiked its dividend 14.5% for 2026 -- its 23rd straight year of increases -- and approved a new $3 billion share repurchase authorization, supporting its plan to return $3.5 billion in cash to shareholders in 2026. This strategy of expanding and also rewarding shareholders has enabled WM to create significant shareholder value over the years.
2. FedEx
NYSE: FDX
Key Data Points
FedEx (FDX +0.58%) provides customers with transportation, e-commerce, and business services. The company operates a fleet of aircraft and vehicles, logistics facilities, and retail stores that help facilitate the shipment of millions of packages daily. It also offers a range of logistics and e-commerce services to help businesses deliver their products to customers.
FedEx generates substantial free cash flow, enabling it to pay a competitive, growing dividend. It can also repay debt to strengthen its balance sheet and make investments to expand its operations.
FedEx’s strong cash flow also enables the company to invest in innovation. The shipping company is testing autonomous vehicles and delivery services. Meanwhile, the company bought RouteSmart Technologies in 2025 to help further optimize delivery.
The company announced in 2025 plans to separate its FedEx Freight operations by creating a new, publicly traded company. FedEx hopes to complete the separation within 18 months. The transaction will create two leading industrial companies and should unlock value for shareholders.
FedEx plans to deliver strong growth following the separation. It expects to grow its revenue at a 4% compound annual rate through 2029, while delivering double-digit compound annual earnings growth.
3. Lockheed Martin
NYSE: LMT
Key Data Points
Lockheed Martin (LMT +0.83%) is a leading global security and aerospace company. It researches, designs, develops, and manufactures advanced technology systems, products, and services, primarily for government customers. The defense contractor has four main business segments: aeronautics, missiles and fire control, rotary and mission systems, and space.
The company invests billions of dollars annually on research and development (R&D) to advance the latest defense technology. It routinely complements its internal R&D program with acquisitions. In late 2024, the company acquired Terran Orbital to enhance its space capabilities. It also bought Amentum's Rapid Solutions business in 2025 to enhance its ability to deliver innovative defense technology.
The defense contractor should continue growing in the coming years. The war with Iran in 2026 could drive global defense spending higher.
Lockheed Martin also has an excellent record of returning cash to shareholders through dividends and repurchases. In late 2025, it delivered its 23rd consecutive dividend increase, while boosting its share repurchase authorization by $2 billion, bringing its remaining available capacity to $9.1 billion.
4. Caterpillar
NYSE: CAT
Key Data Points
Caterpillar (CAT -1.79%) is a leading global manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. The company has three operating segments: construction industries, resource industries, and energy and transportation. It also provides financing and related services.
Caterpillar is working toward making more sustainable equipment. It’s collaborating with companies in the rail, energy, mining, and technology sectors on developing new technologies with lower carbon emissions. For example, it’s working on both battery- and hydrogen-powered locomotives. It’s also developing zero-emission haul trucks and equipment for the mining industry. The focus on sustainability will be a major growth driver for Caterpillar in the coming years as the global economy continues to make progress on reducing carbon emissions.
Another major growth driver for Caterpillar is robotics. In early 2026, the company expanded its collaboration with Nvidia (NVDA +0.87%) to revolutionize heavy industry with physical artificial intelligence (AI) and robotics. Caterpillar also introduced its intelligent machines product line in early 2026 to transform the construction industry.
The company has continued to reward shareholders throughout economic cycles. It has raised its dividend for 32 consecutive years.
5. GE Vernova
NYSE: GEV
Key Data Points
GE Vernova (GEV +0.36%) is an energy equipment manufacturing and services company. It was formed in 2024 after the once-mighty industrial giant GE completed its breakup. GE Vernova is the former GE Power and GE Renewable Energy businesses.
The company has three business segments:
- Power: It provides electricity generation solutions, such as natural gas turbines, to customers.
- Wind: The company is a leader in the production of wind turbines and other components for wind energy.
- Electrification: It developed solutions to help modernize and digitize the electric grid.
GE Vernova's products currently produce about 25% of the world's electricity. It manufactures turbines (natural gas and wind), positioning it to grow as demand for lower-carbon energy rises. It also services its customers' turbines, providing the company with very stable cash flow.
The company raised its multi-year financial outlook in early 2026. It anticipates $52 billion in revenue and at least $24 billion in free cash flow by 2028, up from $52 billion and $22 billion, respectively. Powering that growth is strong demand for its gas turbines to support AI.
The practical takeaway for investors is simple: timing and quality matter more in cyclicals than in many other sectors.
Types of Industrial Stocks
The major types of industry companies are:
- Capital goods and machinery: Companies that produce machinery, tools, and equipment used by other industries, such as farm and heavy construction machinery.
- Aerospace and defense: Companies that design and manufacture aircraft, missiles, and defense systems for commercial and military customers.
- Transportation and logistics: Companies that operate railroads, air freight, and shipping services.
- Construction and engineering: Companies that provide engineering and construction services, as well as those that supply materials for construction, such as cement, steel, and electrical equipment.
- Commercial and professional services: Companies that provide services to other businesses, including waste management, security services, and staffing.
- Industrial conglomerates: Companies that operate in several industrial sectors.
How to identify the best industrial companies
The strongest industrial companies tend to share three traits:
- Diversified operations: Less dependence on any single end market or customer base
- Cost advantages: Efficient operations that hold up under inflation or weak demand
- Strong balance sheets: Investment-grade credit and access to capital, which matters in a capital-intensive sector
Because industrial demand can drop quickly in a downturn, investors should pay close attention to how a company performs in stressful periods. Companies with strong liquidity and disciplined capital allocation are often in the best position to keep investing while competitors pull back.
How to buy industrial stocks
Here's a step-by-step guide on how to buy industrial stocks:
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Should you buy industrial company stocks?
Industrial stocks can be a good fit if you want exposure to the real economy and are comfortable with some cyclical volatility.
They may be a better fit for you if:
- You want a mix of dividend income and long-term growth
- You can hold through economic cycles
- You prefer businesses with tangible demand drivers and pricing power
You may want to be more cautious if:
- You need short-term stability
- You are investing heavily in the early stages of a recession
- You are uncomfortable with cyclical drawdowns
If you want diversification without choosing individual stocks, industrial ETFs can also provide broad exposure.
Current Trends & Outlook
The U.S. and Israel launched a war against Iran in early 2026, which has major implications for the industrial sector:
- Defense spending will likely increase, benefiting defense stocks.
- Energy prices surged due to the war, potentially significantly increasing the costs for transport and logistics companies.
- Higher oil prices could slow the global economy, impacting demand for capital goods and machinery as well as for construction and engineering services and materials.
The longer the war continues, the greater the impact it will have on these industrial stocks.
Related investing topics
FAQ
Investing in industrial stocks FAQ
About the Author
Matt DiLallo has positions in FedEx and WM. The Motley Fool has positions in and recommends Caterpillar, Ge Vernova, and Nvidia. The Motley Fool recommends FedEx, Lockheed Martin, and WM. The Motley Fool has a disclosure policy.
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