SRIC ETF's Dividend Boosts Sustainable Income Portfolios Amid Rising ESG Demand

The Scotia Responsible Investing Canadian Equity Index ETF (SRIC) has declared a quarterly cash distribution of CAD 0.137 per unit, payable on July 3, 2025, to shareholders of record as of June 25. This marks the latest installment in a consistent dividend history that underscores the ETF's appeal as both an income generator and a vehicle for sustainable investing. With ESG-focused ETFs gaining momentum globally, SRIC's blend of low costs, quarterly payouts, and ESG alignment positions it as a compelling option for income-seeking investors.

Tracking ESG-Filtered Canadian Equities

SRIC tracks the Solactive Responsible Canadian Equity Index, which screens companies based on environmental, social, and governance (ESG) criteria. The index excludes sectors like fossil fuels, tobacco, weapons, and controversial industries, while prioritizing firms with strong ESG practices. By mirroring this index, SRIC avoids companies that fail ESG benchmarks, aligning with growing demand for investments that align with ethical and sustainability goals.

The methodology emphasizes negative screening—excluding sectors entirely—and positive screening, which favors companies with high ESG scores. This dual approach ensures the portfolio avoids environmental harm and social controversies while focusing on firms that contribute positively to sustainability.

Low Costs and Steady Income in a Volatile Market

SRIC's annual management fee of just 0.11% is sharply below the average for Canadian equity ETFs, which typically charge around 0.45%. This cost advantage is critical for income investors, as lower fees mean more of their returns stay in their pockets. The ETF's quarterly dividend history, dating back to its inception, has remained stable despite macroeconomic turbulence, reflecting the resilience of Canadian equities and the passive management style that minimizes turnover-driven volatility.

The distribution of CAD 0.137 per unit represents a yield of approximately 1.2% based on its current price (as of June 2025), making it competitive with traditional fixed-income instruments while offering equity-like upside potential.

Positioning in Scotia GAM's Product Suite and the Canadian ETF Market

SRIC is part of Scotia Global Asset Management's (Scotia GAM) Responsible Investing series, which includes over a dozen ESG-themed ETFs. This series caters to investors seeking to align their portfolios with sustainability goals without sacrificing return potential. SRIC specifically targets Canadian equities, a segment where demand for ESG exposure is rising as institutional and retail investors increasingly prioritize climate action and social responsibility.

The Canadian ETF market has seen a surge in ESG assets under management (AUM), with sustainable ETFs now accounting for 15% of total Canadian ETF flows, up from 8% in 2020. SRIC's focus on domestic equities gives it an edge in tapping into this trend, as investors often favor home-country exposure for stability and familiarity.

Why Income Investors Should Consider SRIC

1. ESG Alignment: For those seeking to reduce exposure to fossil fuels or controversial industries while maintaining equity exposure, SRIC offers a clear path to sustainability without sacrificing liquidity.
2. Predictable Income: Quarterly distributions provide a steady cash flow, ideal for retirees or income-focused accounts like TFSAs or RRSPs.
3. Cost Efficiency: The low expense ratio ensures that fees do not erode returns over time, making it a better long-term bet than actively managed funds.
4. Diversification Benefits: SRIC's broad exposure to Canadian equities—spanning sectors like tech, healthcare, and renewable energy—helps diversify portfolios while adhering to ESG principles.

Risks and Considerations

While SRIC's ESG screens reduce some risks, equity ETFs remain vulnerable to market downturns. The Canadian economy's reliance on energy and mining sectors could pose challenges if global commodity prices falter. Additionally, while the Solactive index avoids controversial industries, its exclusion criteria are not exhaustive—investors should review the fund's prospectus for specifics.

Final Take: A Solid Fit for ESG Income Portfolios

SRIC combines the reliability of quarterly dividends with the growing momentum of sustainable investing. Its low cost, ESG-integrated methodology, and Canadian equity focus make it a standout option for investors seeking both income and alignment with ethical values. For those building diversified portfolios, SRIC could serve as a core holding, especially as ESG criteria continue to shape investment decisions in 2025 and beyond.

Consider SRIC for its balance of income, sustainability, and cost efficiency—especially if Canadian equities remain a strategic focus in your strategy.