In this post, we will be going over the Best Global Dividend ETFs in Canada. Only, Global ETFs that invest primarily outside of North America were considered.
Methodology: we started by selecting the most popular ETFs based on Asset under management. Then, we compared these ETFs based on the dividend yield, performance over a 3 years period and volatility. For each ETF, we provide the funds’ objective, holdings and sector/geographic allocation.
Global Dividend ETFs are a great way to get exposure to international markets. However, in comparison with US or Canadian Dividend ETFs, Global Dividend ETFs are much less popular in Canada. Overall, the performance has been the main reason behind this lack of interest. We were able to identify only 4 ETFs that have more than 100 Million dollar in assets and who are truly global (invest in international market excluding US and Canada). As you would see below, BMO dominates the list with their offering especially with their European high dividend covered call ETFs.
Comparison MER or Volatility
Refer to the 2 tables below (The yields and performance data were updated as of March 27th). Note: Past performance does not mean necessarily that the fund will do well in the future).
|ZWP – BMO Europe High Div Cov Call ETF||886||0.71%|
|ZWE – BMO Europe High Div CC CAD Hedge ETF||750||0.67%|
|ZDI – BMO International Dividend ETF||452||0.44%|
|RID – RBC Quant EAFE Dividend Leaders ETF||148||0.54|
– ZDI – BMO International Dividend ETF has the lowest MER among our list at 0.44%! While, ZWP – BMO Europe High Div Cov Call ETF has the highest MER at 071%.
Comparison Yield and performance
– ZWP – BMO Europe High Div Cov Call ETF and ZWE – BMO Europe High Div CC CAD Hedge ETF are the highest dividends paying ETFs in our list. They both pay a little bit over 7% in dividend which is great. But, investors should know that a portion of these payouts are dividends, the other portion are options’ premiums. In fact, because both of these ETFs write covered calls dynamically, they generate additional income through option premiums in certain conditions. This strategy overall has a negative impact on the performance of these ETFs. When you are writing covered calls, you are in essence giving up on the upside potential of the stocks you own.
– RID – RBC Quant EAFE Dividend Leaders ETF has the best performance among the selected ETFs in our list.
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ZWP – BMO Europe High Div Cov Call ETF
The BMO Europe High Dividend Covered Call ETF (ZWP) has been designed to provide exposure to a dividend focused portfolio. These dividend paying companies are selected based on:
- dividend growth rate,
- payout ratio and liquidity.
What’s unique about this ETF is that it uses covered calls to protect against downside risk. This being said, the covered call strategy provides limited downside protection. Also, when you write a covered call, you give up some of the stock’s potential gains. These ETFs will tend to have a higher yield and a lower performance.
|4.88%||VOLKSWAGEN AG PFD|
|3.66%||ZURICH INSURANCE GROUP AG|
|Other (multiple countries)||16.87%|
ZWE – BMO Europe High Div CC CAD Hedge ETF
The BMO Europe High Dividend Covered Call ETF (ZWP) has been designed to provide exposure to a dividend focused portfolio. This ETF is similar to ZWP – BMO Europe High Div Cov Call ETF. The only additional feature ZWE has is the fact that it’s Canadian hedged to reduce exchange risk.
|Weight (%)||Name||Bloomberg Ticker|
|99.83%||BMO EUROPE HIGH DIVIDEND COVERED CALL ETF||ZWP|
For geographic allocation and Sector allocation, please see ZWP – BMO Europe High Div Cov Call ETF.
ZDI – BMO International Dividend ETF
The BMO International Dividend ETF (ZDI) has been designed to provide exposure to a yield weighted portfolio of dividend equities domiciled in international developed markets (outside North America).
Criteria used to select dividend paying stocks:
- three-year dividend growth rate
- payout ratio
|2.47%||TOYOTA MOTOR CORP|
|2.46%||ROCHE HOLDING AG|
|2.42%||RIO TINTO PLC|
|Other (multiple countries)||28.88%|
RID – RBC Quant EAFE Dividend Leaders ETF
RID seeks to provide unitholders with exposure to the performance of a diversified portfolio of high-quality dividend-paying equity securities in markets in Europe, Australasia and the Far East (EAFE) that will provide regular income and that have the potential for long-term capital growth.
|ROCHE HOLDING AG||3.2%|
|KUEHNE + NAGEL INTERNATIONAL AG||2.6%|
|JAPAN TOBACCO INC||2.0%|
|ASML HOLDING NV||1.6%|
|NINTENDO CO LTD||1.4%|
|INDUSTRIA DE DISENO TEXTIL SA||1.4%|
|Other (multiple countries)||30.7%|
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