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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	4.61	0.55
XEI – Ishares S&P TSX Comp High Div Indx	5.21	0.22
VDY – FTSE Canadian High Div Yield Indx	4.85	0.21
CDZ –iShares S&P/TSX Can Div Aristo Indx	4.10	0.66
Covered call
ZWC – BMO CDN High Div Covered Call	7.71	0.72
HDIV -Hamilton Enhanced Multi-Sector Covered Call	10.36	2.39
Banking
FIE – Ishares CDN Fin Mthly Income	7.41	0.89
RBNK – RBC CDN Bank Yield Index	5.15	0.32
ZEB -BMO S&P TSX Equal Weight Banks Indx	4.92	0.28

Source: Barchart, AUM is asset under management in Millions, MER Management expense ratio

AUM and Rating comparison

ETF	AUM in M	Morningstar rating
XDV	1,541	4 stars
XEI	1,416	3 stars
ZWC	1,598	2 stars
HDIV	360	na
VDY	2,127	5 stars
CDZ	888	2 stars
FIE	909	5 stars
RBNK	238	5 stars
ZEB	4,368	4 stars

Source: Barchart and TD Market research, AUM asset under management

Best Canadian Monthly Dividend ETF: Performance

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updated daily

Diversified Canadian Dividend ETFs (example : XDV, XEI, VDY, CDZ)

These ETFs focus on investing in top-performing Canadian companies that offer strong dividend yields and growth potential. They allocate your investments across various sectors of the Canadian economy. However, it’s worth noting that these funds often have a significant presence in the banking and energy sectors, which is reflective of the Canadian economic landscape.

In my assessment, two standout Canadian diversified dividend ETFs are XDV iShares Canadian Select Dividend Index and VDY FTSE Canadian High Dividend Yield Index. These ETFs offer a compelling combination of attributes, including low volatility, attractive returns, and strong overall performance. Notably, VDY boasts an impressive Morningstar rating of 5 Stars and an enticingly low Management Expense Ratio (MER) of just 0.21%.

Covered Call ETFs (ZWC and HDIV)

ZWC and HDIV are well-known dividend-focused exchange-traded funds (ETFs) in the investment landscape. What distinguishes them is their classification as covered call ETFs. In essence, the fund managers overseeing these ETFs engage in a specific strategy where they sell call options on the securities held within the fund’s portfolio. This approach serves two primary purposes:

Portfolio Protection: One key objective is to safeguard the portfolio in the event of a significant decline in the value of the securities it holds. By selling call options, the fund generates income that can help offset potential losses in the underlying holdings.

Income Enhancement: The second goal is to bolster income distributions. These ETFs collect premiums from selling call options, thereby increasing the overall income generated by the fund. This boost in income is particularly attractive to income-focused investors.

Despite their popularity in the Canadian investment landscape, it’s essential to note that covered call ETFs like ZWC and HDIV have faced criticism for their relatively poor long-term performance.

When it comes to dividend yields, covered call ETFs often provide attractive returns due to the additional income generated from the premiums collected through options trading. However, from a long-term performance perspective, the strategy of writing covered calls can be less appealing, as it may limit the potential for capital appreciation.

For a more in-depth exploration of covered call ETFs and their performance in Canada, you can refer to our comprehensive guide on the best covered call ETFs in the country. This resource can provide you with a deeper understanding of these investment vehicles and their suitability for your financial goals.

Canadian Banking ETFs (FIE, RBNK et ZEB)

These ETFs are dedicated to investments in Canada’s most prominent banking institutions, making them a dual-purpose investment that combines sector-specific positioning with a focus on generating dividend income.

The Canadian banking sector is renowned for its financial robustness, and the dividends from these bank securities are highly coveted due to their appealing and dependable yields. Among the top choices for investors seeking exposure to the Canadian banking sector with an emphasis on dividend income, ZEB (BMO S&P TSX Equal Weight Banks Index) and RBNK (RBC CDN Bank Yield Index) stand out as excellent options. Both of these ETFs consistently deliver stable monthly dividend payments.

It’s also worth noting that both RBNK and ZEB come with a lower Management Expense Ratio (MER) compared to FIE, making them potentially more cost-effective choices for investors.

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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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

HDIV -Hamilton Enhanced Multi-Sector Covered Call

HDIV is a passive covered call ETF. It’s ideal for investors who seek high dividend income and low volatility. HDIV invests in a basket of 7 covered call & sector focus ETFs. The fund manager uses also cash leverage of 25% to enhance yield and growth potential. The index tracked is The Solactive Multi-Sector Covered Call ETFs Index TR x 1.25.

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TICKER	NAME	WEIGHT
HMAX	Hamilton Canadian Financials Yield Maximizer ETF	16.2%
NXF	CI Energy Giants Covered Call ETF	15.4%
GLCC	Horizons Gold Producer Equity Covered Call ETF	15.3%
HFIN	Hamilton Enhanced Canadian Financials ETF	14.6%
ZWU	BMO Covered Call Utilities ETF	13.5%
HHL	Harvest Healthcare Leaders Income ETF	13.0%
HTA	Harvest Tech Achievers Growth & Income ETF	12.2%

Investment objectif of LIT Stock

The Global X Lithium & Battery Tech ETF (LIT) aims to provide Canadian investors with investment results that closely follow the price and yield performance of the Solactive Global Lithium Index, before factoring in fees and expenses. This ETF focuses on companies involved in lithium battery technology, which is crucial for the growth of electric vehicles (EVs), renewable energy storage, and mobile devices.

What’s the Solactive Global Lithium Index?

The Solactive Global Lithium Index consists of 40 stocks and is designed to monitor the performance of the largest and most liquid listed companies engaged in lithium exploration and/or mining, as well as the production of lithium batteries. This index is calculated as a total return index in USD and undergoes semi-annual adjustments. The country composition of the index is as follows: Canada contributes 31.9%, the United States accounts for 28.6%, Australia makes up 12.3%, Japan represents 11.8%, and the remaining 15.4% is allocated to other countries.

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Price and Chart – LIT Stock:

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LIT Stock: Historical performance

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LIT Stock review

Rewards

With the increasing demand for electric vehicles and renewable energy solutions, the lithium battery industry holds immense growth potential in the coming decade. At the heart of these technologies, lithium batteries play a crucial role.

The Global X Lithium & Battery Tech ETF offers a compelling investment opportunity for those looking to capitalize on this industry. One key advantage of investing in this ETF is the ability to mitigate company-specific risks. Instead of focusing on individual companies’ performance, investors can track the trajectory of lithium prices. Moreover, the ETF provides broad exposure to the entire electric vehicle supply chain including mining. This comprehensive approach helps to diversify risks within the industry and offers the potential for stable long-term returns.

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Risks

However, it is important to consider potential challenges that the Global X Lithium & Battery Tech ETF may encounter. A decline in Chinese real estate prices, for instance, could have an impact on global electric vehicle sales and disrupt the overall supply chain. It is advisable for investors to stay informed about such developments and evaluate their potential implications on the ETF’s performance.

In summary, the Global X Lithium & Battery Tech ETF presents an enticing opportunity for investors seeking exposure to the thriving lithium battery technology industry. By diversifying risk and gaining access to the entire electric vehicle supply chain, investors can participate in this growing sector with confidence.

Holdings

Net Assets (%)	Name
9.26	ALBEMARLE CORP
6.79	TESLA INC
5.97	PANASONIC HOLDINGS CORP
5.31	RIVIAN AUTOMOTIVE INC-A
5.27	BYD CO LTD-H
4.99	TDK CORP
4.37	CONTEMPORARY A-A
4.18	SAMSUNG SDI CO LTD
3.70	QUIMICA Y-SP ADR
3.41	LG ENERGY SOLUTION

Review of VDY – Vanguard FTSE Canadian High Dividend Yield Index

What’s the objective of XDV ETF?

The iShares Canadian Select Dividend Index ETF (XDV Stock) provides long-term capital growth by investing in 30 high yielding Canadian companies in the Dow Jones Canada Total Market Index.

XDV pays a monthly dividend income which can be appealing for investor who are looking for a frequent payout.

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Updated daily – XDV ETF

What is Dow Jones Canada Select Dividend Index?

The index universe is defined as all dividend-paying companies listed on the Toronto Stock Exchange, excluding income trusts.

The dow Jones Canada Select Dividend Index is rebalanced annually in March. It has 29 constituents of the index. Below, we will detail the methodology used to select the ‘best dividend stocks’.

Methodology

Selected stocks should meet the requirements below:

-Be part of the Index Universe.

-Only stocks that paid dividends in each of the previous five years are selected.

-Enough trading volume

-A five-year average dividend coverage ratio of greater than or equal to 125%. The formula used: Earning per Share / Annual Dividend per Share

The approved stocks are then re-screened by ranking them in descending order by using the indicated annual dividend yield (not including any special dividends). The maximum number of constituents is 30.

Constituent Weightings: Constituent weightings are assigned annually based on IAD. The weight of any individual company is restricted to 10% within the index. Such restrictions are implemented on a quarterly basis

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XDV ETF vs VDY vs XEI

In this section, we will compare XDV with Both XEI – Ishares S&P TSX Comp High Div Index ETF and VDY Vanguard FTSE CDN High Div Yld Index. See tables below:

Table 1: AUM and MER

ETF	AUM*	MER*
XDV – Ishares Canadian Select Div Index	1,734	0.55
XEI – Ishares S&P TSX Comp High Div Index	1,088	0.22
VDY – Vanguard FTSE CDN High Div Yld Index	1,137	0.21

Looking at the management fees, VDY and XEI are attractive. XDV stands at 0.55% which is the highest MER among our three contenders.

Table 2: Performance comparison and analysis

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Performance updated daily

ETF	Div yld %
XDV	4.64
XEI	4.51
VDY	4.33

Source: Yahoo finance

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Analysis

Performance:

The tables above indicate that VDY is ahead in terms of short-term performance. VDY’s exceptional performance can be attributed to the financial sector, which makes up almost 60% of its portfolio.

For long term performance, VDY is slightly better than both XEI and XDV.

Diversification, Volatility and Dividend yield:

XDV holds 30 high dividend-paying stocks in its holdings while VDY 39 and XEI 77. Thus, XEI offers better diversification. In terms of volatility, all three ETFs have the exact Beta suggesting the same level of risk. XEI has the highest dividend yield, but VDY and XDV are close.

Conclusion:

XEI has the upper hand when it comes to diversification. This ETF is not biased towards a specific sector, while Canadian banks dominate XDV and VDY.

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Table 3: Dividend schedule and Beta

ETF	Monthly Div	Beta*
XDV	Yes	0.9
XEI	Yes	1.1
VDY	Yes	0.9

Source: TD Market research, Beta is measure of volatility over 5 years period. The higher the Beta / The higher the volatility. A beta of 1 means the stock or ETF is as volatile as the TSX.

XDV Stock dividend history

XDV pays dividends on a monthly basis. Please refer the last column of the table below for the amount of dividend distribution.

Amount	Dividend Type	Frequency	Ex-Div Date	Record Date	Pay Date	Declare Date

0.1200	Regular	Monthly	1/25/2024	1/26/2024	1/31/2024	1/19/2024

0.1150	Regular	Monthly	12/28/2023	12/29/2023	1/4/2024	12/20/2023
0.1150	Regular	Monthly	11/21/2023	11/22/2023	11/30/2023	11/15/2023
0.1150	Regular	Monthly	10/25/2023	10/26/2023	10/31/2023	10/19/2023

XDV Stock holdings

Name	Weight %
CANADIAN IMPERIAL BANK OF COMMERCE	9,11
BANK OF MONTREAL	7,00
ROYAL BANK OF CANADA	6,33
CANADIAN TIRE LTD CLASS A	6,17
BANK OF NOVA SCOTIA	5,06
TC ENERGY CORP	4,95
LABRADOR IRON ORE ROYALTY CORP	4,94
BCE INC	4,92
TORONTO DOMINION	4,77
NATIONAL BANK OF CANADA	3,94

please consult issuer’s website for up-to-date data

XDV Sectors allocation

Type	Fonds
Finance	55,66
COMMUNICATION	11,82
Services publics	11,12
Énergie	6,75
Consommation discrétionnaire	6,17
Matières	5,77
Valeurs industrielles	2,32
Liquidités et/ou produits dérivés	0,39

please consult issuer’s website for up-to-date data

Investment objective

XYLD is a passive index ETF that uses a covered call strategy to enhance yield and lower volatility. The fund was created by Global X and tracks the S&P500. The manager follows a “covered call” or “buy-write” strategy, in which the Fund buys the stocks in the S&P 500 Index and “writes” or “sells” corresponding call options on the same index. So far, XYLD has paid monthly distributions 9 years running.

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Updated daily – XYLD ETF

Covered call ETF usually 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. Covered call ETFs will tend to have a higher yield and a lower performance (in bull markets) than the portfolio they track.

Is XYLD a good investment?

Positives

Attractive yield thanks to money earned issuing call options;
Lower volatility than investing in the S&P500 ETF such as SPY;
Suits conservative investors and income seekers;
High volatility usually increases the premiums earned by the fund;
Saves you time and effort (if you were youself intesreted on writing call options in the S&P 500
Liquidity: the fund has over 6 Billion dollars assets under management
XYLD is a diversified inevestment

Volatility comparison: XYLD has a lower volatility than the S&P 500 (source of graphic: portfoliolabs.com)

Negatives

Poor performance. You are essentially giving up on the upside potentiel of the S&P 500
The strategy of covered calls becomes ineffective in an unpredictable market

Performance comparison XYLD vs SPY

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Updated daily

Distributions

Distribution Yield	12.11%
Distribution Frequency	Monthly

Is XYLD Sustainable? What is the risk of QYLD?

In my opinion, the dividend are not sustainable for one obvious reason: the primary source of dividend with QYLD is options’ premiums. Options by nature are volatile and their value depend greatly on market sentiment.

Is XYLD a monthly dividend ETF

Yes, QYLD offers a monthly dividend distribution.

XYLD ETF Holdings

Net Assets (%)	Name
6.09	APPLE INC
5.65	MICROSOFT CORP
2.35	AMAZON.COM INC
1.77	BERKSHIRE HATH-B
1.66	ALPHABET INC-CL A
1.60	UNITEDHEALTH GROUP INC
1.49	JOHNSON & JOHNSON
1.48	ALPHABET INC-CL C
1.44	EXXON MOBIL CORP
1.26	JPMORGAN CHASE & CO

Why covered call ETFs are popular?

Covered call ETFs are very popular with American investors. Some of these ETFs managers have billions of dollars under management. Two reasons push investors towards covered call ETFs:

High dividend yield: thanks to the premiums earned when writing call options, the manager under certain conditions can earn premiums and enhance distributions;

Low volatility. Writing a call option is a conservative strategy aimed at reducing volatility;

Great for passive income: if you’re main objective is to achieve high dividend yields and build passive income, then covered call ETFs are a good option. But, remember the high dividend yield comes at a price which very low growth potential.

Practice example: covered call strategy

An investor has 100 shares of Company A in his portfolio. Company A’s share is worth $ 30. He anticipates a stagnation or a slight drop in its price and he is ready to sell them at the price of 26 $. He decides to sell a call with the following characteristics:

• Exercise price: $ 26; Maturity: April; Option price: $ 4; Quantity: 100

He collects the following amount: 4 x 100 or 400 $ (premium)

Two cases should be distinguished:

CASE 1

Company A’s share price rose above the breakeven point of $ 30.

Break-even point = exercise price + premium = 26 + 4 = 30

The buyer of the option will choose to exercise his right to buy and, as the seller of the call, the seller will have to sell the shares at the strike price.

During this operation:

the seller sold his shares for $ 26, which constitutes an acceptable loss for him.
the seller collected the amount of the premium of $ 4, which helped boost the performance of his investments (yield).

CASE 2

Company A’s share price has fallen below the breakeven point of $ 30.

The buyer of the option will choose not to exercise his right to buy and the seller will not have to sell his shares.

Thanks to this operation, the seller keeps his shares in the portfolio and he collected the amount of the premium which generated an additional return.

In the world of exchange-traded funds (ETFs), one innovative offering has been generating significant buzz – the YieldMax™ TSLA Option Income Strategy ETF, known by its ticker symbol TSLY. This actively managed fund has a unique approach to generating income for investors by selling call options specifically on Tesla Inc. (TSLA). While the prospect of substantial dividend yields ranging from 30% to 70% may sound appealing, a closer look reveals significant risks associated with TSLY ETF that may make it less suitable for most investors. In this article, we will delve into TSLY’s strategy, its appeal, and why it might not be the right choice for everyone.

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Understanding TSLY’s Investment Strategy

TSLY’s primary objective is to generate monthly income through an innovative investment strategy. Its core approach involves selling or writing call options on shares of Tesla Inc. (TSLA). However, what sets TSLY apart from other covered call ETFs is its exclusive focus on TSLA.

The fund’s strategy essentially mirrors being long on Tesla. It achieves this by purchasing at-the-money (ATM) call options while simultaneously selling an equivalent number of ATM put options, both with the same expiration date. These positions typically have terms ranging from six months to one year. This combination creates a return profile similar to owning Tesla stock directly.

To further enhance its income generation, TSLY sells an equal amount of call options that are generally 5% to 15% out-of-the-money (OTM), and typically with expirations of one month or less. The proceeds from these options are distributed to shareholders, resulting in an eye-catching distribution yield of approximately 39.5%. The yield is annualized based on the latest dividend payment.

Additionally, TSLY manages its collateral by holding short-term U.S. Treasuries, which currently generate cash flow for the fund.

JEPI vs JEPQ: Which ETF is the Best Investment for You?

What’s a covered call ETF?

Analyzing TSLY’s Risk Factors

While the lure of high dividend yields may make TSLY seem like a tempting investment opportunity, it’s crucial to consider the significant risks associated with this ETF.

Volatility and Sensitivity to Tesla’s Performance:

TSLY’s strategy is closely tied to the performance of Tesla Inc., a company known for its extreme stock price volatility. This high sensitivity to Tesla’s stock price means that TSLY can experience substantial fluctuations in its share price. Investors should be prepared for the potential for both significant gains and losses.

Limited Upside Potential:

One of Tesla’s key selling points for investors has been its potential for substantial capital gains. However, TSLY’s strategy, designed to maximize income through options, limits its participation in any significant price gains of Tesla stock. This means that investors in TSLY may miss out on the full benefits of Tesla’s stock appreciation.

Market Conditions:

TSLY’s strategy does not include taking defensive positions, even during adverse market conditions. This lack of flexibility can expose investors to heightened risks during market downturns or economic crises, potentially leading to significant losses.

Distribution Cuts and Capital Erosion:

TSLY has experienced distribution cuts and capital erosion since its inception. This trend may continue as it relies on the premiums collected from selling call options to sustain its high distribution yield. Such a strategy may not be sustainable in the long run, putting shareholder income at risk.

Source: Seeking alpha

Comparative Analysis:

When comparing TSLY to more conventional covered call ETFs like XYLD, it becomes apparent that TSLY’s characteristics are more pronounced, primarily due to Tesla’s extreme volatility. For the average retiree or income-focused investor, the risk-reward tradeoff of TSLY may not be as appealing as that of a broader-market ETF.

Should You Consider Investing in TSLY ETF?

While there is no inherent flaw in TSLY’s strategy, its suitability depends on an investor’s risk tolerance, investment goals, and understanding of the underlying risks. Here are some factors to consider when deciding whether to invest in TSLY:

Risk Tolerance:

TSLY is inherently risky due to its direct exposure to Tesla’s stock price and its focus on options trading. Investors with a low risk tolerance may find TSLY’s volatility and potential for losses unsuitable for their portfolios.

Investment Goals:

If your primary objective is to generate high income through dividends, TSLY may seem attractive. However, if you also seek capital appreciation or have a long-term investment horizon, TSLY’s limited upside potential may not align with your goals.

Diversification:

Diversification is a fundamental principle of risk management in investing. TSLY’s concentrated exposure to a single stock, Tesla, can lead to higher risks. Consider how this ETF fits into your broader investment strategy and whether it complements or detracts from your overall portfolio diversification.

Market Conditions:

Be aware that TSLY’s performance is highly contingent on market sentiment towards Tesla. If you believe that Tesla’s stock is poised for significant gains, a direct investment in TSLA may offer better returns without the limitations imposed by TSLY’s strategy.

TSLY Dividends

Amount	Dividend Type	Ex-Div Date	Record Date	Pay Date	Declare Date

0.4046	Regular	2/7/2024	2/8/2024	2/9/2024	12/14/2023
0.5565	Regular	1/5/2024	1/8/2024	1/9/2024	12/14/2023

0.6039	Regular	12/7/2023	12/8/2023	12/13/2023	1/25/2023
0.5846	Regular	11/8/2023	11/9/2023	11/16/2023	1/25/2023
0.5769	Regular	10/6/2023	10/10/2023	10/16/2023	1/25/2023
0.5849	Regular	9/8/2023	9/11/2023	9/18/2023	1/25/2023

Conclusion

The YieldMax TSLA Option Income Strategy ETF (TSLY) offers an intriguing approach to income generation through selling call options on Tesla Inc. (TSLA). However, its unique strategy comes with a set of substantial risks that may not be suitable for all investors. While TSLY can generate impressive dividend yields, its sensitivity to Tesla’s stock price, limited upside potential, and exposure to market conditions make it a risky proposition. This is true particularly for retirees or those seeking long-term capital appreciation.

Investors considering TSLY should carefully assess their risk tolerance, investment goals, and portfolio diversification needs before deciding whether to include this ETF in their investment strategy. For those who prioritize income generation and are comfortable with the inherent risks, TSLY may have a place in their portfolios. However, prudent investors should approach TSLY with caution and a full understanding of the potential rewards and pitfalls it presents.

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When exploring Canadian ETF options, two popular choices are the iShares S&P/TSX 60 Index ETF (XIU) and the Vanguard FTSE Canada Index ETF (VCE). Both offer exposure to Canadian equities but have differences worth noting. Let’s dive into a comparison based on fees, size, and holdings – XIU vs VCE.

Executive summary XIU vs VCE

Comparison Aspect	XIU ETF Details	VCE ETF Details
Performance
YTD Return	0.50%	0.61%
3-Year Avg Return	10.54%	11.46%
5-Year Avg Return	9.77%	10.33%
Fees (MER)	0.20% ($200 fee on a $100,000 investment)	0.06% ($60 fee on a $100,000 investment)
Size (AUM)	Over $10 billion (High liquidity)	$1.23 billion (Sufficient liquidity, but less than XIU)
Top Holdings	Royal Bank of Canada, Toronto Dominion, Shopify, Enbridge, etc.	Royal Bank of Canada, Toronto-Dominion Bank, Shopify, Enbridge, etc.
Sector Allocation	Financials: 34.36%, Energy: 17.17%, Technology: 10.29%	Financials: 40.51%, Energy: 16.94%, Technology: 9.36%
Number of Holdings	60 stocks	51 stocks
Index Tracked	S&P/TSX 60 Index	FTSE Canada Index

Performance comparison

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Fees: The Cost of Investing

The management expense ratio (MER) is a critical factor in choosing an ETF. It’s the annual fee deducted from the ETF’s net asset value (NAV), affecting your returns. XIU’s MER is 0.20%, meaning a $100,000 investment incurs a $200 annual fee. VCE, on the other hand, boasts a lower MER of 0.06%, resulting in just a $60 fee on the same investment. For cost-conscious investors, VCE emerges as the more economical option.

Size: A Measure of Popularity and Liquidity

Size and liquidity are crucial when considering ETF investments, as they can significantly influence your trading experience and investment security. The size of an ETF, often represented by its assets under management (AUM), can give us a good indication of its popularity among investors. A larger AUM generally means more investors are involved, contributing to higher trading volumes. This, in turn, enhances liquidity, making it easier for you to buy or sell shares of the ETF without causing significant price movements.

Taking XIU as an example, its AUM stands at a bit over $10 billion, positioning it as one of the larger ETFs in the Canadian market. This substantial size suggests not only its popularity but also implies high liquidity. High liquidity is beneficial as it means you can expect tighter bid-ask spreads, which reduces the cost of trading in and out of the ETF.

On the other hand, VCE, with an AUM of $1.23 billion, is smaller compared to XIU. Despite its smaller size, VCE still maintains sufficient liquidity for most investors, making it a viable option for those looking to diversify their portfolios. However, it’s worth noting that smaller ETFs like VCE, while still liquid, might not match the liquidity levels of their larger counterparts, which could lead to wider bid-ask spreads and potentially higher trading costs in certain situations.

Holdings: The Backbone of Your Investment

Both XIU and VCE heavily invest in the financial and energy sectors, reflecting the Canadian market’s composition. Their top 10 holdings include major companies like Royal Bank and Enbridge, underlining their similar investment focus. However, the ETFs track different indexes—XIU follows the S&P/TSX 60 Index, while VCE tracks the FTSE Canada Index. This leads to slight variations in their portfolios; XIU holds 60 stocks, and VCE has 51. These differences might be minor but could influence performance over time.

Sector allocation comparison XIU vs VCE

Sector	VCE Allocation	XIU Allocation
Financials	40.51%	34.36%
Energy	16.94%	17.17%
Technology	9.36%	10.29%
Materials	8.56%	8.49%
Industrials	8.53%	12.73%

XIU Holding details

Ticker	Name	Weight (%)
RY	ROYAL BANK OF CANADA	7.51
TD	TORONTO DOMINION	6.09
SHOP	SHOPIFY SUBORDINATE VOTING INC CLA	5.29
ENB	ENBRIDGE INC	4.14
CP	CANADIAN PACIFIC KANSAS CITY LTD	4.12
CNR	CANADIAN NATIONAL RAILWAY	3.97
CNQ	CANADIAN NATURAL RESOURCES LTD	3.81
BMO	BANK OF MONTREAL	3.73
BN	BROOKFIELD CORP CLASS A	3.11
BNS	BANK OF NOVA SCOTIA	3.09

VCN Holdings

VCN Holding details

Holding Name	% of Market Value
Royal Bank of Canada	8.2%
Toronto-Dominion Bank	6.79%
Shopify Inc.	5.19%
Enbridge Inc.	4.4%
Canadian Pacific Kansas City Ltd.	4.25%
Canadian National Railway Co.	4.23%
Bank of Montreal	4.12%
Canadian Natural Resources Ltd.	4.05%
Brookfield Corp.	3.48%
Bank of Nova Scotia	3.39%

Portfolio Building: How XIU and VCE Fit In

Incorporating XIU or VCE into your investment portfolio can enhance its diversification, especially if you’re looking to have a strong foundation in Canadian equities. Here’s how they might fit into different investment strategies:

For Conservative Investors: XIU, with its focus on the largest and often most stable companies, might be more appealing. Its larger AUM could also be seen as a sign of stability and liquidity.

For Cost-Sensitive Investors: VCE’s lower MER makes it an attractive option for those looking to minimize fees. Over time, the savings on fees can compound, potentially leading to better net returns.

For Broad Market Exposure: Investors seeking a slightly broader exposure to the Canadian market might lean towards VCE, despite its exclusion of some companies, as it still offers a wide view of the market’s top players.

Conclusion

Choosing between XIU and VCE comes down to what you value most in an ETF. If lower fees are your priority, VCE is the clear choice. However, if you prefer an ETF with a larger AUM, XIU might be more appealing. Despite their differences, both ETFs offer a solid foundation for investors looking to tap into the Canadian market. Remember, the best choice depends on your individual financial goals and preferences.

In this post, we will go over the Best S&P500 ETFs in Canada. We selected only highly popular ETFs with a minimum asset under management of 1 Billion dollars. First things first, we will go over some definitions and the pro and cons of holding index ETFs.

What’s an ETF?

refer to our previous post: Everything you need to know about ETFs

What’s an Index ETF

There are several types of ETFs. And, index ETFs are the king of the hill. In fact, the first ever ETF introduced to a North American Exchange was an index ETF. Index ETFs offer exposure to a large number of securities and sometimes to a whole stock exchange at a very low cost. Their main goal is to acquire, on your behalf, all the securities that constitute a specific index in order to achieve the same return of the tracked index minus the fees.

Does Index funds pay dividend?

Yes they do. Since Index ETFs holds all shares of companies part of the index, if these companies pay dividends then a dividend will be distributed. See below the performance table, the dividend yield is included.

8 Best Canadian dividend stocks near their 52 weeks low

15 Best Monthly Dividend Stocks in Canada for passive income

Popular US indexes

S&P 500 Index

The S&P 500 Index, or the Standard & Poor’s 500 Index, is a market-capitalization-weighted index of the 500 largest publicly-traded companies in the U.S.

The S&P 500 is an excellent index because most of its constituents are large established US corporations. It’s well diversified across various sectors of the US economy. The index is widely regarded as the best gauge of large-cap U.S. equities. It can be easily used to express an opinion on the US economy in general. In other words, if you are bullish on the performance of the American economy in the long term, it’s probably the best index for you.

All ETF’s tracking the S&P 500 index will try replicate the index so their holdings will be similar to the table shown below.

Constituents of the S&P 500 index:

Company	Weight (%)
Apple Inc.	5.72
Microsoft Corporation	5.25
Amazon.com Inc.	3.98
Facebook Inc. Class A	2.11
Alphabet Inc. Class A	1.84
Alphabet Inc. Class C	1.78
Tesla Inc	1.52
Berkshire Hathaway Inc. Class B	1.45
JPMorgan Chase & Co.	1.43
Johnson & Johnson	1.27

S&P 500 website

S&P 500 Sector Weighting

Information technology: 27.60%
Health care: 13.44%
Consumer discretionary: 12.70%
Communication services: 10.79%
Financials: 10.34%
Industrials: 8.47%
Consumer staples: 6.55%
Utilities: 2.73%

Nasdaq 100

The Nasdaq-100 is one of the world’s preeminent large-cap growth indexes. It includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization.

This index is dominated by companies in the Information Technology sector.

Company	Weight
Apple Inc	10.971
Microsoft Corp	9.462
Amazon.com Inc	8.433
Tesla Inc	4.236
Facebook Inc	3.801
Alphabet Inc	3.645
Alphabet Inc	3.32
NVIDIA Corp	2.64
PayPal Holdings Inc	2.342
Intel Corp	2.147

As of March 15th, 2020 Source: Investopedia

Nasdaq 100 Sector weighting

Sector	Weight (%)
Information Technology	48.39%
consumer services	19.43%
health care	10.21%
financials	7.21%
industrials	6.85%
consumer goods	5.51%
utilities	0.81%
telecommunications	0.72%
oil and gas	0.55%
basis materials	0.32%

As of March 15th, 2020 Source: Investopedia

S&P 500 vs Nasdaq 100

S&P 500 is more representative of the US economy. It’s more diversified that the Nasdaq 100 which is heavily tilted towards the tech sector. For a long term investor, an S&P 500 ETF is certainly a cost effective option to both diversify one’s investment and get great return overtime. It’s by far the most used Benchmark, meaning most portfolio managers’ mandate is to beat the S&P 500 Index. And, most of them aren’t able to achieve that target!

We discussed the advantages of owning an S&P 500 Index, now time to tackle its drawbacks. The S&P 500 as its the case of most indexes can be volatile. When a manager is in charge, he can try to mitigate risk during tough times but with an index fund there is no one in charge. You are at the mercy of capital markets. If you can weather storms and stay put you should be able to achieve great long term results. Here is a look at the annualized average returns of the S&P 500 for the period ending June 30, 2019:

S&P500 Historical performance

Market index	S&P 500
1-year return	3.40%
15-year average	8.37%
10-year average	10.90%
15-year average	6.75%

As of the end of September 2019

The businesses that make up the S&P 500 index are a blend of large cap that can be either categorized as Growth or Value stocks. So, by investing in this Index, you will have no exposure to mid or small caps. In addition, If you’re seeking a dividend income, there is definitely other ETFs that can better respond to your needs.

What’s the Nasdaq100?

The Nasdaq 100 Index is a basket of the 100 largest, most actively traded U.S companies listed on the Nasdaq stock exchange. The index itself is not representative of the US economy rather a great way to get exposure to one of the most dynamic and innovative sector (Information Technology). What’s particular for the Nasdaq 100 is that it has no exposure to the US financial sector.

“The index leans heavy towards innovative companies that have become our ‘modern-day industrials,’ and accelerated by the pandemic, they play an even greater role in our daily lives. These include names like Apple, Alphabet and Amazon, as well as Netflix, Zoom and DocuSign. Biotech companies, including vaccine maker Moderna, are also well-represented,” According to Nasdaq website’s.

Annual performance of Nasdaq 100

Year	Annual performance
2020	48.88%
2019	39.46%
2018	0.04%
2017	32.99%
2016	7.27%
2015	9.75%

Comparison of the best S&P 500 ETFs (MER, Yield, Fund size and Beta)

Now that we are done with the definitions, below are the Best Canadian Index ETFs list. We will focus in our comparison on the largest ETFs in Canada in terms of the Asset Under Management.

ETFs tracking the S&P 500	MER
BMO S&P 500 Hedged to CAD Index –ZUE	0.09%
Horizons S&P 500 Index – HXS	0.10%
Horizons S&P 500 Index USD – HXS.U	0.10%
iShares Core S&P 500 Index – XUS	0.10%
iShares Core S&P 500 Index (CAD-Hedged) – XSP	0.10%
iShares Core S&P 500 Index USD – XUS.U	0.10%
Vanguard S&P 500 Index – VFV	0.09%
Vanguard S&P 500 Index (CAD-hedged) – VSP	0.09%

Best S&P500 ETF Canada

Comments:
The MER is almost the same for all the selected ETFs above;
ZUE has the highest dividend yield;
XSP is by far the most popular fund in terms of Asset under management. This provides high liquidity for this ETF;
XUS and XUS.U have the lowest volatility. Hedged ETFs have high volatility but also high returns in comparison to Non Hedged ETFs.

Comparison: S&P 500 Index ETFs (Performance)

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ETFs that are US denominated (XUS.U, HXS.U ) or CAD Hedged (VSP, ZUE, XSP) have outperformed this past year non Hedged ETFs (HXS, VFV, HXS);
Long term 5 years: the performance of the selected ETFs is within the same range;

Comparison of Nasdaq ETFs (MER, Yield, Fund size and Beta)

ETFs tracking the Nasdaq	MER
BMO Nasdaq 100 Equity Hedged to CAD Index – ZQQ	0.39%
iShares NASDAQ 100 Index ETF (Hedged) – XQQ	0.39%

MER is identical for these two popular ETFs;
The volatility is similar since both are tracking the same index and they are both Hedged.

Comparison: Nasdaq Index ETFs (Performance)

Name	1 Y (%)	3 Y (%)	5 Y (%)
ZQQ	-20.23	14.04	17.37
XQQ	-20.17	14.10	17.48

Source: Yahoo finance – as of July 11th – Total monthly returns

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.

For this post, we will share the list of Canadian Dividend Stocks under 10$! All these stocks are Canadian companies listed on the TSX. Monthly dividend stocks are a great way to generate a regular passive income.

We limited ourselves to stocks with over five hundred millions market cap to avoid stocks with low liquidity. In addition, only stock with Dividend Payout Ratio under 125% were considered. For each company, we will provide the dividend yield, pertinent ratios and historical performance.

7 Best Dividend stocks to buy now (safe dividends and growth)

Best dividend stocks to buy – Dividend aristocrats

US Stocks that pay monthly dividends (Full list by sector)

How to select monthly dividend stocks?

Look at the payout ratio

The dividend payout ratio is the amount of dividend distributed by a company divided by the total earnings. For example, a company makes a profit of $ 100 and pays $ 40 in dividends. Its payout ratio is 40%.

If the ratio is high, the company pays almost all of its profits in dividends. There will be little money left in the coffers to innovate or expand to new markets;

It is preferable to invest in a company where the dividend payout ratio is low or medium. The reasoning is that these companies will have money set aside to invest in new projects and thus create growth;

Another variation of payout ratio (Trailing div / Earnings) is the payout ratio to cash (Div / Free cash flows). Earnings can be easily manipulated, so analysts use the payout ratio to cash to assess the safety of dividends better. The website ‘Marketbeat‘ provides the payout ratio to cash for Canadian stocks.

Focus on total return

When one wishes to invest in a dividend-paying stock, it is essential to pay attention to its performance and growth potential. The most common mistake is to invest in stocks with high dividend yields. This strategy is risky. Here’s why :

• A stock can pay a high dividend yield, but is it sustainable? Some companies have a payout ratio that is close to and even exceeds 100%. They manage to post desirable dividend yields, but if we look at the growth prospects, it’s almost nil;

• Investors sometimes shun companies for lack of growth potential or actual risk of lower revenues in the future. These companies experience a drop in the price of their shares, and this causes the dividend yield to become abnormally high. Sooner or later, these businesses will have to cut their dividend.

Dividend sustainability

I personally use the measures below to evaluate a company’s ability to sustain its dividends:

– Debt to Equity ratio: It’s the total debt of a company on shareholders equity. Companies with level of debt are forced to priories the payment of interest charges. This comes at the expense of creating value for shareholders, whether it’s through dividend payment or growth.

– Interest coverage ratio: It’s simply total earnings divided by interest charges. If the ratio is, for example, 4, we would say the company’s earning cover 4 times the interest charges. Business with low interest coverage ratio are at risk. Low ratio means the company’s debt is starting to take a toll on its earnings.

Canadian Dividend Stocks under 10$ -Full list

Last price and Dividend yield

TICKER	PRICE Below 10	DIV YIELD	MKT CAP
FSZFIERA CAPITAL CORP	6.13CAD	14.45%	613.024MCAD
TALPETROTAL CORP	0.74CAD	13.51%	678.915MCAD
TFTIMBERCREEK FINANCIAL CORP	6.60CAD	10.63%	540.89MCAD
BIRBIRCHCLIFF ENERGY LTD.	7.93CAD	10.13%	2.104BCAD
CJCARDINAL ENERGY LTD	7.74CAD	9.60%	1.189BCAD
FCFIRM CAPITAL MORTGAGE INV. CORP.	9.88CAD	9.54%	338.322MCAD
DIVDDIVERSIFIED RTY CORP	2.57CAD	9.34%	368.186MCAD
PNEPINE CLIFF ENERGY LTD	1.52CAD	8.66%	533.615MCAD
PHXPHX ENERGY SERVICES CORP.	7.62CAD	8.00%	371.718MCAD
EXEEXTENDICARE INC	6.12CAD	7.74%	522.53MCAD
DBMDOMAN BUILDING MATERIALS GROUP LTD	7.41CAD	7.50%	650.077MCAD
AQNALGONQUIN POWER AND UTILITIES CORP.	7.57CAD	7.48%	5.393BCAD
INEINNERGEX RENEWABLE ENERGY INC.	9.61CAD	7.48%	1.967BCAD
ECORECORA RESOURCES PLC	1.65CAD	7.30%	409.115MCAD
AFMALPHAMIN RESOURCES CORP.	0.89CAD	6.74%	1.135BCAD
RAY.BSTINGRAY GROUP INC VARIABLE SV	4.50CAD	6.73%	312.886MCAD
RSIROGERS SUGAR INC	5.36CAD	6.65%	567.231MCAD
RAY.ASTINGRAY GROUP INC SV	4.58CAD	6.64%	312.886MCAD
AGF.BDAGF MANAGEMENT LTD	6.86CAD	6.45%	441.595MCAD
AGF.BAGF MANAGEMENT LTD., CL.B, NV	6.84CAD	6.45%	441.595MCAD
DXTDEXTERRA GROUP INC	5.82CAD	6.04%	376.07MCAD
SSFCSAGICOR FINANCIAL COMPANY LTD	5.27CAD	5.73%	750.057MCAD

Dividend Sustainability ratios

TICKER	DEBT/EQUITY	CURRENT RATIO	P/E
FSZFIERA CAPITAL CORP	2.77	—	36.55
TALPETROTAL CORP	0.08	2.90	4.84
TFTIMBERCREEK FINANCIAL CORP	1.53	—	8.85
BIRBIRCHCLIFF ENERGY LTD.	0.13	0.99	6.95
CJCARDINAL ENERGY LTD	0.06	0.69	6.47
FCFIRM CAPITAL MORTGAGE INV. CORP.	0.51	—	10.51
DIVDIVERSIFIED ROYALTY CORP	0.86	5.27	20.24
PNEPINE CLIFF ENERGY LTD	0.03	2.05	11.41
PHXPHX ENERGY SERVICES CORP.	0.34	2.10	5.34
EXEEXTENDICARE INC	4.37	0.78	15300.00
DBMDOMAN BUILDING MATERIALS GROUP LTD	1.28	3.19	10.73
AQNALGONQUIN POWER AND UTILITIES CORP.	1.56	0.71	—
INEINNERGEX RENEWABLE ENERGY INC.	4.89	0.99	—
ECORECORA RESOURCES PLC	0.10	0.49	—
AFMALPHAMIN RESOURCES CORP.	0.12	2.19	14.29
RAY.BSTINGRAY GROUP INC VARIABLE SV	1.43	1.09	8.99
RSIROGERS SUGAR INC	1.52	1.70	—
RSIDROGERS SUGAR INC	1.52	1.70	—
RAY.ADSTINGRAY GROUP INC	1.43	1.09	9.21
RAY.ASTINGRAY GROUP INC SV	1.43	1.09	9.15
AGF.BAGF MANAGEMENT LTD., CL.B, NV	0.08	—	4.97
DXTDDEXTERRA GROUP INC	0.54	1.44	24.96
SSFCSAGICOR FINANCIAL COMPANY LTD	1.46	0.14	6.41

Historical performance

TICKER	3-MONTH PERF	YTD PERF	5Y PERF
FSZFIERA CAPITAL CORP	−8.92%	−30.10%	−50.96%
TALPETROTAL CORP	2.78%	7.25%	146.67%
TFTIMBERCREEK FINANCIAL CORP	−12.23%	−8.21%	−28.57%
BIRBIRCHCLIFF ENERGY LTD.	3.66%	−13.90%	65.21%
CJCARDINAL ENERGY LTD	8.86%	3.06%	79.17%
FCFIRM CAPITAL MORTGAGE INV. CORP.	−6.79%	−8.01%	−23.88%
DIVDIVERSIFIED ROYALTY CORP	−11.11%	−14.95%	−9.86%
PNEPINE CLIFF ENERGY LTD	−1.94%	−8.43%	406.67%
PHXPHX ENERGY SERVICES CORP.	7.93%	2.56%	154.85%
EXEEXTENDICARE INC	−17.41%	−7.55%	−16.73%
DBMDOMAN BUILDING MATERIALS GROUP LTD	16.33%	26.24%	−17.30%
AQNALGONQUIN POWER AND UTILITIES CORP.	−29.78%	−14.94%	−41.14%
INEINNERGEX RENEWABLE ENERGY INC.	−26.25%	−41.62%	−19.72%
ECORECORA RESOURCES PLC	−17.50%	−30.38%	−60.53%
AFMALPHAMIN RESOURCES CORP.	−13.59%	−1.11%	256.00%
RAY.BSTINGRAY GROUP INC VARIABLE SV	−19.35%	−10.00%	−46.43%
RSIROGERS SUGAR INC	−6.29%	−5.47%	−1.83%
RAY.ASTINGRAY GROUP INC SV	−11.92%	−4.58%	−45.61%
RAY.ADSTINGRAY GROUP INC	−13.67%	−5.53%	−45.44%
AGF.BAGF MANAGEMENT LTD., CL.B, NV	−12.76%	−5.13%	21.93%
DXTDEXTERRA GROUP INC	4.68%	11.92%	−58.87%
SSFCSAGICOR FINANCIAL COMPANY LTD	18.43%	−4.53%	−46.71%

The Vanguard US Total Market ETF is a popular index fund. It’s ideal for investors who are looking for a low fee exposure to the US Market. In this post, we will discuss VUN’s strategy, dividend yield and stock performance. We will also compare VUN to VFV and VTI.

Best Dividend Contenders by sector (High Dividend Yields)

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What’s the objective of VUN ETF?

VUN seeks to track the performance of a broad U.S. equity index that measures the investment returns of primarily large-capitalization. In other words, this fund is a way to obtain exposure to the US economy. Since, the index covers a large number of equities, it’s pretty representative.

You would want to acquire this funds for two reasons:

You are bullish on the US economy in general;
to diversify your existing Canadian portfolio of investments with a US component.

VUN managers follow a passive strategy. Meaning, the managers are simply replicating the performance of an existing index. All the details regarding the index, being tracked, are discussed in the section below.

What’s the US Total market index?

The US Total Market Index is managed by the Center for Research in Security Prices. The index includes nearly 4,000 constituents. So, when you’re buying VUN you will achieve, before fees and expenses, the performance of a large basket of US equities. The index includes:

large, mid, small and micro capitalizations. Large caps represent 70% of the overall portfolio;
value and growth stocks, consequently it’s diversified across investment styles.

The methodology used by the index to select constituents can be found below:

when selecting constituents, emphasis is placed on minimizing unnecessary index turnover;
the index is reconstituted quarterly;
market cap of constituents is float adjusted.

VUN dividend yield and historical performance

Table 1: AUM and MER

ETF	AUM*	MER*
Vanguard US Total Market ETF	4,657	0.17%

VUN Stock

VUN is not ideal for investors who are looking for dividend income. It’s more suited for investors who seek long term growth. Please check our post on the Best Canadian monthly dividend ETF – 2023.

VFV vs VUN

In this section, we will compare VUN to VFV S&P 500 Index ETF. From an exposure point of view, both ETFs have the same goal, which is to offer investors exposure to the US Market. VUN has the advantage of being more diversified. For instance, VFV invests primarily in large US caps and has only 500 constituents. VUN includes small, mid, and large caps and has over 4,000 equities.

In terms of MER, VFV has a very low MER at 0.08% compared to 0.16% for VUN. Both VUN and VFV has a similar level of volatility and risk.

Since VFV invests in the largest 500 companies in the US economy, one can argue it offers exposure to ‘high-quality stocks’.

In essence, choosing between VFV and VUN comes down to personal preference. S you can see below, both had an excellent performance in the past five years. I am personally a big fan of the S&P 500 index because of the quality of its constituents and the diversification it offers across various sectors of the US economy.

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Updated daily – VUN Stock

VUN vs VTI

VTI is the Vanguard Total Stock Market ETF. It trades in US dollars and is offered by Vanguard on the US stock exchange. In fact, VUN holdings are simply 100% in VTI. So, the question that most investors ask:

should I invest directly in the US listed ETF (VTI) or buy the Canadian equivalent VUN?

There are three key differences between these two ETFs:

VUN has higher management fees than the US listed version VTI. The difference is (0.15% for VUN – 0.05% for VTI = 0.10%);
Since VTI is US listed it has to be acquired in US dollars;
Taxation wise: if you hold VTI in an RRSP you can be exempt for the 15% tax withheld on non Canadian dividend payments.

In a nutshell, if you are investing in a TFSA, both ETFs will incur the 15% withholding tax on dividends. The only differences that will matter is the management fees and foreign exchange cost. Since the difference in terms of fees is small, I personally would rather own VUN avoid the foreign exchange cost.

In an RRSP, I would still stick to VUN as the dividend yield on VTI is only 1.21%. It’s not high enough to justify the switch.

VUN Sector breakdown

Sector	Fund
Technology	29.5%
Consumer Discretionary	16.5%
Industrials	12.6%
Health Care	12.4%
Financials	11.1%

Please issuers’ website for up-to-date data – VUN Stock

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VUN Morningstar rating

The Morningstar rating for VUN is 4 stars:

★★★★

VUN holdings

Holding Name	% Weight
Apple Inc.	5.5%
Microsoft Corp.	5.2%
Amazon.com Inc.	3.2%
Tesla Inc.	1.9%
Alphabet Inc. Class A	1.8%
NVIDIA Corp.	1.6%
Alphabet Inc. Class C	1.6%

Please issuers’ website for up-to-date data

As the global economy continues to evolve, investors are seeking opportunities beyond traditional markets to diversify their portfolios and achieve higher returns. Emerging markets ETF have emerged as a compelling option for Canadian investors. In fact, many investors are looking to tap into the growth potential of economies that are rapidly developing and expanding. One effective way to gain exposure is through Exchange-Traded Funds (ETFs) that focus on emerging markets.

Emerging markets encompass a diverse range of countries, including nations in Asia, Latin America, Africa, and the Middle East. These economies often exhibit higher growth rates compared to developed markets, driven by factors such as population growth and increasing consumer demand.

For Canadian investors, Emerging Markets ETFs provide an accessible and efficient avenue to participate in these growth stories. These ETFs are designed to track a basket of stocks or bonds from companies within emerging markets. By investing in an ETF, Canadian investors can mitigate some of the risks associated with investing in individual companies.

Best Emerging Markets ETF – Top 3 in Canada

Asset under management and inception date

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Performance comparison

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Unveiling the Potential: Exploring the Vanguard FTSE Canada All Cap Index ETF (VCN Stock)

VFV Review (2024): Vanguard S&P500 ETF For Canadians

Vanguard FTSE Emerging Markets All Cap Index ETF (VEE)

The Vanguard FTSE Emerging Markets All Cap Index ETF aims to replicate the results of the FTSE Emerging Markets All Cap China A Inclusion Index. Its investments are primarily in the stocks of large, mid-sized, and small companies situated within emerging markets.

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iShares Core MSCI Emerging Markets IMI Index ETF (XEC)

XEC presents a clear investment objective: to secure long-term capital growth by mirroring the performance of the MSCI Emerging Markets Investable Market Index, net of expenses. This strategic approach serves as the foundation for several persuasive factors that make XEC an attractive consideration for investors.

Firstly, XEC offers Strategic Access to the promising long-term growth potential synonymous with emerging markets. Through this fund, investors can align their portfolios with the upward trajectory of economies on the rise.

Secondly, Cost-Effective Diversification is a key advantage that XEC brings to the table. With a straightforward and economical approach, investors gain ownership of a well-rounded collection of over 1500 stocks worldwide. This diversification can mitigate risk and amplify growth potential.

Furthermore, XEC is thoughtfully designed as a Core Holding for the long haul. Its structure is intended to act as a stable and fundamental element within investment portfolios, serving as an anchor amidst market fluctuations.

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BMO MSCI Emerging Markets Index ETF (TSE:ZEM)

The main goal of the BMO MSCI Emerging Markets Index ETF is to mirror the performance of the MSCI Emerging Markets Index. The MSCI Emerging Markets Index itself reflects the combined performance of both large and mid-sized companies across 24 countries categorized as Emerging Markets. These markets countries consist of a diverse range including Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates.

With a substantial composition of 1,422 individual elements, this index effectively encompasses approximately 85% of the market capitalization that is freely traded and adjusted within each of these countries.

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