As an investor, you may be looking for a way to potentially generate steady income and reduce investment risk. One way to do this is by investing in utilities ETFs. Utilities companies are businesses that provide essential services like electricity, water, and gas, and are generally considered to be stable and reliable due to the constant demand for their services. In this article, we will take a look at some of the best utilities ETFs in Canada, and compare their performance, investment objectives, and dividend yields. By the end of this article, you should have a better understanding of the top utilities ETFs available in Canada, and which one may be the best fit for your investment goals.
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Best Utilities ETF in Canada – comparison
Dividend yield
| Symbol | Name | Div yld |
|---|---|---|
| ZWU.TO | BMO Covered Call Utilities | 8.45 |
| ZUT.TO | BMO Equal Weight Utilities Index | 3.91 |
| XUT.TO | iShares S&P/TSX Capped Utilities Index | 3.57 |
| HUTL.TO | Harvest Equal Weight Global Utilities Income | 7.88 |
Performance
Historical performance updated daily
Asset under management
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MER Comparison
| Name | MER |
|---|---|
| ZWU – BMO Covered Call Utilities | 0.71 |
| ZUT – BMO Equal Weight Utilities Index | 0.61 |
| XUT – iShares S&P/TSX Capped Utilities Index | 0.61 |
| HUTL | Harvest Equal Weight Global Utilities Income | 0.75 |
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How to choose a good dividend ETF
– Total return: Though the focus here is on the dividend yield, you have to keep in mind the total return. The profit or loss we make on any investment combines both dividend income and capital gain or loss. Looking at the long-term performance of the fund is crucial. An ETF that provides a good capital appreciation with a high dividend yield is preferable.
–Diversification: A diversified ETF is always a safer option. Some high yield ETFs are sector-specific (Financials, Energy or Gold). The ones focused on Energy and Gold have had an inferior long-term performance and carry high volatility risk.
–Volume and liquidity of the ETF. The higher the asset under management, the lower the trading costs of the ETF (difference between the bid and ask price).
ZWU – BMO Covered Call Utilities
The BMO Covered Call Utilities ETF is an investment fund that aims to provide investors with exposure to a diversified portfolio of Canadian utility companies. The ETF aims to achieve two main goals:
- Provide investors with regular income payments every month, similar to receiving rent from a property you own.
- Provide investors with the opportunity to grow their investment over time through capital appreciation, which means that the value of their investment can potentially increase.
To achieve these goals, the ETF invests primarily in Canadian utility companies, which are companies that provide essential services like electricity, water, and gas. Additionally, the ETF uses a strategy called “covered call,” which involves selling options on some of the stocks in its portfolio to generate extra income.
ZWU Dividend history
| Distrib Period | Ex-Div Date | Pay Date | Total Distrib |
|---|---|---|---|
| January 2023 | January 27, 2023 | February 02, 2023 | 0.080000 |
| February 2023 | February 24, 2023 | March 02, 2023 | 0.080000 |
| March 2023 | March 29, 2023 | April 04, 2023 | 0.080000 |
| April 2023 | April 26, 2023 | May 02, 2023 | 0.080000 |
| May 2023 | May 30, 2023 | June 05, 2023 | – |
ZWU ETF Holdings
| Weight (%) | Name | Ticker |
|---|---|---|
| 5.51% | FORTIS INC/CANADA | FTS |
| 5.51% | BMO EQUAL WEIGHT UTILITIES INDEX ETF | ZUT |
| 5.49% | BCE INC | BCE |
| 5.13% | ENBRIDGE INC | ENB |
| 5.09% | PEMBINA PIPELINE CORP | PPL |
| 4.98% | PPL CORP | PPL |
| 4.90% | DUKE ENERGY CORP | DUK |
| 4.86% | TC ENERGY CORP | TRP |
Consult issuers’ website for up-to-date data
ZWU Sector and geographic allocation
| Sector | Allocation |
|---|---|
| Utilities | 55.60% |
| Communication Services | 23.42% |
| Energy | 20.98% |
This table shows that the ETF has the highest allocation of its investments (55.60%) in the utilities sector, followed by communication services (23.42%), and energy (20.98%).
| Country | Allocation |
|---|---|
| Canada | 65.52% |
| United States | 34.41% |
This table shows that the ETF has a majority of its investments (65.52%) in Canadian utility companies, while also holding investments (34.41%) in utility companies located in the United States.
ZUT – BMO Equal Weight Utilities Index
The BMO Equal Weight Utilities Index ETF is an investment fund that invests in a group of Canadian utility companies to generate income and growth.
Utility companies are businesses that provide essential services like electricity, water, and gas to homes and businesses. They are generally seen as stable and reliable because people need these services no matter what’s happening in the economy.
The ETF invests in a portfolio of stocks that is equally weighted, meaning that each company in the portfolio has the same weight or representation, as opposed to a market capitalization-weighted portfolio where bigger companies have a greater representation. This helps to spread out the risk and make sure that no one company has too much influence over the performance of the ETF.
By investing in a diversified portfolio of Canadian utility companies, the BMO Equal Weight Utilities Index ETF provides investors with exposure to the defensive and income-generating characteristics typically associated with utility companies. This means that it can potentially provide investors with a stable income stream, while also minimizing the risks associated with investing in just one or a few companies.
XUT – iShares S&P/TSX Capped Utilities Index
The ETF invests in a portfolio of stocks that is designed to replicate the performance of the S&P/TSX Capped Utilities Index, which is made up of a group of Canadian utility companies. The index is “capped,” which means that no single company can make up more than a certain percentage of the index. This helps to spread out the risk and make sure that no one company has too much influence over the performance of the ETF.
The investment objective of the iShares S&P/TSX Capped Utilities Index ETF is to provide investors with exposure to the Canadian utility sector, while also seeking to replicate the performance of the index. By investing in a diversified portfolio of Canadian utility companies, the ETF aims to provide investors with a stable income stream, while also minimizing the risks associated with investing in just one or a few companies.
HUTL – Harvest Equal Weight Global Utilities Income
The investment objective of the Harvest Equal Weight Global Utilities Income ETF is to provide investors with exposure to the defensive and income-generating characteristics typically associated with utility companies, while also seeking to minimize concentration risk and provide broader exposure to the global utility sector.
In simpler terms, the ETF aims to provide investors with a way to potentially make money by investing in a diversified portfolio of utility companies from around the world. Because utility companies provide essential services and are generally seen as stable and reliable, the ETF may be attractive to investors looking for a way to generate steady income and potentially reduce their investment risk.
The Harvest Equal Weight Global Utilities Income ETF is an investment fund that aims to help investors make money by investing in a diversified portfolio of utility companies from around the world, including Canada, the United States, Europe, and Asia.
Utility companies are businesses that provide essential services like electricity, water, and gas to homes and businesses. They are generally seen as stable and reliable because people need these services no matter what’s happening in the economy.
The ETF invests in a portfolio of utility stocks that is equally weighted, meaning that each company in the portfolio has the same weight or representation, as opposed to a market capitalization-weighted portfolio where bigger companies have a greater representation. This helps to spread out the risk and make sure that no one company has too much influence over the performance of the ETF.