10 Best Green Stocks In Canada (Oct 2022): Invest in the Environment

Net-zero emissions by 2050 – A vital climate change goal that 130 countries have pledged to (including Canada) and are working towards reducing their carbon emissions to essentially zero in the next three decades.

So the world is going “green” at an expedited rate. This is reflected in green spending, green industrial practices, and even green/environmentally-conscious investment.

And if that’s something you are interested in, the best green stocks in Canada are an investment asset category you should consider looking into.

Green Stocks vs Green Energy Stocks

Green stocks should not be confused with green energy stocks, even though the two terms are often used interchangeably.

Green energy stocks are primarily associated with renewable sources and green power generation.

In comparison, green stocks can include any company or business contributing to making the world greener and reducing its carbon footprint. That’s a significantly larger asset pool to consider.

However, it’s still dominated by renewable energy companies, including power producers and renewable infrastructure companies.

Best Green Stocks In Canada – Renewable/Green Energy

The most common type of green stocks in Canada is easily green energy stocks.

They are also referred to as renewable stocks, a more accurate term. But since most renewable sources, primarily wind and solar, also release almost no emissions, they are rightfully classified as green energy sources as well.

1. Algonquin Power and Utilities Stock (TSX)

Algonquin Power and Utilities Stock
  • Ticker: AQN.TO
  • Industry Niche: Renewable power generation and distribution
  • Forward Dividend Yield: 5.29%
  • Dividend Payout Ratio: 131.23%
  • Dividend Yield (12-Month Trailing): 4.37%
  • Upcoming Dividend Date: Oct 14, 2022
  • Market Cap: $10.47 Billion
  • Forward P/E Ratio: 14.17
  • Average Analyst Rating: 2.7 - Hold

Algonquin both produces electricity and distributes it, and even though electricity is not the only element in its utility portfolio, it’s definitely the largest one.

And since most of Algonquin’s power generation is from renewables, including wind and solar, it’s also a solid green stock you can invest in.

A company like Algonquin, with both parts of the power business on hand (generation and distribution), can see significant growth if more consumers start opting for green power at a competitive rate.

As a stock, Algonquin is both safe (thanks to the utility business) and quite profitable. Its return potential, composed of both dividends and growth, is substantial.

2. Brookfield Renewable Partners Stock (TSX)

Brookfield Renewable Partners Stock
  • Ticker: BEP-UN.TO
  • Industry Niche: Renewable power asset acquisition
  • Forward Dividend Yield: 3.41%
  • Dividend Payout Ratio: N/A
  • Dividend Yield (12-Month Trailing): 2.85%
  • Upcoming Dividend Date: Sep 29, 2022
  • Market Cap: $27.76 Billion
  • Forward P/E Ratio: 110.9
  • Average Analyst Rating: 2.3 - Buy

Brookfield Renewable Partners, like its parent asset management company, focuses on acquiring renewable power assets across the globe.

It essentially takes a full or partial stake in companies like Algonquin, and its funding usually allows these companies to scale up and grow.

Its geographic diversification is a significant strength from an asset safety/sustainability perspective as well as a green/environmental impact point of view.

The stock offers both dividends and capital appreciation, though the latter far outshines the former.

It’s a stock you can buy and hold long-term, as it will most likely see accelerated growth as the world as a whole move closer to net zero by 2050.

Best Green Stocks In Canada – Green Energy Infrastructure

Green infrastructure companies are a relatively broad term. It includes windmill manufacturers, solar panel manufacturers, solar panel installation/tech companies, and battery/storage companies as well.

Essentially, any company that helps other businesses or B2C customers go green when it comes to energy consumption by providing the right tech or guidance can fall under this category.

3. Enphase Energy Stock (NASDAQ)

Enphase Energy Stock
  • Ticker: ENPH
  • Industry Niche: Solar energy
  • Forward Dividend Yield: N/A
  • Dividend Payout Ratio: 0.00%
  • Dividend Yield (12-Month Trailing): 0%
  • Upcoming Dividend Date: Jan 01, 1970
  • Market Cap: $34.31 Billion
  • Forward P/E Ratio: 52.42
  • Average Analyst Rating: 2.1 - Buy

Even if you are not married to the idea of investing in US stocks, you may consider making an exception for this large-cap company.

While it markets itself as a solar company, its primary product is not solar panels but rather smart microinverters that can be paired with almost every solar panel and their unique battery technology.

The company caters to both residential and commercial clients, and its microinverters are installed in about 1.9 million homes in 130 countries.

The stock has experienced phenomenal growth in the last five years (over 15,000%). Even now, when it’s trading quite near its peak, you can take advantage of its powerful cyclical growth that’s easily capable of doubling your capital.

4. UGE International Stock (TSXV)

UGE International Stock
  • Ticker: UGE.V
  • Industry Niche: Solar energy
  • Forward Dividend Yield: N/A
  • Dividend Payout Ratio: 0.00%
  • Dividend Yield (12-Month Trailing): 0%
  • Upcoming Dividend Date: Dec 23, 2019
  • Market Cap: $41.11 Million
  • Forward P/E Ratio: -4.2
  • Average Analyst Rating: 1.8 - Buy

UGE is quite different from its US counterpart. It’s a nano-cap stock representing a company that focuses on full-scale solar power projects.

So far, the company has worked on over 700 projects that collectively produce 500 MWs. The number seems relatively small, but the company’s approach is quite

“wide.” It caters to different types of customers, including building owners, landowners, and institutions. The geographic reach is even more impressive, as its 700 projects are in more than 90 companies.

The stock has only shown one major spike since its inception. But if you can buy it low and hold for long, and it starts growing its project portfolio at a decent pace, you can turn in a neat profit.

Best Green Stocks In Canada – Hydrogen

Hydrogen is the fuel of the future. It’s efficient, significantly more powerful than electricity (in raw power), and currently quite expensive to produce.

But if there is a breakthrough that reduces the cost of producing hydrogen by a significant margin, the asset class may soar, and hydrogen stocks may follow.

5. Ballard Power Systems Stock (TSX)

  • Ticker: BLDP.TO
  • Industry Niche: Hydrogen fuel cell
  • Forward Dividend Yield: N/A
  • Dividend Payout Ratio: 0.00%
  • Dividend Yield (12-Month Trailing): 0%
  • Upcoming Dividend Date: Jan 01, 1970
  • Market Cap: $2.63 Billion
  • Forward P/E Ratio: -14.24
  • Average Analyst Rating: 2.5 - Buy

Ballard Power Systems neither generates hydrogen nor makes anything that does. But if you have hydrogen, the company offers you a powerful PEM fuel cell that uses that hydrogen to produce electricity.

It has various benefits. In EVs, for example, this approach practically eliminates two major problems: Weight due to batteries and charging time.

An EV powered by a fuel cell powered by hydrogen literally takes minutes to refuel and comes at a fraction of the weight. Ballard’s fuel cells are also used as a backup power source for industries as well.

The stock is capable of phenomenal growth. Holding it long-term is highly likely to be profitable, but how profitable depends on how discounted you buy it and how long you hold it.

6. Xebec Adsorption Stock (TSX)

Xebec Adsorption Stock
  • Ticker: XBC.TO
  • Industry Niche: RenewableHydrogen
  • Forward Dividend Yield: N/A
  • Dividend Payout Ratio: 0.00%
  • Dividend Yield (12-Month Trailing): 0%
  • Upcoming Dividend Date: Jan 01, 1970
  • Market Cap: $78.91 Million
  • Forward P/E Ratio: -8.5
  • Average Analyst Rating: 3.0 - Hold

Did you know that most of the world’s hydrogen is produced by natural gas and oil? And businesses use technologies like the ones Xebec Adsorption provides to generate this hydrogen.

The problem is that hydrogen produced from these sources is not typically “Green.” Still, it can become environmentally friendly and essentially a net-zero source if you use carbon capture alongside hydrogen production.

Xebec Adsorption’s market value is relatively low for a company with such a long and proud history as well as an impressive international presence.

But with the suitable catalysts (one of which is the demand for its hydrogen-producing technologies), it can grow to its glory days valuation, making you rich in the process.

Best Green Stocks In Canada – Green Transport

The bulk of the world’s greenhouse gas (GHG) emissions come from transport, so it’s one of the most critical areas of focus for the countries that genuinely wish to go green.

The more non-emitting EVs there are in the world instead of fossil-driven conventional vehicles, the greener the world is likely to be. So EV stocks are another variant of green stocks worth considering.

7. Lion Electric Stock (TSX)

Lion Electric Stock
  • Ticker: LEV.TO
  • Industry Niche: Medium and heavy-duty electric vehicles
  • Forward Dividend Yield: N/A
  • Dividend Payout Ratio: 0.00%
  • Dividend Yield (12-Month Trailing): 0%
  • Upcoming Dividend Date: Jan 01, 1970
  • Market Cap: $765.71 Million
  • Forward P/E Ratio: -7.9
  • Average Analyst Rating: 2.5 - Buy

Lion Electric has only been around since 2011, and the stock is even newer and only started trading on the TSX in late 2020.

It’s a Zero-Emission Vehicle (ZEV) manufacturer, essentially making it a green company that contributes toward reducing the impact of fossil-fuel-powered transportation.

The company makes heavy-duty vehicles like trucks, school buses, and minibusses. But its true potential comes from its presence and solutions related to the EV ecosystem, which includes charging stations and specific spare parts.

It even helps different entities find funding to switch to ZEVs.

In its brief existence, the stock has shown incredible growth potential. So buying and holding long-term will most likely help you double or even triple your money, given enough time.

8. NFI Group Stock

NFI Group Stock
  • Ticker: NFI.TO
  • Industry Niche: Zero-Emission Buses (ZEBs)
  • Forward Dividend Yield: 1.54%
  • Dividend Payout Ratio: N/A
  • Dividend Yield (12-Month Trailing): 3.12%
  • Upcoming Dividend Date: Oct 17, 2022
  • Market Cap: $944.13 Million
  • Forward P/E Ratio: 15.27
  • Average Analyst Rating: 2.8 - Hold

NFI Group is quite similar to LEV, but it has a relatively larger production capacity and focuses almost exclusively on buses, which it calls Zero-Emission Buses (ZEBs).

The company has manufactured and delivered over 2,000 buses since 2015, and its production capacity might allow it to ramp up production significantly higher (about 8,000 units a year) if there is enough demand.

It operates through various subsidiaries, and one of the major strengths of the company is that it facilities multiple propulsion types.

The stock offered excellent appreciation between its inception and the 2018 peak. And if a similar growth phase is on the horizon (even if it takes an entire decade to reach the zenith), it would be a brilliant investment.

Best Green Stocks In Canada – Low Carbon

Another form of green stock is stocks of companies with relatively low carbon emissions. One international report that listed 200 of the lowest carbon-emitting publicly traded companies included several Canadian ones as well.

9. Canadian National Railway Stock

Canadian National Railway Stock
  • Ticker: CNR.TO
  • Industry Niche: Railway transportation
  • Forward Dividend Yield: 1.81%
  • Dividend Payout Ratio: 37.02%
  • Dividend Yield (12-Month Trailing): 1.72%
  • Upcoming Dividend Date: Sep 29, 2022
  • Market Cap: $105.59 Billion
  • Forward P/E Ratio: 19.62
  • Average Analyst Rating: 2.7 - Hold

Despite its massive transportation footprint, thanks to its 20,000-mile track, which connects three different coasts, the company has a surprisingly low carbon footprint.

The company managed to achieve that partly thanks to fuel efficiency. It’s also focusing on battery-powered locomotives (currently in the testing phase) and might make more significant strides towards making its operations almost carbon-free in the coming years.

Canadian National Railway is a well-established dividend aristocrat, but its primary forte (as stock) is its capital appreciation potential.

Between April 2012 and April 2022, the stock grew by over 290%. The consistency of its growth/capital appreciation is just as impressive as its pace.

10. Telus Stock

Telus Stock
  • Ticker: T.TO
  • Industry Niche: Telecom
  • Forward Dividend Yield: 4.59%
  • Dividend Payout Ratio: 102.98%
  • Dividend Yield (12-Month Trailing): 4.59%
  • Upcoming Dividend Date: Oct 03, 2022
  • Market Cap: $40.21 Billion
  • Forward P/E Ratio: 19.52
  • Average Analyst Rating: 2.1 - Buy

Telecom is by default an electricity-heavy business, but it also has many moving parts that rely on fossil fuel, i.e., service vehicles, generators, etc.

Still, the stock managed to snag third place in the Canadian companies with the smallest carbon footprint.

It’s already focusing on scope 1 and 2 GHG emissions and has pledged to reduce the scope 3 emissions associated with its business by a significant margin by 2030.  

Telus offers a perfect blend of capital appreciation potential and dividends. The yield is quite decent for one of the three telecom giants in the company, and the long-term growth potential is considerably better than the other two.

Is Green Energy A Good Investment?

Yes. It’s a good investment from two perspectives: Social responsibility and profitability. When you choose to invest in companies that are focused on a greener and cleaner future for our world, you are essentially voting with your money.

This naturally compels other businesses to make a more significant effort towards improving their environmental impact, so you end up accomplishing something good that benefits humanity as a whole.

The profitability perspective is that many government funding, grants, incentives, and money from institutional investors are already moving towards green businesses, and the trend will only take off more in the future.

Also, many green stocks like EVs and clean power will see a much higher consumer demand than the alternatives, so organic revenue flows can be substantial. All of this is likely to result in good stock performance.

What Green Energy Stocks Pay Dividends?

Several green energy stocks in Canada pay dividends, including (but not limited to) Algonquin Power and Utilities, Brookfield Renewable Partners, and Innergex Renewable Energy.

How To Buy Green Stocks In Canada

The cheapest way to buy stocks is from discount brokers. My top choices in Canada are:

Readers Choice
Qtrade
Qtrade
  • 105 commission-free ETFs to buy and sell
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Low Fees
Wealthsimple Trade
Wealthsimple Trade
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Well-Rounded
Questrade
Questrade
  • ETF buys have $0 trading fees
  • Excellent market research tools
  • Most types of registered accounts available

To learn more, check out my full breakdown of the best trading platforms in Canada here.

Conclusion

Several other categories may also classify as green stocks. Vegan stocks, for example, aim to reduce GHG emissions associated with cattle/animals by replacing them with plant-based options.

The return potential of different green stocks can vary drastically based on their financial feasibility, tech costs, demand, and several other factors.

However, the best green stocks in Canada can undoubtedly raise the ESG profile of your portfolio by a significant margin right away, even if they take time to raise the growth potential.

Another way to invest in green companies would be to focus on green energy ETFs.

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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