1 “Growthy” Dividend ETF to Buy to Generate Passive Income

BMO MSCI Canada ESG Leaders Index ETF (TSX:ESGA) is a fantastic ETF for income and growth investors alike going into 2025.

| More on:
ETF chart stocks

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Passive-income investors looking for a way to generate passive income should check out the many exchange-traded fund (ETF) products, many of which can allow the perfect balance of growth and dividends (or distributions). Undoubtedly, it’s tough to keep up with the many new ETF offerings that have been popping up on the TSX Index over the past few years.

Though you don’t need to analyze or even be aware of all of them as they land, I think that more competition for the investment dollars of Canadian passive investors means pressure to lower management expense ratios (MERs) and offer even more value to the hands-off types of investors who’d rather set and forget.

Indeed, the TSX Index has slipped a bit in recent trading sessions, now down close to 2% over the past week, while the S&P 500 has continued zooming higher on the strength of the red-hot tech sector. Indeed, Canada’s stock market tends to sit out those red-hot, tech-driven Nasdaq 100 surges. And with the threat of 25% Trump tariffs up ahead, questions linger as to where the TSX Index will start the year and whether a correction will be in the cards in the first quarter of 2025.

The S&P 500 is surging while the TSX Index cools: Time to stick with Canadian stocks?

As opposition leaders call for Prime Minister Justin Trudeau to step down grow louder, there’s a great deal of uncertainty as Team Canada looks to bounce back and formulate a plan to tackle Trump tariffs and the start of a potential trade war.

Undoubtedly, if tariffs get imposed, the S&P 500 may very well leave the TSX Index behind. While it may be tempting to ditch your Canadian-focused ETFs for a simple one that follows either the S&P 500 or Nasdaq 100, I still think there’s a strong value case for staying invested in Canadian ETFs.

Though the momentum could falter at the hands of unique risks, I view plenty of value and outsized dividends (and distributions) to be had on this side of the border.

BMO MSCI Canada ESG Leaders Index ETF

BMO MSCI Canada ESG Leaders Index ETF (TSX:ESGA) is a highly underrated ETF that looks to be a great fit for ESG (environmental, social, and governance) investors seeking value and dividends. At writing, shares of the ETF sport a decent 2.43% yield.

While it’s a lower-yielding dividend ETF, I view the product as having more potential to grow its payout over time. Indeed, if you’re looking to focus a bit more on improving total returns (dividends and capital appreciation), I’d look no further than the name. With a slight weighting towards some excellent growth companies, I view ESGA as having the potential to outperform the TSX Index over the next two to three years.

So, if you seek ESG-friendliness, growth, dividend growth, and a still-decent yield, look no further than the ESGA, a fairly low-cost (0.17% management expense ratio (MER)) solution for investors looking to start their new year on solid footing.

Created with Highcharts 11.4.3Bmo Msci Canada Esg Leaders Index ETF PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Should you invest $1,000 in Bmo Msci Canada Esg Leaders Index Etf right now?

Before you buy stock in Bmo Msci Canada Esg Leaders Index Etf, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bmo Msci Canada Esg Leaders Index Etf wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

TFSA: Invest $15,000 in This TSX Stock and Create $884 in Annual Passive Income

This TSX stock certainly has quite the long-term outlook -- one that could create passive income now and decades to…

Read more »

Dividend Stocks

Invest $20,000 in These REITs for Over $1,000 in Annual Passive Income

Are you looking for a boost in your passive income? Then consider these two REITs for your self-directed investment portfolio.

Read more »

Asset Management
Dividend Stocks

How I’d Allocate $10,000 in 2 Canadian Growth Stocks for the Long Run

Both growth stocks offer a compelling mix of income, growth, and value, and I believe they can outperform over the…

Read more »

grow money, wealth build
Dividend Stocks

2 Dividend-Growth Stocks to Buy on the Pullback

These stocks have increased their dividends annually for decades.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

BCE Stock Analysis: A Smart Choice for Potential Value and Income

BCE stock has slipped to its June 2009 level amid Trump tariff uncertainty and intensity. Does the sharp dip provide…

Read more »

Person slides down a stair handrail
Dividend Stocks

Should You Buy Cargojet Stock at $70?

Cargojet stock might be down, but don't let that scare you off. It's still a long-term opportunity.

Read more »

Middle aged man drinks coffee
Dividend Stocks

3 Monthly Dividend Stocks to Buy and Hold Forever

Add these three TSX dividend stocks to your self-directed portfolio for reliable monthly passive income.

Read more »

Hourglass projecting a dollar sign as shadow
Dividend Stocks

How I’d Build an Income Portfolio With 3 TSX Stocks Paying Monthly Dividends

Focusing on these three monthly paying TSX dividend stocks can help you reinvest more frequently, enhancing overall returns.

Read more »