Investing in dividend ETFs can be a great way for investors to generate passive income and build long-term wealth. Dividend ETFs typically hold a basket of stocks that pay dividends, which can provide a steady stream of income even during market downturns. In Canada, there are many dividend ETFs available that can offer investors exposure to a range of different sectors and markets.
When evaluating dividend ETFs, it’s important to consider factors such as the fund’s historical performance, dividend growth, and management fees. Some ETFs may focus on high-yield dividend stocks, while others may prioritize dividend growth or low volatility. By carefully selecting dividend ETFs that align with your investment goals and risk tolerance, you can create a diversified portfolio that generates income and grows over time.
In this blog post, we’ll explore some of the best dividend ETFs in Canada for 2023. We’ll look at ETFs that have a strong track record of market returns and dividend growth, as well as those that offer competitive yields and low management fees. Whether you’re a new or experienced investor, this guide can help you make informed decisions about which dividend ETFs to add to your portfolio.
What Are Dividend ETFs In Canada?
Dividend ETFs in Canada are exchange-traded funds that invest in a diversified portfolio of stocks that pay dividends. These ETFs are designed to provide investors with exposure to a basket of dividend-paying companies in various sectors, such as financials, energy, utilities, and consumer goods. Dividend ETFs typically track an underlying index, such as the S&P/TSX Canadian Dividend Aristocrats Index or the S&P 500 High Dividend Index, and aim to provide investors with a steady stream of income through dividend payments.
One of the main advantages of investing in dividend ETFs is the potential for passive income. Many dividend ETFs offer higher yields than traditional savings accounts, making them an attractive option for income-oriented investors. Additionally, dividend-paying companies tend to be more established and financially stable, which can provide some protection against market volatility.
Another advantage of dividend ETFs is the diversification they offer. Rather than investing in a single stock, dividend ETFs provide exposure to a range of companies in different sectors, which can help mitigate risk and potentially improve returns.
Overall, dividend ETFs can be a great addition to any portfolio, especially for investors seeking income and stability. It’s important to research and evaluates the various dividend ETF options available in Canada to determine which ones align with your investment goals and risk tolerance.
Top 20 Dividend ETFs In Canada
iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ): This ETF seeks to provide exposure to Canadian companies that have a history of consistently increasing their dividends. The ETF has a current yield of around 4% and has a low management fee of 0.66%.
BMO Canadian Dividend ETF (ZDV): This ETF aims to provide exposure to Canadian dividend-paying stocks with a focus on quality and growth. The ETF has a current yield of around 3.7% and has a low management fee of 0.39%.
Vanguard FTSE Canadian High Dividend Yield Index ETF (VDY): This ETF seeks to provide exposure to Canadian companies with high dividend yields. The ETF has a current yield of around 4% and has a low management fee of 0.22%.
iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV): This ETF seeks to provide exposure to Canadian companies with strong fundamentals and a history of paying dividends. The ETF has a current yield of around 3.5% and has a low management fee of 0.11%.
Horizons Active Canadian Dividend ETF (HAL): This ETF aims to provide exposure to Canadian dividend-paying stocks with a focus on active management and risk management. The ETF has a current yield of around 3.8% and has a management fee of 0.65%.
iShares Canadian Select Dividend Index ETF (XDV): This ETF seeks to provide exposure to Canadian companies with a history of paying dividends and high dividend yields. The ETF has a current yield of around 3.7% and has a low management fee of 0.55%.
First Asset Canadian Dividend ETF (FDV): This ETF aims to provide exposure to Canadian companies with a focus on dividend growth and quality. The ETF has a current yield of around 3.4% and has a management fee of 0.6%.
BMO US Dividend ETF (ZDY): This ETF provides exposure to US companies with a focus on dividend growth and quality. The ETF has a current yield of around 2.3% and has a low management fee of 0.3%.
iShares Select Dividend Index ETF (XDV): This ETF seeks to provide exposure to US companies with a history of paying dividends and high dividend yields. The ETF has a current yield of around 2.5% and has a low management fee of 0.56%.
Vanguard Dividend Appreciation Index ETF (VGG): This ETF provides exposure to US companies with a history of increasing their dividends over time. The ETF has a current yield of around 1.8% and has a low management fee of 0.08%.
BMO International Dividend ETF (ZDI): This ETF provides exposure to international companies with a focus on dividend growth and quality. The ETF has a current yield of around 3.4% and has a low management fee of 0.44%.
iShares International Select Dividend ETF (IDV): This ETF seeks to provide exposure to international companies with a history of paying dividends and high dividend yields. The ETF has a current yield of around 4.5% and has a management fee of 0.49%.
iShares Emerging Markets Dividend ETF (DVYE): This ETF provides exposure to dividend-paying companies in emerging markets. The ETF has a current yield of around 3.3% and has a management fee of 0.49%.
Invesco S&P Global Dividend Opportunities Index ETF (LVL): This ETF provides exposure to global companies with a focus on dividend growth and quality. The ETF has a current yield of around 3.1% and has a management fee of 0.58%.
First Asset Morningstar US Dividend Target 50 Index ETF (UXM): This ETF seeks to provide exposure to US companies with a focus on high dividend yields and quality. The ETF has a current yield of around 2.8% and has a management fee of 0.6%.
BMO Low Volatility Canadian Equity ETF (ZLB): This ETF provides exposure to Canadian companies with a focus on low volatility and high dividend yields. The ETF has a current yield of around 2.7% and has a low management fee of 0.39%.
iShares Canadian Financial Monthly Income ETF (FIE): This ETF provides exposure to Canadian financial sector stocks with a focus on generating monthly income through dividend payments. The ETF has a current yield of around 5.5% and has a management fee of 0.6%.
CI First Asset Energy Giants Covered Call ETF (NXF): This ETF provides exposure to Canadian energy companies with a focus on generating income through covered call options strategies. The ETF has a current yield of around 7.7% and has a management fee of 0.65%.
Purpose Canadian Financial Income Fund (BNC): This ETF provides exposure to Canadian financial sector stocks with a focus on generating income through dividend payments. The ETF has a current yield of around 5.4% and has a management fee of 0.6%.
iShares U.S. High Dividend Equity Index ETF (XHD): This ETF provides exposure to US companies with a focus on high dividend yields. The ETF has a current yield of around 4.2% and has a low management fee of 0.12%.
Final Words
In conclusion, dividend ETFs in Canada can be an effective way for investors to generate passive income and build long-term wealth. These ETFs offer exposure to a diversified portfolio of stocks that pay dividends, providing a steady stream of income even during market downturns.
When considering dividend ETFs, it’s important to carefully evaluate the historical performance, dividend growth, and management fees. By selecting ETFs that align with your investment goals and risk tolerance, you can create a well-diversified portfolio that generates income and grows over time.
Investing in dividend ETFs may also offer some protection against market volatility, as dividend-paying companies tend to be more established and financially stable. Additionally, the diversification offered by dividend ETFs can help mitigate risk and potentially improve returns.
Overall, dividend ETFs are a great option for income-oriented investors and those seeking stability in their portfolios. As with any investment, it’s important to conduct thorough research and seek professional advice before making any decisions. With careful consideration, dividend ETFs can be a valuable addition to a well-rounded investment strategy.