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For Canadian investors, choosing between the Vanguard U.S. Total Market Index ETF (VUN) and the Vanguard S&P 500 ETF (VOO) depends on several key factors such as diversification, tax efficiency, and currency considerations. Both ETFs are excellent options for gaining exposure to the U.S. stock market, but they cater to different investor needs. Here’s a breakdown to help you make an informed decision.

Executive summary

Feature	VUN (Vanguard U.S. Total Market ETF)	VOO (Vanguard S&P 500 ETF)

Index Tracked

CRSP U.S. Total Market Index

S&P 500 Index

Holdings

~4,000 (Broad U.S. market)

500 (Large-cap U.S. companies)

Currency

Canadian Dollars (CAD)

U.S. Dollars (USD)

Expense Ratio

0.16%

0.03%

Diversification

Broad market, including small- and mid-cap stocks

Focused on large-cap stocks

Tax Efficiency

Potential double withholding in TFSAs and taxable accounts

More efficient in RRSPs due to treaty

Best Account Type

TFSA or Taxable

RRSP

Currency Conversion

No currency conversion required

Requires USD conversion (use Norbert’s Gambit for efficiency)

Ideal Investor

Prefers broad exposure and CAD transactions

Focuses on low costs and large-cap U.S. exposure

Overview of VUN and VOO

VUN is a Canadian-listed ETF that tracks the CRSP U.S. Total Market Index, offering exposure to nearly the entire U.S. equity market, including large-, mid-, small-, and micro-cap stocks. This means you get access to over 4,000 companies across various sectors. VUN is traded in Canadian dollars, making it convenient for Canadian investors who want to avoid currency conversion fees.

VOO, on the other hand, is a U.S.-listed ETF that tracks the S&P 500 Index, representing the 500 largest publicly traded companies in the United States. While it has fewer holdings than VUN, it focuses on large-cap stocks, which historically drive a significant portion of U.S. market returns. VOO is traded in U.S. dollars and is renowned for its low expense ratio and liquidity.

ETF	Index Tracked	Holdings	Currency	Expense Ratio	Primary Focus
VUN	CRSP U.S. Total Market	~4,000	CAD	0.16%	Broad Market
VOO	S&P 500	500	USD	0.03%	Large-Cap U.S.

Diversification

VUN provides broader diversification by including mid-, small-, and micro-cap companies, which can enhance long-term growth potential and reduce concentration risk. In contrast, VOO is concentrated in large-cap stocks, which are more established and generally less volatile. However, investors seeking exposure to smaller, growth-oriented companies would miss out with VOO.

If your goal is to capture the full breadth of the U.S. market, VUN is the better option. For those who prefer to focus on the most influential companies driving U.S. economic performance, VOO is ideal.

Tax Efficiency

Tax efficiency is a critical consideration for Canadian investors. Because VUN is a Canadian-listed ETF, it is subject to a 15% withholding tax on dividends from U.S. stocks within registered accounts like RRSPs or TFSAs. VUN also holds U.S.-listed ETFs within its structure, which can lead to additional layering of withholding taxes on dividends in non-registered accounts.

VOO, being a U.S.-listed ETF, avoids this additional layer of taxation when held in an RRSP due to the Canada-U.S. tax treaty. However, if held in a TFSA or a taxable account, the 15% withholding tax applies directly. This makes VOO more tax-efficient in an RRSP, while VUN might be more convenient for TFSAs or non-registered accounts due to its Canadian dollar listing.

Account Type	VUN Tax Impact	VOO Tax Impact
RRSP	15% withholding on dividends	No withholding on dividends
TFSA	Double-layered withholding possible	15% withholding on dividends
Taxable	Double-layered withholding possible	15% withholding on dividends

Currency Exposure

Another key difference is the currency exposure. VUN is traded in Canadian dollars, which eliminates the need for currency conversion and reduces costs for Canadian investors. However, it is not currency-hedged, meaning its returns are still affected by fluctuations in the CAD/USD exchange rate. VOO, traded in U.S. dollars, requires investors to convert Canadian dollars into U.S. dollars, incurring conversion fees unless you use strategies like Norbert’s Gambit.

If you plan to hold U.S. dollars for other investments or transactions, VOO may be a more straightforward option. On the other hand, VUN is better suited for investors who prefer the simplicity of transacting in Canadian dollars.

Expense Ratios

VOO has a much lower expense ratio (0.03%) compared to VUN (0.16%). This cost difference can add up over time, especially for larger portfolios. However, the higher expense ratio of VUN is justified by its convenience for Canadian investors, including currency handling and broader diversification.

Which One Should You Choose?

The choice between VUN and VOO largely depends on your investment objectives, account type, and willingness to manage currency conversion.

Choose VUN if you value broader market exposure, prefer to transact in Canadian dollars, or plan to hold the ETF in a TFSA or taxable account.
Choose VOO if you want lower costs, focus on large-cap U.S. stocks, and hold the ETF in an RRSP to maximize tax efficiency.

By considering these factors, you can align your investment choice with your financial goals and minimize unnecessary costs or risks.

Bitcoin’s prominence as the largest cryptocurrency by market cap has led to its popularity among investors. Canadian investors, in particular, have access to innovative ETFs like BTCC and BTCX, offering direct exposure to Bitcoin’s spot price. These ETFs, provided by Purpose Investments and CI Global Asset Management, respectively, are distinct in several ways (BTCC vs BTCX).

Executive summary BTCC vs BTCX

Feature	BTCC (Purpose Bitcoin ETF)	BTCX (CI Galaxy Bitcoin ETF)
Management Expense Ratio (MER)	1.00%	0.95%
Assets Under Management (AUM)	$1.5 billion	$248.85 million
Bitcoin Holdings Per Share	Approximately 0.00016202 BTC	Approximately 0.0015 BTC
Total Bitcoin in Cold Storage	Approximately 30,678 BTC	Not specified, but ownership implies around 666 shares per BTC
Currency Hedging	Not currency hedged	Not currency hedged
Tax Advantaged Accounts	Eligible for TFSA and RRSP	Eligible for TFSA and RRSP
Annual Fee on $10,000 Investment	$100	$95
Shares Needed for 1 Bitcoin	Approximately 6,172 shares	Approximately 666 shares

BTCC vs BTCX

QQQ vs. VOO: A Tale of Two ETFs for Canadian Investors

Management Expense Ratio (MER)

The BTCC (Purpose Bitcoin ETF) and BTCX (CI Galaxy Bitcoin ETF) are both prominent investment vehicles for those looking to gain exposure to Bitcoin through the structure of an ETF. BTCC, with a Management Expense Ratio (MER) of 1.00%, incurs an annual fee of $100 on a $10,000 investment. On the other hand, BTCX presents a slightly more cost-effective option with an MER of 0.95%, leading to an annual fee of $95 on the same investment amount. This minor difference in fees makes BTCX marginally cheaper than BTCC, potentially offering a slight advantage to cost-conscious investors who are looking to minimize their investment expenses over time.

Assets Under Management (AUM) and Liquidity

The Purpose Bitcoin ETF (BTCC) boasts an Assets Under Management (AUM) of $1.5 billion, indicating a higher level of investor interest and confidence in this particular ETF. This substantial AUM suggests that BTCC may offer better liquidity compared to its counterparts, which can result in narrower bid-ask spreads and a diminished likelihood of the ETF being delisted due to a lack of investor interest. In contrast, the CI Galaxy Bitcoin ETF (BTCX), with an AUM of $248.85 million, though significant, is comparatively smaller than BTCC.

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Bitcoin Holdings Per Share

BTCC: Holds approximately 0.00016202 Bitcoin per share. To own an equivalent of one Bitcoin, an investor would need about 6,172 shares. It holds around 30,678 Bitcoin in total.

BTCX: Each share corresponds to about 0.0015 Bitcoin. Owning around 666 shares would approximate one Bitcoin. The total Bitcoin held is not specified in the provided text.

Storage and Security

Both ETFs store the underlying Bitcoin in secure, offline cold storage, ensuring safety against online threats.

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Tax Advantages

Investors can hold these ETFs in tax-advantaged accounts like TFSA or RRSP in Canada, potentially saving on income tax upon selling.

Currency Hedging

Neither BTCC nor BTCX is currency-hedged. The share prices of these ETFs can be influenced by CAD-USD exchange rate fluctuations, adding an extra layer of volatility for investors.

Final Thoughts BTCC vs BTCX

For investors who prioritize minimizing investment costs, the CI Galaxy Bitcoin ETF (BTCX) may present an attractive option due to its slightly lower Management Expense Ratio (MER) of 0.95%. This cost efficiency can be particularly appealing for those looking to maximize their returns by reducing the fees associated with their investments. On the other hand, investors who prefer the stability and established nature of a larger fund might find the Purpose Bitcoin ETF (BTCC) more to their liking, as it boasts a higher Assets Under Management (AUM) of $1.5 billion. This larger AUM not only reflects BTCC’s popularity but also suggests potentially greater liquidity and a reduced risk of delisting.

When it comes to the amount of Bitcoin exposure per share, BTCX offers a more favorable ratio, making it an attractive choice for investors seeking to maximize their direct Bitcoin exposure through each share of the ETF they hold. This feature could sway investors who wish to align closely with Bitcoin’s market movements.

Additionally, it’s crucial for investors to consider the impact of currency fluctuations on their investments, especially given that both BTCC and BTCX are not currency-hedged. This absence of currency hedging means that the value of the ETFs could be influenced by changes in the CAD-USD exchange rate, introducing an additional layer of volatility. This factor is particularly important for investors who are sensitive to currency risk and its potential impact on their investment returns.

Why invest in an Index ETF that track the S&P500?

The S&P500 is a snapshot of the best the US economy has to offer

Investing in the S&P 500 is a compelling proposition for Canadian investors seeking exposure to the largest and most prosperous businesses in the USA. Through the use of a simple fund, such as an S&P 500 index ETF (Exchange-Traded Fund), investors can easily tap into the growth potential of a diverse range of top-tier American companies. This strategy is especially appealing to long-term investors, a sentiment endorsed by legendary investor Warren Buffett, known for his advocacy of index investing and his admiration for the S&P 500.

The S&P 500 index represents a comprehensive snapshot of the US stock market, encompassing 500 of the most significant publicly traded companies. This diversity spans across various sectors, mitigating the risk associated with individual company performance fluctuations. By investing in an S&P 500 index ETF, Canadian investors can achieve broad market exposure without having to pick individual stocks, effectively reducing the risk of poor stock selection.

High Liquidity

One of the key advantages of investing in the S&P 500 through an ETF is the ease of access it offers. ETFs are traded on stock exchanges, providing investors with the flexibility to buy and sell shares throughout trading hours. This liquidity ensures that investors can swiftly enter or exit positions, granting them control over their investments. Additionally, ETFs generally come with lower fees compared to actively managed funds, making them a cost-effective option for investors looking to optimize their returns over the long term.

Historical performance

The S&P 500’s historical performance underscores its attractiveness for long-term investors. Over the past several decades, the index has exhibited strong and consistent growth, outpacing inflation and generating substantial returns. While short-term market fluctuations are inevitable, the S&P 500’s overall trajectory has been upward. This aligns with the principles of long-term investing, where time in the market is emphasized over timing the market.

Warren Buffet is a big fan of the S&P500

Warren Buffett, often referred to as the Oracle of Omaha, has consistently praised the merits of index investing and has frequently recommended the S&P 500 as a solid foundation for investors’ portfolios. His endorsement is rooted in the index’s ability to capture the overall growth of the American economy, which has historically been a reliable driver of long-term wealth accumulation.

Furthermore, Warren Buffett has advocated for low-cost investing, which aligns with the structure of index ETFs. These funds typically have lower expense ratios compared to actively managed funds, leading to less erosion of returns over time. This resonates with the legendary investor’s belief in maximizing returns by minimizing fees and expenses.

Low fees

One significant advantage of owning an index ETF is low fees. The manager is simply replicating the index’s performance either by acquiring directly or indirectly (using derivatives) the constituents of the index. There is no additional effort involved in the selection process, thus no need to generously compensate the portfolio manager. It might also be pertinent to know that empirical studies have consistently shown that active portfolio managers rarely beat the S&P 500 index in the long term. In other words, only a few managers can outguess the market in the long run.

MER and Asset under management

	Name	MER	AUM
VFV	Vanguard S&P 500 Index	0.08%	5,310
XUS	Ishares Core S&P 500 Index	0.10%	4,616
ZSP	BMO S&P 500 Index	0.09%	10,450

VFV has one of the lowest Management Expense Ratio in its category at 0.08%. The difference with other similar ETFs remain really small though.

All-in-one ETFs are the Best ETF Canada 2021

Historical performance

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Updated daily

Since all three ETFs track the same index and it’s understandable they will have very close performance.

Is There a 15% Withholding Tax on Dividends Paid by VFV?

Yes, there is a 15% withholding tax on dividends paid by VFV. Here’s what this means for Canadian investors:

VFV, which holds a U.S. Vanguard S&P 500 ETF, distributes dividends from U.S. stocks. The United States imposes a 15% withholding tax on these dividends before they are distributed to foreign investors, including Canadians.

Impact on Dividends

This withholding tax reduces the net amount of dividends you receive. For example, for every $1 of declared dividends, you only receive $0.85 after the 15% withholding tax.

How to Avoid This Withholding Tax

To avoid this withholding tax, Canadian investors can:

Invest in a U.S.-listed S&P 500 ETF within an RRSP: When these ETFs are held in a Registered Retirement Savings Plan (RRSP), U.S. dividends are exempt from the withholding tax due to the tax treaty between Canada and the United States.

The equivalent of VFV in the U.S. market is the Vanguard S&P 500 ETF (VOO). Like VFV, VOO tracks the S&P 500 index, but it is listed in the United States and is not affected by currency fluctuations for U.S. dollar investors.

In summary, while VFV is an excellent way to invest in the S&P 500 index using Canadian dollars, it is important to consider the withholding tax on dividends, as it reduces the net amount you receive.

VFV Stock Profile

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VFV Stock 52 weeks high and low

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VFV Dividend history

Amount	Dividend Type	Frequency	Ex-Div Date	Record Date	Pay Date	Declare Date
0.4002	Regular	Quarterly	12/30/2024	12/30/2024	1/7/2025	12/19/2024
0.3567	Regular	Quarterly	9/27/2024	9/27/2024	10/7/2024	9/20/2024
0.3767	Regular	Quarterly	6/28/2024	6/28/2024	7/8/2024	6/21/2024
0.3501	Regular	Quarterly	3/22/2024	3/25/2024	4/2/2024	3/15/2024

VFV ETF Holdings

Holding Name	Weight %
Apple Inc.	6.03
Microsoft Corp.	5.74
Amazon.com Inc.	3.88
Facebook Inc. Class A	2.19
Alphabet Inc. Class A	2.18
Alphabet Inc. Class C	2.03
Tesla Inc.	1.70
NVIDIA Corp.	1.40
Berkshire Hathaway Inc. Class B	1.37
JPMorgan Chase & Co.	1.32

please consult issuers website for up-to-date data

VFV Sector allocation

Sector	Fund
Information Technology	27.6%
Health Care	13.3%
Consumer Discretionary	12.4%
Financials	11.4%
Communication Services	11.3%
Industrials	8.0%
Consumer Staples	5.8%
Energy	2.7%
Real Estate	2.6%
Materials	2.5%
Utilities	2.4%
Total	100.0%

please consult issuers website for up-to-date data

What are the Fees associated with ETFs

Management Expense Ratio (MER):

The percentage of a fund’s average net assets paid out of the fund each year to cover the day-to-day and fixed costs of managing the fund. The figure is reported in the Fund’s annual management report of fund performance. MER includes all management fees and GST/HST paid by the fund for the period, including fees paid indirectly as a result of holding other ETFs.

Management Fee:

The annual fee payable by the fund to the manager of the fund for acting as trustee and manager of the fund. This fee forms the largest portion of the MER. Typically, included in the management fee are the costs associated with paying the custodian and valuation agents, registrar and transfer agents, and any other service providers retained by the manager.

Operating Expenses:

Other operating costs such as fees and expenses relating to the independent review committee, brokerage expenses and commissions, and taxes.

VGT Canadian equivalent

When delving into the realm of technology-focused investments, the Vanguard Information Technology ETF stands out as a noteworthy player. VGT represents an exchange-traded fund (ETF) with a keen focus on the information technology sector. An equivalent to VGT in the Canadian ETF market would be an index ETF, such as XQQ or ZQQ, both tracking the Nasdaq100. Additionally, the TEC fund issued by TD emerges as a compelling alternative.

List of VGT Canadian equivalent

SYMBOL	NAME	FUND INCEPTION DATE
XQQ.TO	iShares NASDAQ 100 Index ETF (CAD-Hedged)	May 2, 2011
ZQQ.TO	BMO Nasdaq 100 Equity Hedged to CAD Index ETF	Jan 18, 2010
TEC.TO	TD Global Technology Leaders Index ETF	May 6, 2019
HXQ.TO	Horizons NASDAQ-100 Index ETF	Apr 18, 2016
XIT.TO	iShares S&P/TSX Capped Information Technology Index ETF	Mar 18, 2001
HXQ-U.TO	Horizons NASDAQ-100 Index ETF	Apr 18, 2016
ZNQ.TO	BMO NASDAQ 100 Equity Index ETF	Feb 10, 2021

VGT Vanguard Information Technology ETF Investment objective

Aims to monitor the progress of a benchmark index gauging the investment yield of stocks within the information technology sector. Operated in a passive manner, employing a full-replication approach when feasible and opting for a sampling strategy when regulatory constraints come into play. Encompasses stocks of companies involved in the electronics and computer industries, as well as those engaged in manufacturing products rooted in cutting-edge applied science.

The Fund utilizes an indexing investment strategy crafted to mirror the performance of the MSCI US Investable Market Index (IMI)/Information Technology 25/50. This index comprises stocks from large, mid-size, and small U.S. companies operating in the information technology sector, categorized under the Global Industry Classification Standard (GICS). The GICS information technology sector includes companies providing software and IT services, along with manufacturers and distributors of technology hardware and equipment, such as communications devices, cell phones, computers and peripherals, electronic equipment and related instruments, and semiconductors.

Fundamental	VGT
Number of stocks	318
Median market cap	$283.2 B
Earnings growth rate	25.3%
Short-term reserves	—
P/E ratio	30.2x
P/B ratio	7.0x
Turnover rate (Fiscal Year-end 08/31/2023)	15.4%
Return on equity	43.1%
Foreign holdings	0.0%
Fund total net assets as of 10/31/2023	$57.1 B
Share class total net assets	$48.9 B

XQQ – Ishares Nasdaq 100 Index

iShares NASDAQ 100 Index ETF (CAD-Hedged) is an exchange traded fund that seeks to track the performance of the NASDAQ-100 Currency Hedged CAD Index.

Hedged vs Unhedged funds ETF Canada – What’s better?

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XQQ Portfolio

Name	% Weight
Microsoft Corp	13.38%
Apple Inc	12.87%
Amazon.com Inc	6.69%
NVIDIA Corp	5.33%
Alphabet Inc	4.12%
Alphabet Inc	4.06%
Meta Platforms Inc	3.96%
Tesla Inc	3.17%

ZQQ – BMO Nasdaq 100 Hedged To CAD Index

BMO Nasdaq 100 Hedged To CAD is an exchange traded fund that seeks to track the performance of the NASDAQ-100 Currency Hedged CAD Index.

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Name	% Weight
Microsoft Corp	12.54%
Apple Inc	12.31%
Amazon.com Inc	6.21%
NVIDIA Corp	5.22%
Tesla Inc	3.85%
Alphabet Inc	3.70%
Alphabet Inc	3.64%
Meta Platforms Inc	3.59%
Broadcom Inc	2.03%

TEC – TD Global Technology Leaders ETF

The objective of the TEC ETF in Canada is to provide investors with exposure to the performance of the technology sector. By investing in the TEC ETF, investors have the opportunity to participate in the growth and potential returns of technology companies. These companies operate in various areas within the technology sector, including software, hardware, internet, telecommunications, and other related industries.

The TEC ETF seeks to offer investors exposure to both established companies and emerging players in the sector.

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Name	% Weight
Apple Inc	16.08%
Microsoft Corp	13.46%
Amazon.com Inc	5.60%
NVIDIA Corp	3.90%
Alphabet Inc	3.81%
Alphabet Inc	3.39%
Meta Platforms Inc	3.22%

Name	% Weight
Meta Platforms Inc	4.54%
Microsoft Corp	4.34%
Micron Technology Inc	4.24%
Apple Inc	4.13%
NVIDIA Corp	4.12%
Intel Corp	4.10%
Cisco Systems Inc	4.08%
Alphabet Inc	4.08%

XIT – iShares S&P/TSX Capped Info Tech ETF

XIT seeks long-term capital growth by replicating the performance of the S&P/TSX Capped Information Technology Index, net of expenses. The index tracked includes exclusively Canadian companies. In total, this ETF invest in 24 Canadian technology stocks. There is a 25% cap put in place to avoid over exposure to a particular stock.

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XIT Portfolio

Name	% Weight
Shopify Inc	25.16%
Constellation Software Inc	24.54%
CGI Inc	20.29%
Open Text Corp	10.17%
The Descartes Systems Group Inc	6.22%
Kinaxis Inc	3.55%
BlackBerry Ltd	2.51%
Lightspeed Commerce Inc	1.85%

XIT Sector allocation

Sector	Weight %
Application Software	49.09
Internet Services & Infrastructure	25.34
IT Consulting & Other Services	13.60
Data Processing & Outsourced Services	6.01
Systems Software	4.39
Communications Equip.	0.81
Electronic Manufacturing Sces	0.71
Cash and/or Derivatives	0.03

ZNQ – BMO NASDAQ 100 Equity ETF

BMO Nasdaq 100 Equity Index ETF has been designed to replicate the performance of a NASDAQ listed companies index.

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Name	% Weight
Microsoft Corp	12.57%
Apple Inc	12.35%
Amazon.com Inc	6.23%
NVIDIA Corp	5.24%
Tesla Inc	3.86%
Alphabet Inc	3.71%
Alphabet Inc	3.65%
Meta Platforms Inc	3.60%
Broadcom Inc	2.04%

Executive summary VFV vs VGRO

In summary, VFV concentrates on U.S. large-cap stocks, specifically tracking the S&P 500, while VGRO provides a more diversified approach with a 20% allocation to bonds and 80% to equity. VGRO’s balanced structure makes it a suitable choice for investors seeking a mix of growth potential and risk mitigation through a diversified portfolio.

Executive summary: VFV vs. VGRO

Aspect	VFV (Vanguard S&P 500 Index ETF)	VGRO (Vanguard Growth ETF Portfolio)
Objective	Mirrors the S&P 500, focusing on U.S. large-cap stocks.	Diversified fund designed for long-term growth (80% equity, 20% bonds).
Risk	High risk due to concentration in U.S. large-cap stocks.	Lower risk due to bond allocation and global diversification.
Portfolio	Holds U.S. stocks across sectors like tech, healthcare, finance, etc.	Globally diversified portfolio with Canadian, U.S., international stocks, and bonds.
Fees	Low fees, making it cost-effective for U.S. market exposure.	Slightly higher fees but offers diversified exposure across asset classes.
Diversity	Focuses on U.S. large caps.	Broad global and multi-asset diversification.
Investor Suitability	Best for investors seeking exposure to U.S. market growth.	Suitable for investors seeking growth with risk mitigation through bonds.

VFV (Vanguard S&P 500 Index ETF):

Objective: VFV aims to mirror the performance of the S&P 500 Index, representing the 500 largest U.S. companies.

Risk: With a focus on U.S. large-cap stocks, VFV’s risk is closely tied to the performance of these companies. The fund’s value may experience fluctuations based on the ups and downs of the S&P 500.

Portfolio: VFV holds a portfolio of U.S. companies spanning various sectors, including technology, healthcare, finance, and more. It provides investors with exposure to the overall U.S. market.

Low Fees: Notably, VFV is an index ETF with very low fees, enhancing its appeal for cost-conscious investors seeking efficient exposure to the U.S. large-cap market.

VGRO (Vanguard Growth ETF Portfolio):

Objective: VGRO, in contrast, is a diversified fund designed for long-term growth. It’s a balanced portfolio comprising both equity and fixed income ETFs.

Risk: With a 20% allocation to bonds, VGRO carries lower risk compared to VFV. The inclusion of bonds provides a hedge against stock market volatility.

Portfolio: VGRO holds a globally diversified portfolio, encompassing Canadian, U.S., and international stocks, along with bonds. This diversification aims to spread risk and capitalize on opportunities across different markets.

Diversity for All Investor Types: Vanguard extends its offering of all-in-one ETFs beyond VGRO. There are options tailored to conservative, balanced, and growth-oriented investors, providing a comprehensive range to suit varying risk appetites.

Simplified Investing: These all-in-one solutions cater to investors looking for simplicity and a one-stop-shop for their investment needs. With diverse allocations across asset classes, Vanguard’s suite of all-in-one ETFs caters to a spectrum of investor preferences.

Performance comparison VFV vs VGRO

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Portfolio of holdings comparison

VGRO

	Fund
Vanguard U.S. Total Market Index ETF	35.41%
Vanguard FTSE Canada All Cap Index ETF	23.60%
Vanguard FTSE Developed All Cap ex North America Index ETF	15.46%
Vanguard Canadian Aggregate Bond Index ETF	11.75%
Vanguard FTSE Emerging Markets All Cap Index ETF	5.59%
Vanguard Global ex-U.S. Aggregate Bond Index ETF (CAD-hedged)	4.20%
Vanguard U.S. Aggregate Bond Index ETF (CAD-hedged)	3.98%

VFV

Holding Name	% of Market Value	Sector
Apple Inc.	6.94%	Computer Hardware
Microsoft Corp.	6.47%	Software
Amazon.com Inc.	3.19%	Diversified Retailers
NVIDIA Corp.	2.97%	Semiconductors
Alphabet Inc.	2.14%	Consumer Digital Services
Tesla Inc.	1.91%	Automobiles
Meta Platforms Inc.	1.84%	Consumer Digital Services
Alphabet Inc.	1.84%	Consumer Digital Services
Berkshire Hathaway Inc.	1.76%	Diversified Financial Services
Exxon Mobil Corp.	1.3%	Integrated Oil and Gas

What’s an all-in-one ETF

VGRO (Vanguard Growth ETF Portfolio) is an all-in-one ETF listed on the TSX, designed for investors seeking a simple and convenient way to invest. Here’s why VGRO stands out:

Simplicity: VGRO offers easy access to a diversified portfolio, making it ideal for DIY investors who prefer a hands-off approach.

Automatic Rebalancing: The portfolio is automatically rebalanced to maintain the target asset allocation, so you don’t have to manage it yourself.

Cost-Effective: VGRO is a great alternative to Robo-advisors like Wealthsimple Invest or Questrade Portfolios. It typically has lower fees than these managed services, saving you money over time.

VGRO Investment objective

The VGRO Fund aims to achieve long-term capital growth by investing mainly in other Vanguard-managed ETFs that offer exposure to both stocks and bonds.

When you invest in VGRO, you’re essentially buying a portfolio of ETFs. About 80% of the portfolio is allocated to equity ETFs, while the remaining 20% is in fixed income ETFs. This makes VGRO a growth-focused portfolio, well-suited for investors with long-term goals and a medium risk tolerance.

VGRO price and chart

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XGRO vs VGRO vs ZGRO

There are two main all-in-one ETFs that have same portfolio breakdown (80% equity and 20% bonds): the BMO Growth – ZGRO and the iShares ETF XGRO.

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Updated daily, XGRO vs ZGRO vs VGRO

Fees

VGRO has a management expense ratio (MER) of 0.24%. This fee covers all costs associated with the fund. Even though VGRO invests in multiple ETFs, investors are only charged a single MER of 0.24%, not an additional fee for each individual ETF in the portfolio.

Management Fee	0.22%
Management Expense Ratio (MER)	0.24%

Fees and AUM comparison

XGRO and ZGRO have the lowest fees at 0.20%, while VGRO from Vanguard is slightly higher at 0.24%. Another important factor to consider is liquidity. Larger funds typically offer better liquidity, which affects the bid-ask spread when you buy or sell. Among these options, Vanguard’s VGRO is the largest, with over $2.5 billion in assets, making it the most liquid of the three.

Ticker	AUM*	MER
XGRO	1,665	0.20
VGRO	4,185	0.24
ZGRO	193	0.20

Source: Barchart, *AUM: Asset under management in millions

Best All-In-One ETF Canada

What are the largest ETFs in Canada?

VGRO Holdings

VGRO has a great coverage, it includes US, Canada and World equities. 36% is invested in US stocks. As you can see below, VGRO invests in a basket of various ETFs.

Fund
Vanguard U.S. Total Market Index ETF	34.73%
Vanguard FTSE Canada All Cap Index ETF	23.82%
Vanguard FTSE Developed All Cap ex North America Index ETF	16.28%
Vanguard Canadian Aggregate Bond Index ETF	11.65%
Vanguard FTSE Emerging Markets All Cap Index ETF	5.66%
Vanguard Global ex-U.S. Aggregate Bond Index ETF (CAD-hedged)	4.04%
Vanguard U.S. Aggregate Bond Index ETF (CAD-hedged)	3.82

Please visit issuers’ website for up to date data

Sector allocation

VGRO offers an excellent diversification accross various sectors.

Sector	Fund
Financials	19.2%
Technology	16.3%
Industrials	12.6%
Consumer Discretionary	12.0%
Energy	8.9%
Health Care	8.6%
Basic Materials	6.1%
Consumer Staples	5.4%
Utilities	4.2%
Telecommunications	3.5%
Real Estate	3.3%
Total	100.0%

Please visit issuers’ website for up to date data

How can I buy VGRO

Clients have simply to use their banks brokerage websites or independent brokers platform (such as Questrade or Wealthsimple) to acquire the ETF. No need to contact a financial advisor, it’s a product for DIY investors.

This ETF can be held in registered accounts such as RRSP, TFSA or RESP.

High interest savings ETF are financial instruments designed to give investors a means to save capital while earning a competitive interest rate. Furthermore, they can provide investors with better returns than typical savings accounts or money market funds (while maintaining a high level of liquidity and safety, one of their main benefits).

These ETFs are made to follow an index of short-term, high-quality fixed income securities, like bonds issued by governments, companies, or the money market.

Risk involved

High interest savings ETFs are often seen as relatively low-risk investments, in contrast to stocks or other types of investments.

Overall, investors looking for a low-risk strategy to generate a competitive rate of return on their capital may find high-interest savings ETFs to be an appealing investment option. High-interest savings ETFs can be valuable to any investment portfolio due to their diversification, liquidity, and potential for better returns.

Best High-Interest Savings Account ETFs

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High interest savings ETF Canada – overview

Forward dividend yield and Management fees

Symbol	Distribution Yld	Fees
CSAV.TO	4.50%	0.15%
CASH.TO	4.52%	na
HISA.NE	4.48%	0.15%
PSA.TO	4.59%	0.16%
NSAV.NE	4.61%	0.43%

High interest savings ETF – Canada – December 20th 2024

Source: Seeking Alpha

You can click on the ticker of each ETF to visit the issuer’s website.

GIC vs High interest saving ETFs

Investment Option	GIC	High-Interest Savings ETF
Type of Investment	Low-risk	Low to moderate risk
Return	Guaranteed fixed rate of return	Potentially higher rate of return
Term	Typically 1 to 5 years	No fixed term
Interest Rate	Typically higher than savings accounts	Varies depending on market conditions
Risk	Very low risk	Higher risk than GICs
Guarantee	Guaranteed by the issuing institution	No guarantee of return
Suitability	Suitable for risk-averse investors	Suitable for those seeking higher returns with moderate risk tolerance

High interest saving ETFs vs Dividend ETFs

High saving ETFs and dividend ETFs are two distinct types of investment vehicles that cater to different investment objectives. Let’s discuss each category and their characteristics to understand their differences.

High Saving ETFs:

High saving ETFs are designed to provide investors with exposure to assets that generate stable and relatively low-risk returns. These ETFs typically focus on preserving capital and generating income through investments in low-risk instruments such as government bonds, treasury bills, or high-quality corporate bonds. They are suitable for conservative investors who prioritize capital preservation and steady income over higher-risk investments.
Key features of high saving ETFs:

Capital preservation
Income generation
Lower volatility
Lower potential for capital appreciation

Dividend ETFs:

Dividend ETFs, on the other hand, are designed to invest in stocks or equity securities of companies that pay regular dividends. These ETFs focus on companies with a track record of consistent dividend payments and may include sectors such as utilities, consumer staples, or real estate investment trusts (REITs). Dividend ETFs are suitable for investors seeking income generation and potential capital appreciation through exposure to dividend-paying stocks.

Key features of dividend ETFs:

Dividend income: The primary objective is to provide a steady income stream through dividends paid by the underlying stocks.

Capital growth potential: Dividend ETFs invest in companies that have the potential for capital appreciation, allowing investors to benefit from both income and potential growth.

Moderate to higher volatility: Equity investments can be subject to greater price fluctuations compared to fixed-income investments.

Diversification: Dividend ETFs typically hold a diversified portfolio of dividend-paying stocks across various sectors and regions.

Choosing between high saving ETFs and dividend ETFs depends on your investment goals, risk tolerance, and time horizon. High saving ETFs are suitable for conservative investors seeking capital preservation and stable income, while dividend ETFs are more appropriate for investors willing to accept moderate risk in pursuit of income and potential capital growth.

CSAV Distribution history

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

0.1284	Regular	Monthly	12/23/2024	12/23/2024	12/31/2024	12/12/2024
0.1504	Regular	Monthly	11/25/2024	11/25/2024	11/29/2024	11/14/2024
0.1790	Regular	Monthly	10/25/2024	10/25/2024	10/31/2024	10/16/2024
0.1525	Regular	Monthly	9/23/2024	9/23/2024	9/27/2024	9/12/2024

CASH Distribution history

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

0.1550	Regular	11/29/2024	11/29/2024	12/6/2024	11/22/2024
0.1550	Regular	10/31/2024	10/31/2024	11/7/2024	10/24/2024
0.1750	Regular	9/27/2024	9/27/2024	10/7/2024	9/20/2024
0.1800	Regular	8/30/2024	8/30/2024	9/9/2024	8/23/2024

HISA Distribution history

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

0.0148	Special	12/31/2024	12/31/2024	1/8/2025	11/29/2024
0.0148	Regular	12/31/2024	12/31/2024	1/8/2025	11/29/2024
0.1540	Regular	12/30/2024	12/30/2024	1/8/2025	12/18/2024
0.1373	Regular	11/26/2024	11/26/2024	12/6/2024	11/18/2024
0.1805	Regular	10/29/2024	10/29/2024	11/4/2024	10/21/2024

PSA Distribution history

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

0.1531	Regular	12/30/2024	12/30/2024	1/6/2025	12/17/2024
0.1458	Regular	11/27/2024	11/27/2024	12/3/2024	11/18/2024
0.1822	Regular	10/29/2024	10/29/2024	11/4/2024	10/21/2024

NSAV Distribution history

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

0.1519	Regular	11/29/2024	11/29/2024	12/6/2024	11/22/2024
0.1901	Regular	10/31/2024	10/31/2024	11/7/2024	10/24/2024
0.1567	Regular	9/27/2024	9/27/2024	10/7/2024	9/20/2024
0.2701	Regular	8/30/2024	8/30/2024	9/9/2024	8/22/2024
0.1759	Regular	7/31/2024	7/31/2024	8/8/2024	7/24/2024

Leave a Comment / English, Best Dividend Stocks, Best Growth Stocks / By Wyze Investor

Covered calls are a popular strategy to generate passive income while maintaining exposure to stocks in your portfolio. In this article, we explore this method using a practical example with NVIDIA (NVDA). We will also explain how to choose from multiple available options to maximize your gains and reduce risks.

Introduction to Covered Call Options

A covered call involves selling a call option on stocks you already own. By selling the option, you immediately receive a premium, which generates passive income. If the option is exercised, your shares will be sold at the strike price, but you keep the premium.

Why Choose NVIDIA for This Strategy?

NVIDIA is used here as a practical example, but it’s important to note that this strategy can be applied to other companies. However, NVIDIA is an excellent candidate for the following reasons:

High Volatility

Stocks with high implied volatility, such as NVIDIA, offer higher premiums on options. Volatility is a key factor in option pricing: the higher it is, the more lucrative the premium.

However, higher volatility also implies greater risks. Investors must be prepared to manage potential large fluctuations in the stock price.

Leadership in AI and GPUs

NVIDIA is one of the global leaders in artificial intelligence, data centers, and graphics processing units (GPUs). These sectors are in high demand, attracting investors and keeping interest in its stock strong.

NVIDIA’s positioning in a growing sector increases the likelihood of its stock price remaining solid, making the covered call strategy more attractive.

Availability of Options

NVIDIA offers a wide variety of strike prices and expiration dates, giving investors flexibility to meet their objectives. Whether you want to maximize premiums or allow more potential appreciation for the stock, NVIDIA provides suitable options.

Can You Choose Other Companies?

Absolutely! NVIDIA is just one example. The covered call strategy can be applied to any publicly traded company, as long as you choose your stocks wisely. Below are some general criteria to help you select stocks for this strategy:

Option Liquidity

Prioritize companies whose options are highly liquid. High liquidity ensures active trading, making it easier to sell options at competitive prices.

Example: Companies like Apple (AAPL), Microsoft (MSFT), or Tesla (TSLA) have very active options markets.

Volatility According to Risk Tolerance

High Volatility: For higher premiums, consider more volatile stocks like NVIDIA or Tesla. Keep in mind, however, that higher volatility also increases the risk of loss.
Moderate Volatility: If you prefer a more conservative approach, stable stocks like Procter & Gamble (PG) or Johnson & Johnson (JNJ) are better choices. These companies provide smaller premiums but tend to have lower price fluctuations.

Stocks You’re Willing to Hold

Select companies you trust and are comfortable holding even if the market becomes volatile. Dividend-paying blue-chip stocks are often a good option.

Alignment with Your Investment Strategy

If you’re a long-term investor, choose stocks in sectors you understand and where you see sustainable growth potential.

Example of Selection Based on Risk Profile

Risk Tolerance	Examples of Companies	Why?
Conservative	Johnson & Johnson (JNJ), Procter & Gamble (PG)	Stable companies, low fluctuations, modest premiums.
Moderate	Apple (AAPL), Microsoft (MSFT), Coca-Cola (KO)	Strong growth with moderate volatility.
Aggressive	NVIDIA (NVDA), Tesla (TSLA), Palantir (PLTR)	High premiums but more volatile and riskier stocks.

Steps to Sell a Covered Call

Select the Stock

You must own at least 100 shares for every option contract you sell. Choose a stable or growing stock that you’re willing to hold long-term.

Choose the Strike Price

The strike price should align with your strategy:

An Out of The Money (OTM) strike (above the current price) maximizes potential gains while generating attractive premiums.

Choose the Expiration Date

Short-term expirations (30-60 days) are often the most effective for generating regular premiums.

Practical Example: Analysis of the NVIDIA $149 Strike Option

Below is an example based on NVIDIA options (data as of January 3, 2025).

Parameter	NVIDIA $149 Strike Option
Current NVDA Price	$141.91
Premium Offered	$2.76 per share
Expiration	January 3, 2025
Implied Volatility	34.34%
Delta	0.3478
Total Income (1 Contract)	$276

Scenarios

Stock Stays Below $149: You keep your shares and the premium ($276).
Stock Exceeds $149: Your shares are sold at the strike price, but you keep the premium and gain up to $149.
Stock Drops Significantly: The premium received reduces your overall loss.

Choosing the Right Options: Criteria and Flexibility

The option presented ($149 strike) is just one example among many. Depending on your financial goals and risk tolerance, you can choose other options from those available. Below are factors to consider:

Comparing Available Options

Strike	Premium (per share)	Potential Gain on Stock	Delta	Implied Volatility
$145	$4.40	Moderate	0.44	33%
$149	$2.76	High	0.34	34%
$150	$2.58	Very High	0.30	35%

Strategy Based on Objectives

Conservative Investor: Choose a strike close to the current price to maximize premiums (e.g., $145).
Optimistic Investor: Opt for a higher strike (e.g., $150) to capture additional gains if the stock rises.

Short-Term vs Long-Term Expirations

Short-Term (e.g., 27 days): Offers regular premiums and more flexibility.
Long-Term: Requires less active management but may result in slightly lower premiums.

Advantages and Risks of the Strategy

Advantages

Advantage	Explanation
Immediate Income	Premiums are received as soon as the options are sold.
Flexibility	Choose from a variety of strikes and expirations.
Cost Reduction	The premium reduces your average purchase cost for the stock.

Risks

Risk	Explanation
Capped Gains	If the stock exceeds the strike, your gains are limited.
Significant Drop	A sharp decline in the stock price can result in a capital loss.
Early Assignment	The option may be exercised before expiration if the stock significantly exceeds the strike price.

Conclusion

Covered calls provide a unique opportunity to generate passive income while holding onto your stocks. Using the NVIDIA $149 strike option as an example, we’ve demonstrated how this strategy works. However, every investor can adapt this method based on available strikes and expirations.

Before starting, analyze key option parameters (premium, volatility, delta) and adjust your strategy according to your objectives. With prudent management, this method can transform your portfolio into an efficient income generator.

With this information, you’re ready to explore covered calls and optimize your investments for sustainable passive income.

Super Micro Computer, Inc. (SMCI) is a prominent player in high-performance computing solutions, specializing in the design and manufacturing of servers, storage solutions, and data center technologies. Founded in 1993 and headquartered in San Jose, California, the company plays a crucial role in rapidly growing areas such as artificial intelligence (AI) and IT infrastructure. However, SMCI is currently navigating a challenging period marked by financial and regulatory hurdles, as well as increased market volatility.

Recent Stock Performance

Risk of Nasdaq Delisting

Delays in Financial Reporting
SMCI has missed several critical deadlines for financial reporting:

-The annual report due on August 29, 2024.

-Several quarterly reports, also pending submission.

The company has until Monday, November 20, 2024, to submit a plan to address these delays and maintain its Nasdaq listing. If approved, SMCI could be granted an extension until February 2025 to comply with regulatory requirements.

Potential Impact of Delisting

A delisting could lead to heightened volatility, as institutional investors like hedge funds and ETFs often liquidate positions in delisted stocks. This typically creates downward pressure on share prices.

Notably, SMCI has experienced a delisting before, in 2018, when its stock fell to $1.31. The company later rebounded dramatically, reaching $120 in March 2023. This history suggests the possibility of significant recoveries if the company resolves its compliance issues.

Current Challenges and Issues

Regulatory and Operational Problems

SMCI faces several allegations, including:

–Accounting irregularities.

–Sanctions violations.

-Employment of personnel linked to related parties.

In 2018, SMCI paid a $17 million fine for accounting violations. While the financial impact of these infractions was limited, they revealed structural weaknesses in governance and risk management.

Management Criticism

Despite its technological achievements, SMCI’s management has faced criticism for:

-Poor operational execution.

-Inadequate handling of compliance issues.

These recurring problems have led to repeated delisting threats, damaging the company’s reputation.

Strengths and Opportunities

Strategic Market Position

SMCI holds a strong position in high-growth sectors like AI and data centers. These markets offer substantial growth potential due to increasing demand for high-performance computing solutions.

Revenue Growth

Despite its challenges, SMCI continues to deliver impressive financial results:

–$25 billion in projected revenue for fiscal year 2024, reflecting 70% year-over-year growth.

-Forecasted $30 billion in revenue for 2025, marking a further 20% increase.

Current Valuation

With a market capitalization of $10.2 billion, SMCI trades at approximately 0.4x its revenue, a ratio significantly below historical averages. This low valuation reflects current uncertainties but could improve with favorable developments.

Future Outlook

Post-Delisting Scenarios

If SMCI is delisted but manages to address its compliance issues, it could potentially return to Nasdaq. This could restore investor confidence and normalize its valuation.

Impact of Corrective Measures

Efforts to improve governance and accelerate financial reporting will be crucial for rebuilding the company’s credibility. Progress on regulatory issues will also be a key factor to monitor.

Conclusion

Super Micro Computer is facing significant challenges, including delays in financial reporting and regulatory concerns. However, its position in high-growth technology sectors and ability to generate strong revenues present an intriguing contrast. The next steps, particularly the submission of a compliance plan and responses to allegations, will be critical in shaping the company’s future trajectory. Investors and observers will be closely watching this situation to evaluate its long-term impact.

Building a portfolio of Canadian dividend stocks is an effective strategy for generating passive income while diversifying your investments. Spreading investments across multiple economic sectors can not only limit the risks associated with fluctuations in a particular sector, but also take advantage of the regular dividends paid by well-established companies in Canada.

This article presents a selection of the best Canadian stocks by sector, with a focus on key sectors such as financials, energy, telecommunications, utilities and consumer goods.

How to Build a Canadian Dividend Portfolio: Sector Allocation

Creating a well-diversified portfolio of Canadian dividend stocks is based on a sector allocation tailored to each investor’s passive income objectives and risk tolerance. This article provides a list of the best Canadian dividend stocks by sector, as well as a suggested sector allocation. The distribution indicated is only a suggestion; It is essential that each investor adjusts the percentages according to their needs. For example, if your priority is revenue stability and predictability, you may want to place greater emphasis on the utilities and telecommunications sectors. Conversely, a more growth-oriented approach could overweight sectors such as consumer goods and energy, which offer the prospect of high returns although they are sometimes more volatile.

To build this sector allocation, you can also take inspiration from popular dividend ETFs such as the Vanguard FTSE Canadian High Dividend Yield Index ETF (ETF: VDY), the iShares Canadian Select Dividend Index ETF (ETF: XDV), and the iShares Core S&P/TSX Composite High Dividend Index ETF (ETF: XEI), which allocate their assets based on the dividend performance of Canadian companies. These ETFs offer an indicative sector allocation that can serve as a starting point, but it’s always best to tailor the allocation based on your analysis and view of each sector’s potential returns.

Popular Canadian Dividend Stocks by Sector

Financial sector (30-35%)

The financial sector is crucial in a Canadian dividend portfolio. While Canada’s largest banks have a significant share, it is recommended to diversify slightly to avoid overexposure. You could allocate about 30% of the portfolio to banks like Royal Bank of Canada (RY), Bank of Montreal (BMO) and Bank of Nova Scotia (SNB). These institutions offer generous and regular dividends, but it makes sense to supplement this allocation with non-bank financial securities, such as insurance or asset management companies, to limit the risks associated with the banking sector.

Ticker	Enterprise	Dividend(%)	Description
RY	Royal Bank of Canada	About 4.1%	Canada’s largest bank by capitalization, known for its consistent dividends.
BMO	Bank of Montreal	About 4.3%	Historic bank with prudent management and more than 190 years of continuous dividends.
BNS	Bank of Nova Scotia	About 6%	Offers a high dividend with significant exposure to international markets.
TD	Toronto-Dominion Bank	About 4.0%	Strong presence in Canada and the United States with steadily increasing dividends.
CM	Canadian Imperial Bank (CIBC)	About 5.5%	Attractive dividend, with a strong track record of financial stability.
NA	National Bank of Canada	About 4.2%	Well positioned in Quebec, with stable dividend growth.
MFC	Manulife Financial	About 5.7%	Insurance company offering a high and diversified dividend internationally.

Energy sector (20-25%)

With Canada being a major producer of oil and gas, the energy sector is a source of high dividends. Companies like Enbridge Inc. (ENB) and TC Energy Corp (TRP), known for their oil and natural gas transportation infrastructure, are offering attractive dividends. To add resilience, you could also include Canadian Utilities (CU), which, while classified as a utility, has diversified businesses in renewable energy. The entire sector offers solid incomes but is also exposed to some volatility related to commodity prices.

Ticker	Enterprise	Dividend yield (%)	Description
ENB	Enbridge Inc.	About 7.5%	Oil and natural gas transportation, leader in energy infrastructure.
TRP	TC Energy Corp	About 6.8%	Natural gas pipeline network and projects, active in North America.
CU	Canadian Utilities	About 4.7%	Diversified into energy and utilities, appreciated for the regularity of its dividends.
SU	Suncor Energy	About 4.9%	Integrated player in the oil industry, present in production and refining.
CNQ	Canadian Natural Resources	About 4.5%	One of the largest independent oil and gas producers.
IMO	Imperial Oil	About 3.2%	ExxonMobil’s Canadian subsidiary, specializing in exploration and refining.
RNW	TransAlta Renewables	About 6%	Producer of renewable energy (wind and hydroelectricity) in Canada.

Services publics (15-20%)

Utilities, such as Fortis Inc. (FTS), Algonquin Power & Utilities Corp (AQN), and Hydro One Ltd. (H), are ideal for a stable portion of the portfolio. These companies provide essential services (electricity and gas) and are known for their resilience in bear market times. With often regular dividends and increased cash flow predictability, utilities form a safe foundation in a dividend portfolio.

Ticker	Enterprise	Dividend yield (%)	Description
FTS	Fortis Inc.	About 4.3%	Well-diversified electric and gas company with assets in North America.
AQN	Algonquin Power & Utilities Corp	About 6%	Focused on renewable energy and traditional utilities.
H	Hydro One Ltd.	About 3.5%	Ontario’s electricity supplier, valued for its financial stability.
EMA	Emera Inc.	About 5.0%	Electricity and gas in North America, which is very involved in clean energy.
CU	Canadian Utilities	About 4.7%	ATCO’s Utilities Division, diversified into utilities.
NPI	Northland Power	About 4.5%	Independent producer of clean energy, including wind and solar.
INE	Innergex Renewable Energy	About 4%	Renewable energy specialist, with assets in Canada and internationally.

Telecommunications (10-15%)

The telecommunications sector is another pillar for generating passive income in Canada.Inc. (BCE),TelusCorporation (T)andRogers Communications (RCI. B)are the main players offering competitive dividends. These companies are benefiting from a constant demand for communication services, particularly with the deployment of 5G. This stability makes the telecom sector an essential component for investors looking for regular income.

Ticker	Enterprise	Dividend yield (%)	Description
BCE	BCE Inc.	About 6.2%	Leading Canadian telecom provider, with stable revenues and a high dividend.
T	Telus Corporation	About 5.5%	Strong presence in mobile and digital health, known for its dividend growth policy.
RCI.B	Rogers Communications	About 3.2%	A player in 5G and mobile telephony, with a growing dividend.
QBR.B	Quebecor Inc.	About 4.5%	Present in Quebec, diversified into cable, internet, and media.
SJR.B	Shaw Communications	About 3.8%	Telecommunications and Internet services provider, recently acquired by Rogers.
MBT	Manitoba Telecom Services (Bell MTS)	About 4.0%	Specializes in telecommunications services in Manitoba.
CGO	Cogeco Inc.	About 2.4%	Internet and cable service provider, expanding in Eastern Canada.

Consumer staples (10-15%)

For further diversification, including consumer staples is essential. Metro Inc. (MRU), George Weston Ltd. (WN), and Empire Company Ltd. (EMP. A) are strong companies operating in essential sectors such as food and basic necessities. Although their dividend yields are often lower than in other sectors, these companies provide resilience to economic cycles. They are therefore a protection against consumption drops in difficult times.

Consumer Goods Sector: Food & Essentials

Ticker	Enterprise	Dividend yield (%)	Description
MRU	Metro Inc.	About 1.5%	Grocery and drug chain is the leader in Quebec and Ontario with stable dividend growth.
WN	George Weston Ltd.	About 1.8%	Parent company of Loblaw, well diversified into food and retail.
EMP.A	Empire Company Ltd.	About 2%	Owner of Sobeys and IGA, well established in the Canadian food sector.
L	Loblaw Companies Ltd.	About 1.6%	Leading food and pharmacy retailer, with FMCG brands.
SAP	Saputo Inc.	About 2.2%	A major producer of dairy products, present in Canada and internationally.
ATD	Alimentation Couche-Tard	About 0.9%	Convenience store chain, very active in acquisitions and global expansion.
DOL	Dollarama Inc.	About 0.4%	Leader in discount stores in Canada, with rapid expansion and low dividend.

How to Select Dividend Stocks: Key Ratios and Stability Criteria

Here are the key elements and ratios to consider, as well as an overview of the “Dividend Aristocrats“, the companies that are particularly reliable for investors looking for dividends.

1. Key Ratios for Valuing Dividend Stocks

Dividend Yield: The dividend yield is a ratio that measures the ratio of the annual dividend per share to the share price. For example, a stock listed at $100 with an annual dividend of $4 will have a yield of 4%. This ratio allows for a comparison of the returns of different stocks, but a return that is too high can signal increased risk, as distressed companies may temporarily maintain a high dividend to attract investors.

Payout Ratio: This ratio indicates the share of profits that a company devotes to dividends. A payout ratio above 80% may indicate that the company is spending a large portion of its profits on dividend payments, which may limit its ability to invest in growth. Ideally, a payout ratio between 40% and 60% is considered healthy.

Dividend Growth: A history of dividend growth is a good indicator of a company’s stability and financial health. Companies that are able to increase their dividends every year often show strong financial management and an ability to generate stable revenue.

Price-to-earnings (P/E) ratio: While the P/E ratio is primarily a valuation indicator, it can help identify stocks that are reasonably priced relative to earnings. A P/E that is too high could signal a risk of a price correction, which could affect the value of the investment, even if dividends remain stable.

2. The Importance of Dividend History

The history of paying dividends is another essential criterion. Companies that have paid dividends regularly over several decades are often perceived as stable and resilient to economic crises. This history indicates financial strength and a management policy aimed at rewarding shareholders. For example, Canadian companies such as the Royal Bank of Canada and Enbridge have demonstrated consistency in their dividends, even during a recession.

3. The ‘Dividend Aristocrats’

In Canada, aristocratic stocks have slightly different criteria than their U.S. counterparts. Here, the minimum required to be considered an Aristocrat Dividend is to have increased its dividends for at least 5 consecutive years. Although this threshold is less demanding than the 25-year threshold in the United States, it remains a sign of solidity and consistency for companies that meet this criterion. These companies are often leaders in their respective industries, with prudent financial management and a stable business model that allows them to reward their shareholders year after year.

The Canadian Dividend Aristocrats are mainly present in stable and well-established sectors, such as financials, utilities, and energy. Among them are companies like Fortis Inc., which has increased its dividend for more than 45 consecutive years, BCE Inc., and Canadian Utilities, all of which are recognized for their consistency in dividend payments. These companies offer investors peace of mind, as they are able to generate stable cash flows even in periods of economic volatility.

Investing in Canadian Aristocratic Dividends can therefore be an attractive strategy for investors looking for stable and growing sources of income over the long term, while having a portfolio that is less vulnerable to market fluctuations.

Conclusion

Building a diversified portfolio of Canadian dividend stocks is a smart strategy for generating passive income while minimizing risk. By allocating their investments across different sectors, each investor can tailor their portfolio to their goals, whether it’s stability, growth, or dividend optimization. While this article offers a sector allocation and a selection of popular stocks in key sectors like financials, energy, telecommunications, utilities, and consumer goods, it is essential that each investor adjusts these recommendations based on their own financial goals and risk tolerance. By drawing on the allocations of popular Canadian ETFs such as VDY, XDIV and XEI, and regularly re-evaluating the performance of each sector, it is possible to build a balanced portfolio that can generate strong income and withstand market fluctuations.