Dividend and growth investing are popular strategies in the stock market. Some investors prefer generating passive income streams from dividend stocks. Others purchase low-priced stocks with visible growth potential and sell them at higher prices.
At the same time, people have become more ethical in the modern world. Many invest in companies not only because of earnings but also for their ESG (Environmental, Social and Governance) goals.
In addition to financial returns, ethical investors want to see firms prioritize ESG strategies, have a positive environmental impact, and perform best business practices. Two Canadian ESG stocks stand out for their financial success and commitment to protecting the environment.
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Energy and utilities
Capital Power Corporation’s (TSX: CPX) mission is to provide responsible energy to the world. The $4.7 billion growth-oriented company is well-positioned to support the low-carbon energy system. Its thermal and renewable assets have a combined generating capacity of around 7,500 MW.
On March 13, 2023, Ethisphere named the Edmonton-based power producer one of the World’s Most Ethical Companies for the fifth straight year. Capital Power shares the honour with eight other global energy and utility companies.
Capital Power’s President and CEO, Avik Dey, said, “As the need for energy only grows, we delivered on our balanced approach and executed on our proven midlife natural gas strategy and buildout of renewables, exceeding our annual $600 million growth target for 2023.”
In the first half of 2023, revenue and net income rose 76.9% and 88.7% year over year respectively to $2.1 billion and $370 million. Capital Power has raised dividends for 10 consecutive years and provided dividend growth guidance of 6% annually through 2025. At $40.18 per share, CPX pays a hefty 6.12% dividend.
Automotive
Magna International Inc. (TSX: MG) is at the front and centre in the automotive industry’s drive to deliver more electric vehicles (EVs). The Canadian auto parts maker raised its sales forecast for fiscal 2025 because of the sustained, if not increasing, demand for parts, sensors, and electrified powertrain systems.
The $22.8 billion company’s primary goal is to create a better world of mobility and achieve net-zero by 2050. According to its CEO, Swamy Kotagiri, Magna can achieve the target by addressing the emissions in their manufacturing facilities and the entire supply chain.
Magna will also support low-carbon mobility technology, embrace sustainable practices, and shift to renewable energy sources. The moves should result in more efficient manufacturing processes as the transition to EVs happens. Magna will use 100% renewable electricity in Europe and globally by 2025 and 2030, respectively.
Other new business developments include producing an innovative Gen5 front camera module system for a European OEM. Magna boasts market-leading camera expertise to develop a scalable, one-box front camera module for automakers.
The joint venture with LG Electronics in Hungary will build a new facility for e-motor production and offer electrified powertrain solutions.
In the first half of 2023, Magna’s sales rose 14% year over year to US$21.7 billion, while income jumped 128% to US$548 million. If you invest today, the share price is $81.18. MG also pays a decent 3.06% dividend.
Ethical business models
Capital Power and Magna International are on equal footing regarding ethical business models. Both companies have integrated ESG into their operations and delivered competitive returns.
