2 Soaring TSX Stocks to Watch in the Second Half of 2025

The first half of 2025 has been full of surprises for Canadian investors. As we look ahead to the second half of the year, a few stocks stand out not just for their recent performance but for the momentum they have built through smart moves, strong earnings, and growing investor confidence. Two in particular, namely Innergex Renewable Energy (TSX: INE) and Lundin Gold (TSX: LUG), have caught my attention for very different but equally compelling reasons.

INE

Innergex has long been a fixture in Canada’s renewable energy space. But 2025 has been anything but typical for this company. After years of gradual growth and steady income from hydro, wind, and solar projects, Innergex announced this spring that it had agreed to be acquired by CDPQ, one of its largest institutional shareholders. The all-cash offer of $13.75 per share represented a healthy premium and sent the stock soaring more than 70% year to date. At the time of writing, it trades at $13.67, just shy of that buyout price, as the market prices in the expected closure of the deal.

The acquisition was overwhelmingly approved by shareholders in May and is expected to close in the second half of 2025. But beyond the takeover itself, Innergex has been actively growing its portfolio. It recently brought the Hale Kuawehi solar and battery facility online in Hawaii, adding to a list of high-quality renewable assets across North America and Europe. The dividend stock also continues to pay a quarterly dividend of $0.09 per share, offering investors a modest but steady income while the transaction wraps up.

On the earnings front, Innergex posted a loss of $0.066 per share in the first quarter (Q1) of 2025. That’s a significant improvement from the $0.21 loss during the same period last year. Revenue came in at $248.8 million, and while the dividend stock isn’t currently profitable, cash flow remains strong. That’s been a critical piece of its appeal. Innergex has long reinvested in its growth, balancing short-term volatility with long-term income and asset expansion.

LUG

Then there’s Lundin Gold, a very different kind of business that’s been delivering big numbers of its own. The dividend stock operates the Fruta del Norte mine in Ecuador, one of the most successful gold projects in Latin America. With gold prices reaching historic highs earlier this year, Lundin has capitalized in a major way. In Q1 2025, it sold over 117,000 ounces of gold at an average realized price of $3,081 per ounce. That translated into gross revenues of $362 million.

Even more notable is the dividend stock’s profitability. Net income hit $145.6 million last quarter, giving it a net profit margin of more than 40%. Lundin’s return on equity is over 41%, and it has one of the cleanest balance sheets among gold producers. In 2024, the dividend stock brought in $1.19 billion in revenue and $426 million in net income. It’s also expanding exploration, with a 108,000-metre drilling program underway to potentially unlock even more reserves around Fruta del Norte.

Lundin isn’t just a growth story, though. It also pays a dividend, with a current yield just above 3%, offering both capital appreciation and passive-income potential. Unlike many of its peers, it has kept debt in check and continues to deliver free cash flow.

Foolish takeaway

So, why are these two stocks worth watching for the rest of 2025? For Innergex, the CDPQ deal offers near-term price stability and an exit opportunity for investors, but its ongoing project development and earnings improvement hint at the potential value of its underlying assets. Lundin, however, offers exposure to the surging gold market with the financial performance to back it up. It’s a rare mix of profitability, expansion, and income that doesn’t come around often in mining stocks.

In fact, both dividend stocks offer compelling dividend income from a $10,000 investment, as seen below.

In a year filled with change, these two dividend stocks offer lessons in how Canadian companies can thrive during volatile times, and both deserve a spot on any watchlist heading into the second half of 2025.