best us dividend etf

Best US Dividend ETF in canada (2024)!

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
cibc investors' edge

Comments and analysis

US dividend ETFs ideal for investors who seek capital growth

RUD.TO – RBC Quant U.S. Dividend Leaders ETF

RUD.TO emphasizes financial strength and dividend growth over time. Its consistent average returns over 3 and 5 years highlight its effectiveness in providing both regular income and long-term capital growth. Its positive YTD return, albeit modest, suggests some resilience.

VGG.TO and VGH.TO – Vanguard US Dividend Appreciation

    Both VGG and VGH track the NASDAQ US Dividend Achievers Select Index, composed of securities with a history of increasing annual dividends. VGG is non-hedged while VGH is CAD-hedged against currency fluctuations. VGG’s higher returns across the board might indicate a benefit from currency fluctuations or simply better performance of the non-hedged approach in the given period.

    HAZ.TO – Horizons Active Global Dividend

      HAZ’s strong YTD return suggests effective active management and selection of international dividend-paying stocks. Its strategy focusing on dividend growth, cash flow payout, and sustainability appears to be yielding good results, making it an attractive option for those seeking regular income and modest capital growth from a diversified international portfolio.

      DXG.TO – Dyn Ishares Active Global Div ETF

      DXG is another actively managed fund with a significant portion invested in U.S. companies. Despite a negative YTD return, its 5-year average suggests good long-term performance. Its strategy of selecting dividend-paying large caps across various sectors like Technology and Healthcare seems to yield substantial returns over a longer horizon.

      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.

      10 Best Dividend ETF in Canada

      8 Best Covered Call ETF Canada – High dividend yield

      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

      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.

      cibc investors' edge

      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

      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

      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

      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.

      cibc investors' edge

      Morningstar rating

      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

      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

      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

      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

      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.