Individuals seeking income frequently turn to a dividend ETF in Canada. These investments purchase dividend stocks and offer investors a low-cost way to create passive income. Canadian dividend ETFs focus on stocks offering higher yields, typically comprising established companies that distribute modest income to investors rather than reinvesting profits. Investors, such as retirees or others who depend on dividends as a principal source of income, often prefer monthly dividends. Monthly payments fit well into the personal budgeting process and, all else equal, getting paid sooner is better than getting paid later. This is unfortunate because an unbiased portfolio (InvestCAN) and retirement planning software (RetireCAN) will most likely offer a better retirement.
What is a Monthly Dividend ETF?
Monthly dividend ETFs are designed for income investors who want a high level of sustainable dividend income and the potential for portfolio gains. These ETFs deliver a dependable income stream and are viewed as stable long-term investments. These companies are often well-established blue-chip entities with a history of consistent dividend payouts. The final result are well-diversified core portfolio solutions for income investors. Monthly dividends can be more convenient for managing cash flows and help in budgeting with a predictable income stream. Further, these products give greater total returns, if the monthly dividends are reinvested.
What is the Best Dividend ETF in Canada?
If you’re looking for ETFs with the best historical performance based on their five-year annualized returns, here is an ordered list of the top performing monthly dividend ETFs:
- VDY: Vanguard FTSE Canadian High Dividend Yield Index ETF
- DXC: Dynamic Active Canadian Dividend ETF
- XDIV: iShares Core MSCI Canadian Quality Dividend Index ETF
- RCD: RBC Quant Canadian Dividend Leaders ETF
- XEI: iShares S&P/TSX Composite High Dividend Index ETF
- ZDV: BMO Canadian Dividend ETF
- CDZ: iShares S&P/TSX Canadian Dividend Aristocrats Index ETF
- XDV: iShares Canadian Select Dividend Index ETF
- PDC: Invesco Canadian Dividend Index ETF
- FCCD: Fidelity Canadian High Dividend ETF
Canadian Monthly Dividend ETF Comparison
Quickly compare Canadian monthly dividend ETFs by fees, performance, yield, and other metrics to decide which ETF fits in your portfolio.
| Manager | ETF | Name | Risk | Inception | AUM | MER | P/E | Yield | Beta | Distributions | Holdings | 5Y |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BlackRock | CDZ | iShares S&P/TSX Canadian Dividend Aristocrats Index ETF | Medium | 2006-09-08 | $1,004,000,000 | 0.66% | 13.77 | 3.55% | 0.88 | Monthly | 92 | 9.82% |
| BlackRock | XDIV | iShares Core MSCI Canadian Quality Dividend Index ETF | Medium | 2017-06-07 | $1,871,598,476 | 0.11% | 14.90 | 4.24% | 0.79 | Monthly | 17 | 11.92% |
| BlackRock | XDV | iShares Canadian Select Dividend Index ETF | Medium | 2005-12-19 | $1,788,221,831 | 0.55% | 11.82 | 4.25% | 0.92 | Monthly | 31 | 9.71% |
| BlackRock | XEI | iShares S&P/TSX Composite High Dividend Index ETF | Medium | 2011-04-12 | $1,730,180,828 | 0.22% | 11.72 | 4.87% | 0.91 | Monthly | 75 | 10.22% |
| BMO | ZDV | BMO Canadian Dividend ETF | Medium | 2011-11-21 | $1,134,600,000 | 0.39% | 19.36 | 3.76% | 0.93 | Monthly | 53 | 10.02% |
| Dynamic | DXC | Dynamic Active Canadian Dividend ETF | Low to Medium | 2017-01-20 | $323,850,000 | 0.72% | N/A | 2.49% | 0.83 | Monthly | 40 | 12.02% |
| Fidelity | FCCD | Fidelity Canadian High Dividend ETF | Medium | 2018-09-13 | $212,700,000 | 0.39% | 16.67 | 3.88% | 0.93 | Monthly | 67 | 7.57% |
| Invesco | PDC | Invesco Canadian Dividend Index ETF | Medium | 2011-06-16 | $811,146,763 | 0.56% | 12.37 | 4.28% | 0.94 | Monthly | 45 | 8.88% |
| RBC | RCD | RBC Quant Canadian Dividend Leaders ETF | Medium | 2014-01-15 | $189,430,000 | 0.43% | 15.29 | 3.30% | 0.91 | Monthly | 59 | 11.20% |
| Vanguard | VDY | Vanguard FTSE Canadian High Dividend Yield Index ETF | Medium | 2012-11-02 | $3,320,000,000 | 0.22% | 12.45 | 4.25% | 0.94 | Monthly | 56 | 12.47% |
10. Fidelity Canadian High Dividend ETF
Fidelity Canadian High Dividend ETF (FCCD) seeks to replicate the performance of the Fidelity Canada Canadian High Dividend Index. It invests primarily in dividend-paying equity securities of Canadian companies. The Index is designed to reflect the performance of stocks of large- and mid-capitalization Canadian dividend-paying companies.
- Single-factor exposure to high-quality tax-preferred Canadian dividend-paying companies
- An outcome-oriented approach that seeks to deliver monthly income and capital gains
- An efficient complement to a well-diversified portfolio
9. Invesco Canadian Dividend Index ETF
Invesco Canadian Dividend Index ETF (PDC) invests in dividend-paying securities of Canadian companies to replicate the NASDAQ Select Canadian Dividend Index, which is comprised of companies that are listed on the Toronto Stock Exchange and have had stable or increasing annual regular dividend payments for the past five or more consecutive years.
- Want to generate income and capital growth over the long term
- Are looking for a core Canadian equity ETF that focuses on dividend-paying companies
- Own, or plan to own, other types of investments to diversify their holdings
- Are comfortable with medium-risk
8. iShares Canadian Select Dividend Index ETF
iShares Canadian Select Dividend Index ETF (XDV) seeks to provide long-term capital growth by replicating the performance of the Dow Jones Canada Select Dividend Index.
- Diversified exposure to 30 of the highest-yielding Canadian companies in the Dow Jones Canada Total Market Index
- Rules-based methodology analyses stocks by dividend growth, yield and payout ratio
- Earn regular monthly dividend income
7. iShares S&P/TSX Canadian Dividend Aristocrats Index ETF
iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ) has been designed to replicate, to the extent possible, the performance of the S&P/TSX Canadian Dividend Aristocrats Index. The Index consists of equity securities issued by Canadian issuers who have increased dividends in at least four of the past five years. Securities must also meet minimum criteria for market capitalization and liquidity to be included in the Index.
- Diversified exposure to a portfolio of high-quality Canadian dividend-paying companies
- Underlying index screens for large, established Canadian companies that increased ordinary cash dividends every year for at least five consecutive years
- Earn regular monthly dividend income
6. BMO Canadian Dividend ETF
BMO Canadian Dividend ETF (ZDV) has been designed to provide exposure to a yield-weighted portfolio of Canadian dividend-paying stocks. ZDV uses a rules-based methodology considering the three-year dividend growth rate, yield, and payout ratio to invest in Canadian equities. Securities will also be subject to a liquidity screening process. The underlying portfolio is rebalanced in May and reconstituted in November.
5. iShares S&P/TSX Composite High Dividend Index ETF
iShares S&P/TSX Composite High Dividend Index ETF (XEI) seeks long-term capital growth by replicating the performance of the S&P/TSX Composite High Dividend Index. Under normal market conditions, the ETF will primarily invest in Canadian equity securities. The Index is comprised of 50 to 75 stocks selected from the S&P/TSX Composite Index. Index constituents are ranked and selected based on their indicated dividend and are capped at 5% weight, while each sector is capped at 30% weight.
- Pays monthly dividend income
- Low cost
- Designed to be a long-term foundational holding
4: RBC Quant Canadian Dividend Leaders ETF
RBC Quant Canadian Dividend Leaders ETF (RCD) seeks to provide unitholders with exposure to the performance of a diversified portfolio of high-quality Canadian equity securities that are expected to provide regular income from dividends and that have the potential for long-term capital growth.
3. iShares Core MSCI Canadian Quality Dividend Index ETF
iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV) seeks to provide long-term capital growth by replicating the performance of the MSCI Canada High Dividend Yield 10% Security Capped Index. The Index targets companies from the MSCI Canada Index (excluding REITs) with high dividend income and quality characteristics and includes companies that have higher than average dividend yields that are expected to be both sustainable and persistent. Securities are also screened based on certain “quality” factors such as return on equity, earnings variability, debt to equity, and on recent 12-month price performance.
- Low-cost portfolio of Canadian stocks with above-average dividend yields and steady or increasing dividends
- Selects securities with strong overall financials, including solid balance sheets and less volatile earnings
- Designed to be a long-term core holding
2. Dynamic Active Canadian Dividend ETF
Dynamic Active Canadian Dividend ETF (DXC) invests primarily in a broadly diversified portfolio of equity securities of Canadian-based businesses that pay or are expected to pay a dividend or distribution.
- Utilizes a bottom-up approach and fundamental analysis to assess growth and value potential
- Target companies that are attractively valued, have high margins and market share and are run by quality management teams
- Has the flexibility to access businesses located outside Canada
1. Vanguard FTSE Canadian High Dividend Yield Index ETF
Vanguard FTSE Canadian High Dividend Yield Index ETF (VDY) seeks to track the performance of a broad Canadian equity index that measures the investment return of common stocks of Canadian companies that are characterized by high dividend yield. Currently, this Vanguard ETF seeks to track the FTSE Canada High Dividend Yield Index. It invests primarily in common stocks of Canadian companies that pay dividends.
Conclusion
Monthly dividend ETFs offer an affordable and easy way to add an extra stream of income to your portfolio. These types of ETFs are suitable for all investors, such as those looking to diversify their portfolios or retirees looking for additional cash flow. With any investment, it is critical to do thorough research beforehand to determine if the investment is suitable for your risk tolerance and investment time horizon.
Investing in Canadian Dividend ETFs comes with instant diversification among dividend-paying stocks usually heavily weighted in the energy and financial sectors. The best-performing Canadian Dividend ETFs are Vanguard FTSE Canadian High Dividend Yield Index ETF (VDY), Dynamic Active Canadian Dividend ETF (DXC) and iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV). They offer diversification and reliable income, but it’s crucial to note that not all dividend ETFs are equal.
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