2 Canadian Stocks That Deliver Income and Potential Capital Gains

Canadian stocks are known for their dividends. But some stocks give both income and capital gains, giving returns in all economies.

Puja Tayal

Author Bio

Puja Tayal grew up in a small-business family where dinner conversations often centred on working capital and savings. Her early experiences with investing, particularly during the 2008 financial crisis, shaped her approach to understanding markets and evaluating investment opportunities. She began her career at a mutual fund company before moving into investor education and financial writing for asset and wealth management firms. Before joining The Motley Fool, Puja wrote for Market Realist, where she extensively covered the semiconductor industry. Her published work has also appeared in The Indian Express. Puja believes every stock has a story that can help investors understand its potential returns. She combines business analysis with different investing approaches to help investors make informed decisions and align their portfolios with their long-term financial goals. Outside of finance, Puja enjoys long drives, catching up with friends, watching superhero and science-fiction movies, and managing her family portfolio. She also has a keen interest in artificial intelligence and its potential to reshape the world.

Education

Bachelor's degree in Accounting and Finance, University of Mumbai (2007)
CFA Level I

Areas of Expertise

Qualitative company analysis, management strategy, risk assessment, long-term investing, portfolio diversification and rebalancing, dividend reinvestment, cyclical growth opportunities, compounding strategies, growth stocks, and dividend stocks.

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Favorite Investment Quote

"Risk comes from not knowing what you're doing." — Warren Buffett

Published September 10, 2025 4:30 pm EDT

Stocks are often categorized as growth or dividend stocks. They give you returns in many ways:

· Dividends: Quarterly or monthly payouts and buying back shares so each share gets a higher dividend

· Growth: Increasing the stock price through growth and expansion, or increasing the share count through a bonus issue or a stock split.

Some stocks give returns in all four ways during the lifetime of the company. The management gives returns to shareholders by working out the best possible method in their current financial situation. For instance, if there are no attractive reinvestment opportunities, they buy back shares instead of stashing too much cash in the balance sheet. And if they have expansion opportunities, they give capital appreciation.

In other words, the investors win when the business is on the normal course and when it is growing. Such stocks deliver both income and potential capital gain.

diversification and asset allocation are crucial investing concepts — Source: Getty Images

Two Canadian stocks that deliver income and potential capital gains

Power Corporation of Canada

Power Corporation of Canada (TSX: POW) is a financial holding company that earns money from dividends and returns from its operating companies. Great-West Lifeco and IGM Financial make up 83% of Power’s gross asset value. The remaining 17% asset value comes from alternative asset managers GBL, Sagard, and Power Sustainable, which invest in real estate, private credit, and energy infrastructure. These companies generate capital appreciation by increasing the fair market value of their assets. Power expects to earn a 10% net return from these investments.

Great-West and IGM Financial are the key sources of dividends for Power Corporation. They pay regular dividends from the premiums they collect from life insurance and asset management fees from assets under management. Some popular names under their belt are Canada Life, Wealth Simple, Rockefeller, and China AMC.

Power Corporation of Canada has unlocked shareholder value by simplifying its organizational structure, buying back shares when there are no significant reinvestment opportunities, and making strategic acquisitions. As the asset value of its holding companies increases, the share price of Power Corporation increases. As of June 30, 2025, its net asset value (NAV) per share was $64.76, and the stock is currently trading at a 10% discount to its NAV.

Apart from capital growth, Power has also grown its dividends by 6-10% in the last 11 years as Great-West Life and IGM collected more premiums and asset management fees. You could consider buying Power stock and holding it for the long term if you are bullish on the financial sector.

goeasy stock

Another lead from the financial ecosystem is the non-prime lender goeasy (TSX: GSY). goeasy gives capital appreciation by increasing its loan portfolio. And for that, it uses multiple tools such as introducing new loan products, offering loans through multiple distribution channels, covering a wider consumer base, and expanding geographically. It benefits when consumer spending is high and interest rates are low.

The lender also pays dividends from the interest and processing fees it charges on the loan. The bigger the portfolio, the higher the fees and interest, even if the interest rate is low. It also keeps buying back shares, which helps it distribute a higher dividend per share. goeasy has been growing its dividends by 16-45% in the last 11 years.

While dividend growth is relatively stable with some years of windfall gains, capital appreciation is volatile. The share price not only depends on the loan portfolio but also on the quality of the portfolio. When interest rates increase, credit risk rises, and the value of the loan portfolio falls as provision for credit losses increases.

goeasy stock has jumped 50% since April 4 as loan activity increased and credit risk reduced. While the stock is a buy for its dividend growth, it is not a good entry point for capital appreciation. Investors have already priced in the future cash inflows, limiting the upside potential. You could wait for a correction before buying the stock.