best us dividend etf

Best US Dividend ETFs in Canada (2023)!

In this post, we will be going over the Best US Dividend ETFs in Canada. Only ETFs that invest primarily in the US were considered. Methodology: we started by selecting the most popular ETFs based on Assets under management. Then, we compared these ETFs using the dividend yield, performance over five years, and volatility. For each ETF, we provide the funds’ objective, holdings, and sector/geographic allocation.

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Comparison Asset under management and fees

The table below shows assets under management in millions, the dividend yield, and the fees for each ETF selected. The fees range from 0.30% to 0.97%. Index ETFs tend to have the lowest MERs, while actively managed ones are more expensive. DXG Dyn Ishares Active Global Div, ZWH BMO US High Dividend Covered Call, and VGG Vanguard US Div Appr are the most popular US dividend ETFs in Canada.

In comparison to Canadian dividend ETFs, US dividend ETFs offer better diversification. As discussed in our previous post, Canadian dividend ETFs tend to be dominated by financials and energy.

NameAUMMER
%
DXG – Dyn Ishares
Active Global Div
8820.81%
ZWH – BMO US High
Dividend Covered Call
8760.72%
VGG – Vanguard US
Div Appr
9540.30%
ZDY – BMO US
Dividend CAD
4660.33%
VGH – Vanguard US
Div Appr CAD Hdg
4570.30%
RUD – RBC Quant US
Div Leaders
4070.43%
CUD – Ishares S&P
US Div Growers
4020.66%
DXU – Dyn Ishares
Active US Div
1590.80%
HBF – Harvest Brand
Leaders Plus Income
2970.96%
HAZ – Horizons Active
Global Dividend
2080.78%
Source: Barchart.com for the AUM: asset under management. The info regarding the MER was extracted from the issuers’ website directly.

– HBF from Harvest has the highest management expense ratio;

– Vanguards ETFs VGG and VGH have the lowest MERs.

Comparison performance and dividend yield

Updated daily

ETFDiv Yld
 DXG0.03
 ZWH6.11
 VGG1.43
 ZDY2.63
 VGH1.43
 RUD1.85
 CUD2.12
 DXU0.00
 HBF7.63
HAZ2.99
Source Yahoo Finance – Dividend yield

Comments and analysis

US dividend ETFs ideal for investors who seek capital growth

VGG – Vanguard US Div Appr and VGH – Vanguard US Div Appr CAD Hdg offer excellent long-term performance with a very low MER. These Vanguard ETFs follow a passive strategy. They track the NASDAQ US Dividend Achievers Select Index. The latter is comprised of a select group of exclusively US securities with at least ten consecutive years of increasing annual regular dividend payments. VGG is non-hedged, while VGH is hedged against currency fluctuations.

DXG – Dyn Ishares Active Global Dividend had an excellent long-term performance. This being said, the fund lost ground recently due to market volatility. The managers of the fund apply an active strategy with a focus on dividend-paying stocks. However, the primary purpose of the fund is to seek capital growth. The dividend yield is close to 0%. A little over 50% of the fund is invested in US companies with a bias towards the IT sector.

In terms of liquidity, DXG is a good choice. It’s one of the most popular ETF in its category. The MER is 0.81% which is acceptable considering it’s an actively managed fund.

US dividend ETFs ideal for investors who are seeking income

ZWH BMO US High Dividend Covered Call has been designed to provide exposure to a dividend-focused portfolio while earning call option premiums. ZWH offers an attractive dividend yield of close to 6%. What’s unique about this ETF is that it uses covered calls to protect against downside risk. 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. ZWH is a non-hedged ETF.

HBF  Harvest Brand Leaders Plus Income is an equally weighted portfolio of 20 large companies selected from the world’s Top 100 Brands. The ETF is designed to provide a consistent monthly income stream with an opportunity for growth. It pays close to a 6% dividend yield, but it also has the highest MER with 0.96%. It’s relatively a small ETF in terms of asset under management.

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Tax implications of owning US dividend ETFs

There are tax implications when holding an ETF that invests in US and international stocks. Any dividend received will be reduced by withholding taxes depending on the scenarios below. The table below provides a summary:

Canadian ETF: 1$ dividend
scenario
TaxesDividend
received
1- Holding US or
International stocks directly
-0.15$ (withholding tax from US or
foreign jurisdiction) Creditable
0.85$
2- Holding US listed
ETFs that invest in US stocks
-0.15$ (withholding tax from US or
foreign jurisdiction) Creditable
0.85$
3- Holding US listed ETFs
that invest in International stocks
-0.15$ (withholding tax from foreign
jurisdiction) Non creditable -0.13
(withholding tax from US) Creditable
0.72$

The chart is designed for illustrative purposes only and is subject to change. Please consult a tax specialist for more information.

DXG – Dyn Ishares Active Global Div ETF

DXG is a actively managed fund. The fund invests primarily in a diversified portfolio of equity securities of businesses located around the world that pay or are expected to pay a dividend or distribution. These securities are selected actively based on size, profitability and liquidity. 56% of the funds holdings are invested in US companies, this is why it’s part of our list of the best US Dividend ETFs in Canada.

This ETF is ideal for investors seeking a dividend income from an international basket of large caps. The fund is well diversified across a variety of sectors mainly Technology, Industrials, Consumer discretionary and Health care.

DXG Morningstar rating

Rating: 5 out of 5.

DXG Holdings detail

Company NameAllocation
Ashtead Group PLC6.2%
Hoya Corp5.8%
LVMH Moet Hennessy
Louis Vuitton SE
5.7%
Facebook Inc Class A5.4%
Capital One Financial 5.2%
Alphabet Inc Class A5.2%
Salesforce.com Inc4.9%
NVIDIA Corp4.8%
Edwards Lifesciences 4.7%
BNP Paribas Act. Cat.A4.3%
Please consult issuers’ website for the most up-to-date data

DXG Sector breakdown

CountryFund
United States62.3
International35.8
Please consult issuers’ website for the most recent data

DXG Sector breakdown

Sector % Allocation
Financial Services21.7%
Technology17.8%
Consumer Cyclical15.0%
Please consult issuers’ website for the most up-to-date data

ZWH – BMO US High Dividend Covered Call ETF

ZWH has been designed to provide exposure to a dividend focused portfolio, while earning call option premiums. The underlying portfolio is yield-weighted and broadly diversified across sectors. The Fund utilizes a rules-based methodology that considers the following criteria:

dividend growth rate,

yield,

payout ratio,

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.

Morningstar rating

Rating: 2 out of 5.

ZWH Holding details

Weight (%)Name
4.48%BANK OF AMERICA CORP
4.29%CISCO SYSTEMS INC/DELAWARE
4.21%HOME DEPOT INC/THE
4.12%JPMORGAN CHASE & CO
4.09%MICROSOFT CORP
3.92%INTERNATIONAL BUSINESS MACHINES CORP
3.85%CHEVRON CORP
3.83%ABBVIE INC
3.71%AT&T INC
3.65%COCA-COLA CO/THE
Please consult issuers’ website for the most recent data

ZWH Geographic allocation

CountryFund
USA100.0%

ZWH Sector allocation

SectorFund
Information Technology22.52%
Industrials8.25%
Consumer Discretionary9.60%
Health Care12.53%
Financials16.30%
Materials4.19%
Communication9.54%
Consumer Staples7.25%
Energy3.92%
Utilities 3.77%
Real estate2.12%
Please consult issuers’ website for the most recent data

VGG – Vanguard US Div Appr and VGH – U.S. Dividend Appreciation Index ETF (CAD-hedged)

VGG and VGH are both index fund (passively managed). They have the same investment strategy. They currently seeks to track the performance of the NASDAQ US Dividend Achievers Select Index. The latter is comprised of a select group of securities with at least ten consecutive years of increasing annual regular dividend payments.

VGH is hedged: Meaning the manager will seek actively to reduce currency risk. VGG is not hedged against currency fluctuation risk.

Index funds can be great especially from an MER perspective. VGG and VGH charge 0.30% MER which the lowest among the ETFs selected in our list. They offer an exposure to large number of established US corporations, mostly Bluechips such as Microsoft, Walmart…etc.

The choice between VGG and VGH depends solely on the investor take on currency. If the Canadian dollar appreciates then a hedged ETF will be a better choice. On the other hand, if the US dollar appreciates, then the non hedged ETF will have a better performance.

Morningstar rating

Rating: 3 out of 5.

VGG Holding details

Company NameAllocation
Microsoft Corp4.5%
JPMorgan Chase & Co3.9%
Johnson & Johnson3.8%
UnitedHealth Group Inc3.3%
Visa Inc Class A3.2%
The Home Depot Inc3.1%
Please consult issuers’ website for the most up-to-date data

VGG Geographic allocation

CountryFund
USA99.3%
Please consult issuers’ website for the most up-to-date data

VGG Sector allocation

Sector % Allocation
Financial Services17.0%
Industrials16.9%
Healthcare15.5%
Please consult issuers’ website for the most up-to-date data

ZDY – BMO US Dividend CAD

BMO US Dividend ETF has been designed to provide exposure to a yield weighted portfolio of U.S. dividend paying stocks. The ETF utilizes a rules based methodology that considers the three year dividend growth rate, yield, and payout ratio to invest in U.S. equities. Securities will also be subject to a liquidity screen process. The underlying portfolio is rebalanced in June and reconstituted in December.

Morningstar rating

Rating: 3 out of 5.

ZDY Holdings details

Weight (%)Name
3.13%BANK OF AMERICA CORP
2.86%JPMORGAN CHASE & CO
2.64%CHEVRON CORP
2.64%HOME DEPOT INC/THE
2.63%CISCO SYSTEMS INC/DELAWARE
2.60%INTEL CORP
2.56%MICROSOFT CORP
2.47%JOHNSON & JOHNSON
2.33%INTERNATIONAL BUSINESS MACHINES CORP
2.31%AT&T INC
Please consult issuers’ website for the most recent data

ZDY Sector allocation

SectorFund
Information Technology20.38%
Industrials8.79%
Consumer Discretionary6.27%
Health Care15.99%
Financials17.21%
Materials1.35%
Communication6.71%
Consumer Staples10.98%
Energy2.80%
Utilities 8.82%
Real estate0.70%
Please consult issuers’ website for the most recent data

RUD – RBC Quant U.S. Dividend Leaders ETF

RUD seeks to provide unitholders with exposure to the performance of a diversified portfolio of high-quality U.S. dividend-paying equity securities that will provide regular income and that have the potential for long-term capital growth.

The fund manager uses an inhouse multi-factor approach to gauge a company’s financial strength. An emphasis is put on companies that grow their dividends overtime.

Morningstar rating

Rating: 3 out of 5.

RUD Holdings

HoldingsAssets
MICROSOFT CORP9.2%
APPLE INC6.4%
MASTERCARD INC2.5%
HOME DEPOT INC2.4%
ACCENTURE PLC2.0%
TEXAS INSTRUMENTS INC1.9%
JOHNSON & JOHNSON1.7%
VISA INC1.6%
INTUIT INC1.4%
VERIZON COMMUNICATIONS INC1.4%
Total number of holdings145
Please consult issuers’ website for the most recent data

RUD Sector breakdown

Information technology 33.6%

Health care 12.5%

Industrials 11.2%

Financials 10.1%

Consumer discretionary 9.0%

Consumer staples 6.6%

Communication services 6.3%

Real estate 3.4%

Energy 3.1%

Materials 3.0%

Utilities 1.3%

( Please consult issuers’ website for the most recent data )

CUD – iShares US Dividend Growers Index ETF (CAD-Hedged)

CUD is an index ETF. It seeks to replicate the S&P High Yield Dividend Aristocrats CAD Hedged Index, net of expenses

The index is designed to measure the performance of companies within the S&P Composite 1500® that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 years.

Morningstar rating

Rating: 1 out of 5.

NameWeight %
EXXON MOBIL CORP3.41
AT&T INC2.66
PEOPLES UNITED FINANCIAL INC2.41
CHEVRON CORP2.35
INTERNATIONAL BUSINESS MACHINES CO2.02
FEDERAL REALTY INVESTMENT TRUST RE2.01
NATIONAL RETAIL PROPERTIES REIT IN1.92
WALGREEN BOOTS ALLIANCE INC1.87
OLD REPUBLIC INTERNATIONAL CORP1.82
FRANKLIN RESOURCES INC1.77
Please consult issuers’ website for the most recent data

CUD Sector breakdown

SectorWeight
Financials17.62
Industrials15.08
Consumer Staples13.80
Utilities12.73
Materials8.63
Real Estate6.96
Consumer Discretionary6.33
Energy5.76
Health Care5.62
Communication4.04
Please consult issuers’ website for the most recent data

DXU – Dynamic Active U.S. Dividend ETF

Invests primarily in a diversified portfolio of equity securities of U.S.-based businesses that pay or are expected to pay a dividend or distribution.

Criteria:

– Focus on large cap companies (Liquidity and valuation are key).

– Business that are expected to grow their dividends overtime.

Morningstar rating

Rating: 4 out of 5.

DXU Holding details

NameWeight %
TRIMBLE INC6.28
ALIGN TECHNOLOGY INC5.54
TAIWAN SEMICONDUCTOR MANUFACTURING5.33
ALPHABET INC CLASS A5.32
FIVE BELOW INC5.13
TJX INC5.04
ZEBRA TECHNOLOGIES CORP CLASS A5.03
DISCOVER FINANCIAL SERVICES4.74
ULTA BEAUTY INC4.73
PARKER-HANNIFIN CORP4.70
Please consult issuers’ website for the most recent data

DXU Sector breakdown

SectorWeight %
Information Technology32.49
Consumer Discretionary18.57
Industrials13.45
Health Care13.19
Financials9.09
Communication5.30
Consumer Staples4.17
Materials3.35
Cash0.39
Please consult issuers’ website for the most recent data

HBF – Harvest Brand Leaders Plus Income

HBF is an equally weighted portfolio of 20 large companies selected from the world’s Top 100 Brands. The ETF is designed to provide a consistent monthly income stream with an opportunity for growth. In order to generate an enhanced monthly distribution yield, an active covered call strategy is engaged.

Morningstar rating

Rating: 3 out of 5.

HBF Holding details

Company NameAllocation
JPMorgan Chase & Co5.4%
Royal Dutch Shell PLC
ADR Class A
5.3%
McDonald’s Corp5.3%
Alphabet Inc Class A5.2%
Microsoft Corp5.2%
Citigroup Inc5.1%
The Walt Disney Co5.1%
Please consult issuers’ website for the most up-to-date data

HBF Sector breakdown

Sector % Allocation
Financial Services20.2%
Technology20.1%
Comm. Services15.3%
Please consult issuers’ website for the most up-to-date data

HAZ – HORIZONS ACTIVE GLOBAL DIVIDEND

HAZ is an actively managed ETF. The investment objective is to seek long-term returns consisting of regular dividend income and modest long-term capital growth. The fund is advised by Guardian Capital Group Limited. Stocks are selected from international markets based on three key fundamental drivers:

  • Growth of dividends;
  • Payout of cash flows;
  • Sustainability of the payout

Morningstar rating

Rating: 3 out of 5.

HAZ Holding details

Security NameWeight
BROADCOM INC5.38%
ACCENTURE PLC CLASS A5.29%
APPLE INC4.99%
MICROSOFT CORP4.82%
AIR PRODUCTS & CHEMICALS INC3.52%
LAM RESEARCH CORP3.24%
MEDICAL PROPERTIES TRUST INC3.21%
NESTLE SA3.12%
ROYAL BANK OF CANADA3.06%
MCDONALD’S CORP2.96%
Please consult issuers’ website for the most recent data

HAZ Geographic allocation

CountryFund
United States62.12
United Kingdom6.68
France6.26
Canada6.09
Ireland5.30
Switzerland5.34
Other8.21
Please consult issuers’ website for the most recent data

HAZ Sector breakdown

SectorWeight %
Information Technology28.23
Consumer Discretionary9.07
Industrials15.35
Health Care8.93
Financials4.21
Communication1.62
Consumer Staples9.40
Materials9.12
Energy6.58
Real estate4.71
Utilities1.38
Cash & equivalent1.40
Please consult issuers’ website for the most recent data

Disclaimer

The data on this website is for your information only. It does not constitute investment advice, or advice on tax or legal matters. Any information provided on this website does not constitute investment advice or investment recommendation nor does it constitute an offer to buy or sell or a solicitation of an offer to buy or sell shares or units in any of the investment funds or other financial instruments described on this website. Should you have any doubts about the meaning of the information provided herein, please contact your financial advisor or any other independent professional advisor.

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