2 Canadian ESG Stocks for Ethical Investors

Two Canadian ESG stocks are excellent options for investors looking for financially successful companies with ethical business models.

| More on:
protect, safe, trust

Image source: Getty Images

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.

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Magna International. The Motley Fool has a disclosure policy..

More on Dividend Stocks

Man data analyze
Dividend Stocks

This 5.3% Dividend Stock Is a No-Brainer as Trump’s Tariffs Hit

This dividend stock offers investors strong income should Canada be hit by Trump's tariffs.

Read more »

Map of Canada showing connectivity
Dividend Stocks

Trump’s Tariffs: 1 Canadian Stock to Dump and 1 to Buy Immediately

As Trump threatens tariffs on Canada, these are two top stocks to watch.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

TFSA: 4 Canadian Stocks to Buy Now and Hold Forever

These top Canadian stocks could give a big boost to your hard-earned TFSA savings in the long run.

Read more »

stock research, analyze data
Dividend Stocks

Prediction: These Could Be the Best-Performing Value Stocks Through 2030

Despite short-term challenges, these top Canadian value stocks could outperform the broader market by a wide margin in the coming…

Read more »

An investor uses a tablet
Dividend Stocks

Where Will BCE Stock Be in 5 Years?

Despite facing big short-term challenges, BCE stock’s strong market position, steady dividend, and long-term vision make it worth watching.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Want Safe Dividend Income in 2025? Invest in the Following 3 Ultra-High-Yield Stocks!

The market is full of great income stocks, but this trio can provide growth potential and safe dividend income for…

Read more »

A meter measures energy use.
Dividend Stocks

Power Up Your Defences: Canadian Utility ETFs for Steady Income

It is time to power up your defence strategy to withstand market uncertainty around a looming trade war with Canadian…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

What to Know About Canadian Railway Stocks for 2025

The Canadian National Railway (TSX:CNR) isn't the only railroad stock in town.

Read more »