Guide to Canadian Dividend ETFs

Canadian Dividend ETFsA dividend ETF tracks an index consisting of dividend paying stocks. Different ETFs apply different dividend strategies. For instance, a few funds select stocks based on their dividend yields, while some select based on market capitalizations or locations.

Investors especially those approaching retirement prefer investing in dividend ETFs as they provide for a regular stream of income, add diversification, minimize risk, and hedge against inflation. ETFs offer an easy way for investors to manage their portfolios as they track an index.

The number of Canadian dividend ETFs has been growing over the years. BlackRock Canada is one of the biggest portfolio managers in the country and manages some of the leading funds in the country.

Canadian Dividend ETFs

Navigating the dividend ETFs does depend on what you are looking for. If you are strictly looking at income versus appreciation, your approach may be different. Care should be taken while choosing an ETF based on its style, past performance, sector diversification and fees.

Though past performance is indicative and does not guarantee future returns for sure, it is good practise to select funds having a decent established history. You could also go for funds having a low management fee and a good amount of diversification. A good ETF investment will not only save time on researching individual stocks but also provide far better diversification.

Here is a quick summary but you can find the details below; the best performers have the largest exposure to financials. It’s no surprise my portfolio has the largest exposure to financials.

Major Canadian Dividend ETF

All Funds Sectoral Diversification

Due to the nature of the Canadian stock markets, all Canadian Dividend ETFs have a high weightage of Financial and Energy sectors. The other prominent sectors are Industrials and Utilities. Most of these dividend ETFs also invest in the Communications, Real estate and Basic Materials stocks to round up the ETFs.

wdt_IDETFCDZXEIXIUXDVVDYZDVXDIVPDCDXM
1Communication8.6114.007.4216.712.9011.9010.758.989.40
2Consumer Cyclical2.690.084.190.000.000.000.000.000.00
3Consumer Defensive6.710.324.360.003.603.550.003.947.20
4Energy20.7227.8719.425.8621.0018.1321.5522.0923.60
5Financials20.9129.1338.3457.0866.2036.1456.2029.9724.70
6Healthcare0.000.950.510.000.000.000.000.000.00
7industrials13.370.5810.362.580.703.230.004.076.80
8Technology1.290.003.550.000.000.000.004.140.00
9Basic Materials3.191.129.605.300.202.750.000.697.00
10Real Estate8.859.800.001.490.005.381.289.016.30

All Funds Comparative Analysis

The performance and cost details for each dividend ETF is outlined below for better comparative analysis. Keep on reading for more details on each dividend ETF. Do note that the yield is not consistent across payments like many individual stocks, it can fluctuates based on the management of the ETF.

wdt_IDETFYieldReturnFeesMERFrequencyNet AssetsStart Date
1CDZ4.455.940.600.66Monthly886M08/09/2006
2XEI5.524.730.200.22Monthly500M12/04/2011
3XIU3.206.760.150.18Quarterly9,372M28/09/1999
4XDV5.915.370.500.55Monthly1,277M19/12/2005
5VDY4.607.500.200.22Monthly429M02/11/2012
6ZDV4.825.600.350.39Monthly425M21/10/2011
7XDIV4.653.480.100.11Monthly64M07/06/2017
8PDC5.137.800.500.55Monthly586M16/06/2011
9DXM4.713.150.600.67Quarterly17M13/01/2012

CDZ – S&P/TSX Canadian Dividend Aristocrats Index Fund

The S&P/TSX Canadian Dividend Aristocrats Index Fund TSE:CDZ seeks to replicate the S&P/TSX Canadian Dividend Aristocrats Index, which screens for large Canadian companies who have increased their dividends at least five consecutive years. The fund is managed by BlackRock Asset Management Canada Limited, and provides an exposure to a portfolio of high quality, dividend paying Canadian companies operating across diversified sectors. CDZ allows investors to earn a regular monthly dividend income.

CDZ - Sector Exposure
Source: iShares CDZ ETF

Top 10 Holdings:

  1. Gibson Energy Inc. TSE:GEI
  2. Alaris Royalty Corp TSE:AD
  3. TransAlta Renewables Inc. TSE:RNW
  4. GRANITE REIT TSE:GRT.UN
  5. Parkland Fuel Corporation TSE:PKI
  6. Inter Pipeline Ltd TSE:IPL
  7. Exchange Income Fund TSE:EIF
  8. Enbridge TSE:ENB
  9. CHOICE PROPERTIES REIT TSE:CHP.UN
  10. Pembina Pipeline TSE:PPL

XEI – iShares Core S&P/TSX Composite High Dividend Index ETF

iShares Core S&P/TSX Composite High Dividend Index ETF TSE:XEI seeks to replicate the performance of the S&P/TSX Composite High Dividend Index. This  fund is also managed by BlackRock Asset Management Canada Limited, and aims at long-term capital growth by investing in Canadian companies operating across diversified sectors. XEI pays a monthly dividend income.

XEI - Sector Exposure
Source: iShare XEI ETF

Top 10 Holdings:

  1. BCE TSE:BCE
  2. Enbridge TSE:ENB
  3. Pembina Pipeline TSE:PPL
  4. Telus TSE:T
  5. TC Energy TSE:TRP
  6. Bank of Nova Scotia TSE:BNS
  7. National Bank TSE:NA
  8. CIBC TSE:CM
  9. Bank of Montreal TSE:BMO
  10. Fortis TSE:FTS

XIU – iShares S&P/TSX 60 Index ETF

iShares S&P/TSX 60 Index ETF TSE:XIU seeks to replicate the performance of the S&P/TSX 60 Index. The fund is launched and managed by BlackRock Asset Management Canada Limited, and aims at long-term capital growth. It is the largest and most liquid ETF in Canada and the first ETF (to begin trading) in the world.

XIU - Sector Exposure
Source: iShare XIU ETF

Top 10 Holdings:

  1. Royal Bank of Canada TSE:RY
  2. TD Bank TSE:TD
  3. Bank of Nova Scotia TSE:BNS
  4. Enbridge TSE:ENB
  5. Canadian National Railway TSE:CNR
  6. Suncor TSE:SU
  7. Bank of Montreal TSE:BMO
  8. BCE TSE:BCE
  9. TC Energy TSE:TRP
  10. Brookfield Asset Management TSE:BAM.A

XDV – iShares Canadian Select Dividend Index ETF

iShares Canadian Select Dividend Index ETF TSE:XDV seeks to replicate the performance of the Dow Jones Canada Select Dividend Index. The fund is another dividend ETF managed by BlackRock Asset Management Canada Limited. It aims to provide long-term capital growth by investing in 30 high yielding Canadian companies in the Dow Jones Canada Total Market Index. Canadian Select Dividend Index ETF offers a large exposure to the financial sector with more than 50% weightage. It offers regular monthly dividend income to unitholders.

XDV - Sector Exposure
Source: iShare XDV ETF

Top 10 Holdings:

  1. CIBC TSE:CM
  2. Bank of Montreal TSE:BMO
  3. Royal Bank of Canada TSE:RY
  4. BCE TSE:BCE
  5. Bank of Nova Scotia TSE:BNS
  6. TC Energy TSE:TRP
  7. Emera TSE:EMA
  8. ROGERS COMMUNICATIONS TSE:RCI.B
  9. National Bank TSE:NA
  10. TD Bank TSE:TD

VDY – FTSE Canadian High Dividend Yield Index ETF

FTSE Canadian High Dividend Yield Index ETF TSE:VDY tracks the performance of the FTSE Canada High Dividend Yield Index, which consists of Canadian stocks having a high dividend yield. The ETF has a large part of its holdings coming from the financials and energy sectors with over 60% and 20% weightage, respectively. All the top ten holdings of the fund comprises of financials and energy stocks.

VDY - Sector Exposure
Source: Vanguard VDY ETF

Top 10 Holdings:

  1. Royal Bank of Canada TSE:RY
  2. TD Bank TSE:TD
  3. Bank of Nova Scotia TSE:BNS
  4. Enbridge TSE:ENB
  5. Bank of Montreal TSE:BMO
  6. CIBC TSE:CM
  7. TC Energy TSE:TRP
  8. MANULIFE FINANCIAL CORP TSE:MFC
  9. SUNLIFE FINANCIAL INC TSE:SLF
  10. Pembina Pipeline TSE:PPL

ZDV – BMO Canadian Dividend ETF

BMO Canadian Dividend ETF TSE:ZDV seeks to provide unitholders an exposure to the performance of a Canadian dividend paying stock portfolio based on dividend yields. Stocks showing long-term growth are chosen considering their dividend growth, yield, and payout ratio. It offers monthly distributions. The fund is more balanced with none of the stocks constituting more than 5% of the net asset value. BMO Canadian Dividend ETF has stocks from financials, energy, communication and utilities sectors amongst its top six holdings.

ZDV - Sector Exposure
Source: BMO ZDV ETF

Top 10 Holdings:

  1. Enbridge TSE:ENB
  2. CAPITAL POWER CORPORATION TSE:CPX
  3. Telus TSE:T
  4. Genworth MI Canada Inc. TSE:MIC
  5. BCE TSE:BCE
  6. Algonquin Power & Utilities Corp TSE:AQN
  7. Emera TSE:EMA
  8. BROOKFIELD PROPERTY PARTNERS TSE:BPY.UN
  9. Royal Bank of Canada TSE:RY
  10. Bank of Montreal TSE:BMO

XDIV – iShares Core MSCI Canadian Quality Dividend Index ETF

iShares Core MSCI Canadian Quality Dividend Index ETF TSE:XDIV replicates the performance of the MSCI Canada High Dividend Yield 10% Security Capped Index. The fund selects securities with a high quality balance sheet and which have shown consistent earnings in the past. The ETF stocks are characterized by above average dividend yields and growing dividends.

XDIV - Sector Exposure
Source: iShare XDIV ETF

Top 10 Holdings:

  1. Bank of Nova Scotia TSE:BNS
  2. Royal Bank of Canada TSE:RY
  3. TC Energy TSE:TRP
  4. Bank of Montreal TSE:BMO
  5. CIBC TSE:CM
  6. SUNLIFE FINANCIAL INC TSE:SLF
  7. Pembina Pipeline TSE:PPL
  8. Fortis TSE:FTS
  9. Shaw CommunicationsTSE:SJR.B
  10. Telus TSE:T

PDC – Invesco Canadian Dividend Index ETF

Invesco Canadian Dividend Index ETFTSE:PDC seeks to replicate the performance of the NASDAQ Select Canadian Dividend Index. Most Canadian companies in the portfolio are liquid with high yields and have a sound track record of growing dividends. The fund has a 95% exposure to Canada with the rest 5% being contributed by other countries.

PDC - Sector Exposure
Source: Invesco PDC ETF

Top 10 Holdings:

  1. BCE TSE:BCE
  2. TC Energy TSE:TRP
  3. Enbridge TSE:ENB
  4. Bank of Nova Scotia TSE:BNS
  5. CIBC TSE:CM
  6. Telus TSE:T
  7. Pembina Pipeline TSE:PPL
  8. BROOKFIELD INFRASTRUCTURE PARTNERS TSE:BIP.UN
  9. Shaw CommunicationsTSE:SJR.B

DXM – First Asset Morningstar Canada Dividend Target 30 Index ETF

First Asset Morningstar Canada Dividend Target 30 Index ETFTSE:DXM tracks the performance of the Morningstar Canada Target Dividend Index. The fund is designed to provide a diversified exposure to Canadian dividend paying companies. First Asset Morningstar Canada Dividend Target 30 Index ETF is ideal for investors looking for regular quarterly cash flows and who can tolerate medium risk.

DXM - Sector Exposure
Source: CI Financial DXM ETF

Top 10 Holdings:

  1. Enbridge TSE:ENB
  2. Fortis TSE:FTS
  3. Emera TSE:EMA
  4. BCE TSE:BCE
  5. Algonquin Power & Utilities Corp TSE:AQN
  6. ROGERS COMMUNICATIONS TSE:RCI.B
  7. H&R REIT TSE:HR.UN
  8. Canadian Utilities TSE:CU
  9. Pembina Pipeline TSE:PPL
  10. Telus TSE:T

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.
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