Exchange-traded funds (ETFs) that pay monthly dividends are popular with investors. Indeed, it is a way for many to have a relatively stable monthly income. There are a number of ETFs with monthly dividends. However, each ETF has a different objective and a unique investment strategy. For the purposes of this post, we have selected 10 Best Canadian monthly dividend ETFs.
Dividend Yield and AUM comparison
| ETF | Div Yld | MER % |
| Canadian Diversified | ||
| XDV – iShares Can Select Dividend Indx | 4.30 | 0.55 |
| XEI – Ishares S&P TSX Comp High Div Indx | 4.34 | 0.22 |
| VDY – FTSE Canadian High Div Yield Indx | 4.15 | 0.21 |
| CDZ –iShares S&P/TSX Can Div Aristo Indx | 3.70 | 0.66 |
| Covered call | ||
| ZWC – BMO CDN High Div Covered Call | 6.64 | 0.72 |
| Banking | ||
| FIE – Ishares CDN Fin Mthly Income | 6.94 | 0.89 |
| RBNK – RBC CDN Bank Yield Index | 4.08 | 0.32 |
| ZEB -BMO S&P TSX Equal Weight Banks Indx | 4.01 | 0.28 |
AUM and Rating comparison
| ETF | AUM in M | Morningstar rating |
| XDV | 1,911 | 4 stars |
| XEI | 1,753 | 3 stars |
| ZWC | 1,528 | 2 stars |
| VDY | 1,298 | 5 stars |
| CDZ | 1,061 | 2 stars |
| ZWC | 1,528 | 2 stars |
| FIE | 963 | 5 stars |
| RBNK | 284 | 5 stars |
| ZEB | 2,700 | 4 stars |
Best Canadian Monthly Dividend ETF: Performance
updated daily
Diversified Canadian Dividend ETFs (example : XDV, XEI, VDY, CDZ)
These ETFs invest in the best Canadian companies in terms of dividend yield and growth potential. These funds invest your money in several sectors of the economy. However, due to the nature of the Canadian economy, it is not surprising to see these funds dominated by the banking and energy sectors.
In my opinion, XDV iShares Canadian Select Dividend Index and VDY FTSE Canadian High Dividend Yield Index remain the best Canadian diversified dividend ETFs. They combine: low volatility, attractive returns and good performance. VDY has a Morningstar rating of 5 Stars and a low MER of just 0.21%!
- CIBC Investor’s Edge Review
- Full list of ‘Dividend Kings’ stocks by sector –
- Canadian Dividend Stocks under 10$
Covered Call ETFs (ZWC)
ZWC is a popular dividend ETF. ZWC, is what we call, a covered call ETF. In essence, the fund manager sells call options on the securities held in the portfolio for two main purposes: 1- to protect the portfolio in the event of a significant drop in the value of the securities held and 2- to collect premiums and thus improve distributions. These funds are very popular in Canada despite the poor long-term performance they generate.
Personally, I find the covered call strategy well suited to a basket of low volatility securities. It would be very risky if used with cyclical or volatile securities, for example: energy or mining companies.
In terms of dividend yields, ZWC is simply unbeatable. ZWC pays a dividend above 6%. This performance is due to the premiums collected, which enhance the dividend yield. However, in terms of long-term performance, the strategy of writing covered calls is unattractive.
Canadian Banking ETFs (FIE, RBNK et ZEB)
These ETFs invest in the largest Canadian banks. It is both a sector play and a dividend income strategy.
Canadian banks are known for their financial strength. The dividends of their securities are highly sought after and appreciated for their attractive and stable yields. ZEB – BMO S&P TSX Equal Weight Banks Index and RBNK RBC CDN Bank Yield Index are both excellent choices. If you want exposure to the Canadian banking sector with a focus on earning dividends, you’ll be served. Both pay a fairly stable monthly dividend.
RBNK and ZEB have a lower MER than FIE.
XDV – iShares Canadian Select Dividend Index ETF
XDV seeks long-term capital growth by replicating the performance of the Dow Jones Canada Select Dividend Index, net of expenses.
Holdings (XDV)
| Name | Weight |
| Canadian Imperial Bank of Commerce | 8.5% |
| Canadian Tire Corp Ltd Class A | 6.8% |
| Bank of Montreal | 6.3% |
| Labrador Iron Ore Royalty Corp | 6.2% |
| Royal Bank of Canada | 6.0% |
| BCE Inc | 4.7% |
| TC Energy Corp | 4.7% |
| Bank of Nova Scotia | 4.7% |
| The Toronto-Dominion Bank | 4.3% |
| National Bank of Canada | 3.9% |
Consult issuers’ website for up-to-date data
XEI – iShares Core S&P/TSX Composite High Dividend Index ETF
This ETF objective is to replicate the performance of the S&P/TSX Composite High Dividend Index ETF. The fund’s objective is long term capital growth by investing in Canadian companies operating across diversified sectors. XEI pays a monthly dividend income which can be appealing for investor who are looking for a frequent payout.
XEI portfolio
| Name | Weight |
| Enbridge Inc | 5.2% |
| Royal Bank of Canada | 5.1% |
| Canadian Natural Resources Ltd | 5.1% |
| The Toronto-Dominion Bank | 5.0% |
| BCE Inc | 5.0% |
| Suncor Energy Inc | 4.9% |
| TC Energy Corp | 4.8% |
| Bank of Nova Scotia | 4.8% |
| Nutrien Ltd | 4.5% |
| Bank of Montreal | 4.0% |
Consult issuers’ website for up-to-date data
ZWC – BMO CDN High Div Covered Call
The BMO Canadian High Dividend Covered Call ETF (ZWC) 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 selection methodology uses 4 factors: – Liquidity; – Dividend growth rate; – Yield and payout ratio.
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.
The financial sector and Energy represents 56% of the total overall sector allocation.
ZWC High dividend ETF Holdings
| Weight (%) | Name |
| 4.96% | TORONTO-DOMINION BANK |
| 4.91% | BCE INC |
| 4.91% | ROYAL BANK OF CANADA |
| 4.71% | CANADIAN IMPERIAL BANK OF COMMERCE |
| 4.61% | BANK OF NOVA SCOTIA |
| 4.24% | MANULIFE FINANCIAL CORP |
| 4.20% | TRANSCANADA CORP |
| 4.10% | ENBRIDGE INC |
| 3.81% | BANK OF MONTREAL |
| 3.77% | GREAT-WEST LIFECO INC |
Consult issuer’s website for up-to-date data
VDY – Vanguard FTSE Canadian High Dividend Yield Index ETF
FTSE Canadian High Dividend Yield Index ETF tracks the performance of the FTSE Canada High Dividend Yield Index, which consists of Canadian stocks having a high dividend yield. Due to the nature of the Canadian market, this fund has large portion of its investment portfolio in Energy and Financials.
VDY holdings
| Name | Weight |
| Royal Bank of Canada | 14.1% |
| The Toronto-Dominion Bank | 12.5% |
| Enbridge Inc | 7.9% |
| Bank of Nova Scotia | 7.7% |
| Bank of Montreal | 6.5% |
| Canadian Imperial Bank of Commerce | 4.9% |
| TC Energy Corp | 4.7% |
| BCE Inc | 4.4% |
| Canadian Natural Resources Ltd | 4.1% |
| Manulife Financial Corp | 3.7% |
Consult issuers’ website for up-to-date data
Consult issuer’s website for up-to-date data
CDZ – S&P/TSX Canadian Dividend Aristocrats Index Fund
The S&P/TSX Canadian Dividend Aristocrats includes only large companies that are part of the TSX and who have increased their dividend consistently for at least 5 years period. This fund has been around for a while now.
CDZ holdings
| Name | Weight |
| Keyera Corp | 3.4% |
| SmartCentres | 3.0% |
| Pembina Pipeline Corp | 2.8% |
| Enbridge Inc | 2.8% |
| Canadian Natural Resources Ltd | 2.5% |
| Power Corporation of Canada | 2.4% |
| Fiera Capital Corp | 2.3% |
| Great-West Lifeco Inc | 2.1% |
| BCE Inc | 2.1% |
| Canadian Imperial Bank of Commerce | 2.1% |
Consult issuers’ website for up-to-date data
FIE – Ishares CDN Fin Mthly Income
Ishares CDN Fin Monthly Income seeks to maximize total return and to provide a stable stream of monthly cash distributions. FIE has a high exposure to the financial sector.
FIE holdings
| Name | Weight |
| iShares S&P/TSX Cdn Prefr Shr ETF Comm | 20.7% |
| iShares Core Canadian Corporate Bd ETF | 10.0% |
| Canadian Imperial Bank of Commerce | 9.1% |
| Royal Bank of Canada | 8.5% |
| The Toronto-Dominion Bank | 7.0% |
| Sun Life Financial Inc | 6.5% |
| Manulife Financial Corp | 6.5% |
| National Bank of Canada | 6.5% |
| Power Corporation of Canada | 6.0% |
Consult issuers’ website for up-to-date data
RBNK – RBC CDN Bank Yield Index
RBC Canadian Bank Yield Index ETF seeks to replicate the Solactive Canada Bank Yield Index. The latter is focused only on the Canadian banking industry.
RBNK holdings
| Name | Weight |
| Canadian Imperial Bank of Commerce | 25.7% |
| Bank of Nova Scotia | 24.0% |
| Royal Bank of Canada | 16.6% |
| The Toronto-Dominion Bank | 15.9% |
| Bank of Montreal | 8.5% |
| National Bank of Canada | 8.0% |
Consult issuers’ website for up-to-date data
ZEB -BMO S&P TSX Equal Weight Banks Indx
The BMO Equal Weight Banks ETF has been designed to replicate, to the extent possible, the performance of the Solactive Equal Weight Canada Banks Index, net of expenses. The index includes the major Canadian banks with a balanced allocation as you can see in the composition of the portfolio below.
| Weight (%) | Name |
| 17,18% | BANK OF MONTREAL |
| 16,90% | TORONTO-DOMINION BANK/THE |
| 16,78% | CANADIAN IMPERIAL BANK OF COMMERCE |
| 16,59% | NATIONAL BANK OF CANADA |
| 16,50% | ROYAL BANK OF CANADA |
| 15,86% | BANK OF NOVA SCOTIA/THE |
| 0,19% | CASH |
Please consult issuers’ website for up-to-date data