Enbridge is responsible for transporting a quarter of the oil produced in North America through its extensive pipeline system. The company also transports one-fifth of the natural gas used in the United States.
Enbridge is often part of the best dividend stocks in Canada. And for a good reason! Despite a high dividend rate and sometimes bad economic conditions, the company has never reduced its dividends and continues to increase them.
Dividends are the portion of a company’s profits that is distributed to its shareholders. These payments represent a return on the investment made by shareholders in the company. Dividends can be in the form of cash, additional shares of stock, or other assets, and are typically paid out regularly, such as on a quarterly basis. They serve as a way for companies to reward their shareholders for their ownership, and for investors, dividends can provide a steady stream of income or a reinvestment option for long-term growth.
Types of dividends in the Canadian market
In the Canadian market, several types of dividends are prevalent:
Cash Dividends: These are the most common, involving direct cash payments to shareholders. They’re usually paid out on a regular schedule, such as quarterly, and provide shareholders with immediate income.
Stock Dividends: Also known as bonus shares, companies issue additional shares to shareholders instead of cash. This type of dividend doesn’t provide immediate income but increases the shareholder’s ownership stake in the company.
Dividend Reinvestment Plans (DRIPs): These allow shareholders to reinvest their dividends to purchase more shares, often at a discounted price, enabling compounded growth.
Special Dividends: Occasional one-time payments outside the regular dividend schedule, typically when a company experiences exceptional profits.
Preferred Dividends: Typically paid to preferred shareholders, these dividends take precedence over common stock dividends and are usually fixed.
Eligible and Non-Eligible Dividends: Canada’s tax system differentiates between these two types, affecting the tax rates shareholders pay on the dividends received.
Understanding these dividend types is essential for Canadian investors to make informed decisions aligning with their financial goals and tax considerations.
BMO All-in-One ETF – Diversification and Convenience
All-in-One ETFs, also known as asset allocation or balanced ETFs, were created to offer investors a simplified and convenient way to achieve diversified portfolios. Several reasons make these types of ETFs attractive to investors:
Diversification: All-in-One ETFs typically hold a mix of different asset classes such as stocks, bonds, and sometimes even other assets like real estate or commodities. This diversification helps spread risk and reduces the impact of poor performance in any single asset.
Ease of Use: These ETFs are designed to be easy for investors to understand and use. Instead of selecting and managing multiple individual ETFs, investors can purchase a single All-in-One ETF that already contains a well-balanced mix of assets.
Simplicity: Especially for novice investors, All-in-One ETFs simplify the investment process. There’s no need to worry about rebalancing or adjusting the portfolio as market conditions change since the fund’s management takes care of this.
Cost-Effectiveness: These ETFs can be cost-effective compared to purchasing multiple individual ETFs or mutual funds. The fees for All-in-One ETFs are often lower than the combined fees of managing a similar diversified portfolio with separate funds.
Time-Saving: For investors who don’t have the time or expertise to actively manage a complex portfolio, All-in-One ETFs provide a “set it and forget it” approach. This can be particularly beneficial for individuals with busy schedules or those who prefer a hands-off investment strategy.
Targeted Goals: Some All-in-One ETFs are designed for specific goals, such as retirement, saving for college, or generating income. This makes it easier for investors to align their portfolio with their financial objectives.
Accessibility: All-in-One ETFs are available on major stock exchanges, making them easily accessible to a wide range of investors through their brokerage accounts.
Overall, the introduction of All-in-One ETFs provides investors with a straightforward and efficient way to achieve a diversified portfolio, align with their risk tolerance, and work towards their investment goals without the complexity of managing multiple individual investments.
How to choose the best All in one BMO ETF portfolio?
The first crucial step is assessing your risk profile, a pivotal factor in crafting the best portfolio. This profile hinges on your response to two fundamental questions:
Time Horizon: Are you planning for the long haul or aiming for short-term gains?
Risk Tolerance: Every ETF carries inherent fluctuations in value. What level of percentage variation can you comfortably handle?
To facilitate this assessment, an online questionnaire is available through Vanguard at the following link.
Based on your answers, the tool will propose the best allocation among stocks, bonds and short-term reserves.
Conservative portfolio
Fixed income will dominate the portfolio at 60% or more (with the exception of Horizons’). Meaning your investments will be mostly in Bonds. Bonds are much safer than stocks but they don’t usually offer much return. This portfolio is perfect for some one whose financial objective is short term or who is risk averse. Your portfolio will still have between 20-40% exposure to stocks which allows for some modest growth with a moderate risk overall.
Balanced profile
A balanced portfolio is an investment that combines stocks and bonds. In general, 60% will be invested in the stock market (. While the remainder (40%) will be invested in fixed income investments. This portfolio seeks to combine both growth potential by holding stocks and the safety associated with holding bonds.
Growth portfolio
A growth fund is a diversified portfolio of stocks that has capital appreciation as its primary goal. This is ideal for investors who have a long term objective such as building a retirement fund. The fund will invest at least 80% in Stocks. Generally for these type of funds, providing a dividend income is a secondary objective.
BMO All-in-One ETF
BMO offers three all-in-one ETFs. The breakdown for each portfolio is diversified and covers several types of assets (US, Canadian, Developed and Emerging Markets Equities). The fixed income offering is diversified and covers both the North American and global bond markets.
For the equities breakdown, exposure to the US market is made with 3 funds (mainly the BMO S&P 500 INDEX ETF, BMO S&P US MID CAP INDEX ETF and BMO S&P US SMALL CAP INDEX ETF).
For the bond component, iShares uses three funds that cover the Canadian, American and global markets.
A Registered Retirement Savings Plan (RRSP) is a retirement savings and investing vehicle for employees and the self-employed in Canada. Pre-tax money is placed into an RRSP and grows tax-free until withdrawal, at which time it is taxed at the marginal rate.
In other words, it is a way the Canadian Government encourages you to save by offering the option to lower your taxable income by the amount you contribute.
Mike has a taxable income of 90K. If he contributes to his RRSP 15K, then he will reduce his taxable income and thus his taxes. The governement will not tax the 15K (it’s basically sheletered from Tax because it’s in an RRSP).
The intent of this incentive is that you will save that money for your retirement.
Key assumptions here: You income in your retirement is lower than now. Meaning, when you will withdraw money at your retirement you will benefit by paying a lower taxes. This is probably true for most of us.
Pro:
Can be really a powerful tool to reduce your taxable income and save money for retirement. The money you save can be invested for instance in a TFSA or contributed back in your RRSP if you still have room.
Cons:
If you contribute to your RRSP and then needed the money before your retirement, the whole benefit of an RRSP is basically wiped out. This is because not only you will taxes on the amount withdrawn but also any income you made (dividend or capital gains) is also taxable.
Questions and Answers
How to open an RRSP account
You set up a RRSP through a financial institution such as a bank, credit union, trust or insurance company. Your financial institution will advise you on the types of RRSP and the investments they can contain.
What if I withraw from my RRSP to participate in the: Home Buyers’ Plan & Lifelong Learning Plan withdrawals
Under specific circumstances, you can withdraw funds from your RRSP and your RRSP issuer will not withhold tax.
When you withdraw funds from your RRSPs under either of these plans, do not include them as income on your Income Tax and Benefit Return.
What’s the maximum I can contribute
Your RRSP contribution limit for 2020 is 18% of earned income you reported on your tax return in the previous year, up to a maximum of 27,230. For 2021, the dollar limit is $27,830.
Deadline to contribute to an RRSP
March 1, 2021March 1, 2021 is the deadline for contributing to an RRSP for the 2020 tax year. December 31 of the year you turn 71 years of age is the last day you can contribute to your own RRSP. For more information, see RRSP options when you turn 71.
What are the federal tax brackets in Canada for 2020?
Annual Income (Taxable)
Tax Brackets
Tax Rates
Max Taxes Per Bracket
Max Total Tax
Up to $48,535
The first $48,535
15%
$7,280
$7,280
$48,535 to $97,069
The next $48,534
20.5%
$9,950
$17,230 ($7,280 + $9,950)
$97,069 to $150,473
The next $53,404
26%
$13,885
$31,115 ($17,230 + $13,885)
$150,473 to $214,368
The next $63,895
29%
$18,530
$49,645 ($31,115 + $18,530)
Over $214,368
Over $214,368
33%
n/a
n/a
In the world of investing, the pursuit of long-term growth is a common objective for many individuals. Whether you’re a seasoned investor or just starting to build your investment portfolio, identifying the right vehicles to achieve sustainable growth is crucial. Exchange-Traded Funds (ETFs) have emerged as popular investment options due to their diversification, cost-effectiveness, and ease of access. With an ever-expanding range of ETFs available, it can be overwhelming to choose the Best ETF for Long Term Growth.
In this post, we will dive into the realm of ETFs and explore some of the best options specifically tailored for long-term growth. We will examine various factors such as historical performance, underlying assets, expense ratios, and overall investment strategies. By the end of this guide, you will gain valuable insights into the top-performing ETFs that have the potential to deliver sustained growth over an extended period.
Best Canadian Dividend ETFs
Pros of Owning a Canadian Dividend ETF
Income Generation: Canadian Dividend ETFs invest in Canadian companies that pay dividends, providing a regular stream of income for investors. This can be especially appealing for investors who are retired or seeking income from their investments.
Diversification: Canadian Dividend ETFs invest in a broad range of companies, which can help investors diversify their portfolio. By spreading their investments across different sectors and companies, investors can reduce the risk of having all their eggs in one basket.
Lower Costs: ETFs typically have lower fees than actively managed mutual funds, making them an affordable option for investors who want to keep costs low.
Tax Efficiency: Canadian Dividend ETFs can be tax-efficient, as Canadian dividends are eligible for the dividend tax credit, which can reduce the amount of tax paid on the dividend income.
Top Canadian Dividend ETFs
Best ETF for Long Term Growth (Canadian Dividend)
Best US Dividend ETFs
Pros of Owning a Canadian Dividend ETF
Income Generation: Canadian Dividend ETFs that invest in US stocks can provide a regular stream of income for investors from US-based companies.
Diversification: Investing in a Canadian Dividend ETF that includes US stocks can help investors diversify their portfolio beyond Canadian companies and reduce overall risk.
Exposure to US Market: A Canadian Dividend ETF that invests in US stocks provides exposure to the US market, which is the largest and most diverse stock market in the world. This can provide investors with access to some of the largest and most successful companies in the world.
Diversification: Canadian Index ETFs invest in a broad range of companies across multiple sectors, which can help investors diversify their portfolio and reduce overall risk.
Low Fees: Canadian Index ETFs typically have lower fees compared to actively managed mutual funds, which can increase overall returns for investors.
Passive Investing: Index ETFs track a specific index, such as the S&P/TSX Composite Index, and do not require active management, which can be less time-consuming for investors.
Market Exposure: A Canadian Index ETF provides exposure to the Canadian market, which can help investors capture the overall performance of the Canadian economy.
Exposure to US Market: The S&P 500 Index ETF provides exposure to the US market, which is the largest and most diverse stock market in the world. This can provide investors with access to some of the largest and most successful companies in the world.
Diversification: Investing in an S&P 500 Index ETF can help investors diversify their portfolio beyond Canadian companies and reduce overall risk.
Low Fees: S&P 500 Index ETFs typically have lower fees compared to actively managed mutual funds, which can increase overall returns for investors.
Passive Investing: Index ETFs track a specific index, such as the S&P 500 Index, and do not require active management, which can be less time-consuming for investors.
Top Index ETFs (US S&P500 Index)
Top All In One ETFs (Growth)
Pros of Owning an All-in-One ETF:
Simplified Investing: An all-in-one ETF provides investors with a single investment that contains a diversified portfolio of stocks and bonds, which can simplify the investing process and save time.
Diversification: All-in-one ETFs invest in a broad range of companies across multiple sectors and geographic regions, which can help investors diversify their portfolio and reduce overall risk.
Low Fees: All-in-one ETFs typically have lower fees compared to actively managed mutual funds, which can increase overall returns for investors.
Passive Investing: All-in-one ETFs track a specific index and do not require active management, which can be less time-consuming for investors.
When the manager has to replicate a U.S. index such as the S.P. 500 or the Nasdaq 100. It must acquire these assets in U.S. dollars. So, on a fairly regular basis, the fund has to convert the funds available in Canadian dollars into U.S. dollars. These conversions may be beneficial or have a negative impact depending if the Canadian dollar has appreciated or depreciated.
Many investors want to reduce this risk. To meet their needs, the majority of ETFs that reproduce a U.S. index offer a “hedged” version of their funds and sometimes another version that is traded only in U.S. dollars. Coverage acts as a kind of insurance. See the scenarios presented below:
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 ad
The recent stock market correction clearly represents an opportunity to acquire new shares of the highest dividend paying stocks. A good starting point are dividend stocks with a solid track record. In this post, we will be looking at 4 dividend stocks that are near their 52 weeks lows. For each stock, we will present the growth prospects and the risks. In addition, we will include growth statistics and other relevant ratios. This list is just a starting point for further research and not a buy recommendation.
Highest Dividend paying Stocks near their 52 weeks low
Market Cap and Dividend yield
Symbol
Market Cap
Div Yield
LHX
35.28B
2.42%
PKG
11.50B
3.87%
MAA
17.64B
3.60%
CINF
16.41B
2.70%
As of May 23rd, 2023 (Source: SeekingAlpha), – Highest Dividend paying Stocks
Ex-Dividend date and Pay Out Ratio
Symbol
Ex-Div Date
Payout Date
Payout Ratio
LHX
6/1/2023
6/16/2023
35.66%
PKG
6/14/2023
7/14/2023
47.13%
MAA
7/13/2023
7/31/2023
87.50%
CINF
6/15/2023
7/14/2023
79.66%
As of May 23rd, 2023 (Source: SeekingAlpha), – Highest Dividend paying Stocks
Dividend growth metrics
Symbol
Div Growth 5Y
Years of Growth
Consecutive Years
LHX
14.97%
21 Years
33 Years
PKG
14.69%
12 Years
18 Years
MAA
8.13%
12 Years
24 Years
CINF
6.79%
62 Years
62 Years
As of May 23rd, 2023 (Source: SeekingAlpha), – Highest Dividend paying Stocks
LHX L3Harris Technologies, Inc.
L3Harris Technologies, Inc. is an aerospace and defense technology company providing mission-critical solutions for global government and commercial customers. Its offerings include multi-mission intelligence systems, communication systems, maritime and autonomous solutions, electro-optical and infrared solutions, space payloads, electronic warfare systems, tactical radios, and public safety equipment. The company was founded in 1895.
+ L3Harris, a defense contractor, presents an opportunity for investors seeking potentially undervalued stocks. Despite a bearish stock chart, the company has displayed strong revenue growth.
+ The recent acquisition of Aerojet Rocketdyne is expected to have a meaningful impact on future results.
+ The company benefits from a solid flow of new orders supported by an advanced product portfolio, with resolved supply chain issues.
+ L3Harris has shown steady revenue and EPS growth over the past decade.
+ The company’s reputation for dividend growth offers potential income stability for long-term investors.
+ L3Harris is well-positioned to potentially benefit from increased global defense spending.
+ The company’s valuation appears reasonable, although investors should be mindful of potential risks.
+ 21 consecutive years paying and growing their dividends while maintaining a low payout ratio
+ Dividend grew 14.97% in the past 5 years!
PKG – Packaging Corporation of America
Packaging Corporation of America (NYSE:PKG), established in 1867, is a leading producer of container board products, paper, and packaging materials in the United States. The company operates in three segments: Packaging (the largest division), Paper, and Corporate and Other. With a network of 8 mills, 89 corrugated products plants, and a facility in Hong Kong, they cater to businesses of all sizes, offering a diverse range of corrugated packing materials, including solutions for food and consumer products. Additionally, their paper segment specializes in both commodity and specialty paper products. Packaging Corporation of America is a trusted and long-standing presence in the industry.
+ Strong fundamentals are supported by a strong balance sheet and cash flow statement.
– PKG operates in a highly competitive industry, which may impact its pricing power, margins, and profitability.
– The company’s dependence on key raw materials, such as paper and pulp, exposes it to market fluctuations and supply chain disruptions.
+ 12 consecutive years paying and growing their dividends while maintaining a low payout ratio
+ Dividend grew 14.69% in the past 5 years!
MAA – Mid-America Apartment Communities, Inc.
Mid-America Apartment Communities owns 101,986 apartment units, including those currently in development, across 16 states and Washington D.C. Their primary markets are:
Mid-America Apartment Communities owns 101,986 apartment units, including those currently in development, across 16 states and Washington D.C. Their primary markets are: the Southeast, Southwest and Mid-Atlantic regions of the United States.
+ strong balance sheet and pays a well-covered and growing dividend.
+ Higher Population growth, Household Formation and Job growth in MAA Markets contributes to the company’s strong financial situation.
+ Higher interest rates benefit MAA by pricing out buyers from single-family homes, increasing demand for their apartment communities.
+ 12 consecutive years paying and growing their dividends while maintaining a low payout ratio.
+ Dividend grew 8.13% in the past 5 years!
CINF – Cincinnati Financial Corporation
Cincinnati Financial Corporation and its subsidiaries offer property casualty insurance products in the United States. The company operates through five segments: Commercial Lines Insurance, Personal Lines Insurance, Excess and Surplus Lines Insurance, Life Insurance, and Investments.
+ Dividend King stock with 62 consecutive years of dividend growth.
+ As interest rates rose, the stock market declined, which had a significant impact on Cincinnati’s stock portfolio. This downward trend in the stock market led to a noticeable decrease of 21% in total revenues compared to the same period in the previous year. However, it’s important to note that these losses are currently unrealized. When the market regains its strength and the portfolio’s investments appreciate in value, Cincinnati stands to benefit from the rebound, potentially offsetting the previous losses and generating positive returns.
+ Dividend grew 6.79% in the past 5 years!
Investing in dividend-paying stocks
Regarding dividend investing, investors understand the significance of selecting the right stocks. Those seeking a reliable and growing income stream prioritize stocks with a solid history of increasing dividends annually. This article explores the importance of investing in such dividend stocks and highlights four top picks currently trading near their 52-week lows.
Consistent Income Growth:
Dividend stocks with a consistent track record of increasing dividends provide investors with a relatively safe income stream.
Long-Term Wealth Generation:
Dividend growth stocks have proven to be excellent vehicles for long-term wealth generation. Investors can harness the power of compounding returns by reinvesting dividends or selectively deploying the cash flow into other investments. Over time, this compounding effect significantly boosts overall portfolio returns.
Stability and Resilience:
Companies that consistently increase dividends often exhibit stability and resilience in their business operations. These companies typically possess strong fundamentals, solid financial health, and sustainable growth prospects. Investing in dividend stocks with a solid track record helps investors mitigate risks associated with volatile market conditions.
Signal of Company Health:
Dividend increases year after year serve as positive signals of a company’s confidence in its prospects and financial strength. Consistently raising dividends reflects a company’s commitment to shareholder value, which signifies earnings growth and cash flow stability. Dividend growth becomes a valuable measure of a company’s health and long-term sustainability.
XEF ETF Objective
XEF ETF is an index fund that helps investors get exposure to large and mid-cap companies in developed markets outside of North America. The fund seeks long-term capital growth by replicating the performance of the MSCI EAFE® Investable Market Index, net of expenses.
XEF is unhedged. If you are looking for the hedged version you can invest in XFH. A Canadian dollar hedged fund is an investment fund that seeks to mitigate the impact of currency fluctuations between the Canadian dollar and foreign currencies. When investing in foreign assets, such as stocks or bonds denominated in a currency other than the Canadian dollar, the returns of the investment can be affected by changes in exchange rates.
What’s the MSCI EAFE Index
The MSCI EAFE Index is a popular stock market index that offers investors exposure to large and mid-cap companies in developed markets outside of North America. Let’s take a closer look at the advantages and weaknesses of this index.
Advantages:
Diversification: The MSCI EAFE Index covers 21 developed markets, which can help investors to reduce the risk of a concentrated portfolio and potentially increase returns.
Global exposure: Investing in the MSCI EAFE Index provides exposure to a diverse range of markets, which can help to mitigate the impact of regional economic downturns.
Strong performers: The index includes some of the world’s largest and most successful companies, which can provide investors with the opportunity to invest in established businesses with a proven track record.
Weaknesses:
Currency risk: Investing in international markets exposes investors to the risk of currency fluctuations, which can affect returns and add an additional layer of risk to the investment.
Geopolitical risk: Political events, such as changes in trade policies or economic sanctions, can affect the performance of the MSCI EAFE Index and create uncertainty for investors.
Limited exposure to emerging markets: The MSCI EAFE Index only includes developed markets, which means that investors may miss out on the potentially higher returns of emerging markets.
In conclusion, the MSCI EAFE Index can be a useful tool for investors looking to diversify their portfolios and gain exposure to developed international markets. However, it is important to carefully consider the risks associated with investing in foreign markets, such as currency fluctuations and geopolitical events, and weigh the potential benefits against these risks.
XEF ETF est un fonds indiciel qui aide les investisseurs à obtenir une exposition aux sociétés à grande et moyenne capitalisation des marchés développés à l’extérieur de l’Amérique du Nord. Le fonds vise une croissance du capital à long terme en reproduisant le rendement de l’indice MSCI EAFE® Investable Market Index, déduction faite des frais.
Le XEF n’est pas couvert. Si vous recherchez la version couverte, vous pouvez investir dans XFH. Un fonds de couverture en dollars canadiens est un fonds d’investissement qui cherche à atténuer l’impact des fluctuations des devises entre le dollar canadien et les devises étrangères. Lorsque vous investissez dans des actifs étrangers, tels que des actions ou des obligations libellées dans une devise autre que le dollar canadien, les rendements de l’investissement peuvent être affectés par les variations des taux de change.
Que représente l’incide MSCI EAFE
L’indice MSCI EAEO est un indice boursier populaire qui offre aux investisseurs une exposition aux sociétés à grande et moyenne capitalisation des marchés développés à l’extérieur de l’Amérique du Nord. Examinons de plus près les avantages et les faiblesses de cet indice.
Avantages :
Diversification : L’indice MSCI EAEO couvre 21 marchés développés, ce qui peut aider les investisseurs à réduire le risque d’un portefeuille concentré et potentiellement augmenter les rendements.
Exposition mondiale : Investir dans l’indice MSCI EAEO offre une exposition à un large éventail de marchés, ce qui peut aider à atténuer l’impact des ralentissements économiques régionaux.
Solides performances : L’indice comprend certaines des sociétés les plus importantes et les plus prospères au monde, ce qui peut offrir aux investisseurs la possibilité d’investir dans des entreprises établies ayant fait leurs preuves.
Faiblesses:
Risque de change : Investir sur les marchés internationaux expose les investisseurs au risque de fluctuations des devises, ce qui peut affecter les rendements et ajouter une couche de risque supplémentaire à l’investissement.
Risque géopolitique : Des événements politiques, tels que des changements dans les politiques commerciales ou des sanctions économiques, peuvent affecter le rendement de l’indice MSCI EAEO et créer de l’incertitude pour les investisseurs.
Exposition limitée aux marchés émergents : L’indice MSCI EAEO n’inclut que les marchés développés, ce qui signifie que les investisseurs peuvent passer à côté des rendements potentiellement plus élevés des marchés émergents.
En conclusion, l’indice MSCI EAEO peut être un outil utile pour les investisseurs qui cherchent à diversifier leurs portefeuilles et à s’exposer aux marchés internationaux développés. Cependant, il est important d’examiner attentivement les risques associés à l’investissement sur les marchés étrangers, tels que les fluctuations des devises et les événements géopolitiques, et de peser les avantages potentiels par rapport à ces risques.
XEF Cours plus haut et plus bas 52 dernières semaines
Performance historique
XEF Portfeuille
Name
Weight (%)
ISHARES CORE MSCI EAFE ETF
3.15
NESTLE SA
1.86
NOVO NORDISK CLASS B
1.43
LVMH
1.43
ASML HOLDING NV
1.33
ASTRAZENECA PLC
1.22
ROCHE HOLDING PAR AG
1.15
SHELL PLC
1.13
NOVARTIS AG
1.12
BHP GROUP LTD
0.83
XEF Allocation par pays
Type
Fund
Japan
22.41
United Kingdom
14.95
France
11.40
Switzerland
9.36
Germany
8.02
Australia
7.78
Netherlands
4.02
Sweden
3.67
Denmark
2.93
Italy
2.63
In this article, we will present the best canadian dividend stocks 2023. We focused in our analysis on large caps that have increased significantly their dividends in the past 5 years. In addition, for each company selected, the dividend yield and the dividend payout ratio and other pertinent ratios will be provided.
A quick review of the methodology:
Minimum dividend yield of 2.5%
Companies with the highest incease in their paid dividends in the past 5 years (Minimum = 10%)
Source: Barchart – 5Y Div%: 5 years dividend growth
Investing in dividend-paying stocks
Investing in dividend paying stocks is a strategy that appeals to young and old investors. Here is a quick reminder of the main concepts to keep in mind before applying this strategy:
Investment horizon: 5 years or more minimum. The strategy of investing in dividend paying stocks is not suitable for an investor with a short term horizon (less than 5 years).
Objective: The strategy can help you build passive income or further grow your capital by reinvesting the dividends received.
Risk Tolerance: Medium (provided you restrict yourself to selecting quality securities and having a diversified portfolio across several sectors).
What’s a good 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.
Why stocks price decrease after dividend payments?
In the short term, the payment of dividends constitutes a drain on the company’s financial resources. At the time they are distributed, the share price will decrease accordingly in normal trading conditions. This is why some companies allow shareholders to reinvest their dividend by acquiring more shares.
In the long term, the relationship between dividend and share price is more complex.
On the one hand, the payment of dividends attracts new shareholders and retains the current ones. This has a positive effect on the share price overall. But on the other hand, an excessive levy on the resources of the company can hinder he compay’s growth prospects.
POW-PE.TO Power Corp Part Pr
ABX.TO Barrick Gold Corp
AEM.TO Agnico Eagle Mines Ltd
QSP-UN.TO Restaurant Brands Intl Ltd Partnership
QSR.TO Restaurant Brands International Inc
CCL-A.TO and CCL-B.TO Ccl Industries Inc Cl A
CNQ.TO Canadian Natural Resources Ltd.
CTC.TO and CTC-A.TO Canadian Tire Corp Ltd
In this post, we will be going over the Best Exchange Traded Funds (ETF) in Canada. First, we will discuss the benefits of investing in ETFs. Then, we will be presenting the best ETFs by category:
The quick answer is diversification. Assume you have 5,000 $, you can’t buy a lot of stocks with that amount (may be 4 or 5). Also, you will incur fees to trade them. Your portfolio will be certainly too dependent on a performance of 1, 2 …or even 5 sectors that your stocks are in. If you buy with that 5,000 $ an ETF that tracks let’s say the TSX/S&P 60, it basically means you just bought share in 60 of the largest companies that are trading in the stock exchange in Canada. It’s clearly a powerful tool to diversify your portfolio with a small amount of money.
ETFs offer a wide variety of choices, you can basically decide the allocation yourself based on your risk tolerance or rely on Robo advisers services (such as Questrade or Wealth simple).
What are the risks?
An ETF trades like a stock. So it’s volatile. You have to accept the fact the value can go up or down like any stock. There is no question that an ETF covering let’s say the TSX is for most of the time less volatile than holding 1 stock. Because the TSX ETF is a bundle of over 100 stocks not just one. It’s diversified by nature so it’s less volatile.
In my opinion, XDV iShares Canadian Select Dividend Indx andVDY FTSE Canadian High Dividend Yield Indx are the best Canadian diversified dividend ETFs. They combine low volatility, attractive returns, and good performance. VDY has a Morningstar Rating of 5 Stars and a low MER 0.21%!
Canadian Banks are known for their financial strength. Their Dividends are attractive and stable. FIE Ishares CDN Fin Mthly Income is a great choices. If you want exposure to the Canadian banking industry focusing on earning dividends, this ETF will undoubtedly answer your goals.
VDY – Vanguard FTSE Canadian High Dividend Yield Index ETF
FTSE Canadian High Dividend Yield Index ETF tracks the performance of the FTSE Canada High Dividend Yield Index, which consists of Canadian stocks having a high dividend yield. Due to the nature of the Canadian market, this fund has large portion of its investment portfolio in Energy and Financials.
VDY holdings
Name
Weight
Royal Bank of Canada
14.1%
The Toronto-Dominion Bank
12.5%
Enbridge Inc
7.9%
Bank of Nova Scotia
7.7%
Bank of Montreal
6.5%
Canadian Imperial Bank of Commerce
4.9%
TC Energy Corp
4.7%
BCE Inc
4.4%
Canadian Natural Resources Ltd
4.1%
Manulife Financial Corp
3.7%
Please consult issuers’ website for up-to-date data
S
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.
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%
Please 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.
VGG – Vanguard US Div Appr and VGH – U.S. Dividend Appreciation Index ETF (CAD-hedged)
VGG seeks to track the performance of the NASDAQ US Dividend Achievers Select Index. The latter is comprised of a select group of securities with at least ten consecutive years of increasing annual regular dividend payments.
VGH is hedged: Meaning the manager will seek actively to reduce currency risk. VGG is not hedged against currency fluctuation risk.
Index funds can be great especially from an MER perspective. VGG and VGH (hedged version) charge 0.30% MER which the lowest among the ETFs selected in our list. They offer an exposure to large number of established US corporations, mostly Bluechips such as Microsoft, Walmart…etc.
The choice between VGG and VGH depends solely on the investor take on currency. If the Canadian dollar appreciates then a hedged ETF will be a better choice. On the other hand, if the US dollar appreciates, then the non hedged ETF will have a better performance.
VGG Holding details
Company Name
Allocation
Microsoft Corp
4.5%
JPMorgan Chase & Co
3.9%
Johnson & Johnson
3.8%
UnitedHealth Group Inc
3.3%
Visa Inc Class A
3.2%
The Home Depot Inc
3.1%
Please consult issuers’ website for up-to-date data
VGG Geographic allocation
Country
Fund
USA
99.3%
Please consult issuers’ website for up-to-date data
VGG Sector allocation
Sector
% Allocation
Financial Services
17.0%
Industrials
16.9%
Healthcare
15.5%
Please consult issuers’ website for up-to-date data
ZWH – BMO US High Dividend Covered Call ETF
ZWH has been designed to provide exposure to a dividend focused portfolio, while earning call option premiums. The underlying portfolio is yield-weighted and broadly diversified across sectors. The Fund utilizes a rules-based methodology that considers the following criteria:
dividend growth rate,
yield,
payout ratio,
liquidity.
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.
ZWH Holding details
Weight (%)
Name
4.48%
BANK OF AMERICA CORP
4.29%
CISCO SYSTEMS INC/DELAWARE
4.21%
HOME DEPOT INC/THE
4.12%
JPMORGAN CHASE & CO
4.09%
MICROSOFT CORP
3.92%
INTERNATIONAL BUSINESS MACHINES CORP
3.85%
CHEVRON CORP
3.83%
ABBVIE INC
3.71%
AT&T INC
3.65%
COCA-COLA CO/THE
Please consult issuers’ website for the most recent data
ZWH Geographic allocation
Country
Fund
USA
100.0%
ZWH Sector allocation
Sector
Fund
Information Technology
22.52%
Industrials
8.25%
Consumer Discretionary
9.60%
Health Care
12.53%
Financials
16.30%
Materials
4.19%
Communication
9.54%
Consumer Staples
7.25%
Energy
3.92%
Utilities
3.77%
Real estate
2.12%
Please consult issuers’ website for the most recent data
BMO Nasdaq 100 Equity Hedged to CAD seeks to replicate, to the extent possible, the performance of an index of securities of companies listed on the NASDAQ, net of expenses. ZQQ ranks first in our ranking of the best BMO ETFs to hold for long term.
The ZQQ is hedged for currency risk.
The Nasdaq-100 is one of the world’s leading large-cap growth indices. It includes 100 of the largest national and international non-financial companies listed on the Nasdaq by market capitalization.
This index is dominated by companies in the technology sector.
47.93% Technology
19.77% Communications Services
18.25% Consumer Discretionary
ZQQ Holdings
Weight (%)
Name
10,52%
APPLE INC
9,47%
MICROSOFT CORP
8,17%
AMAZON.COM INC
3,98%
ALPHABET INC
3,97%
FACEBOOK INC
3,73%
TESLA INC
3,56%
ALPHABET INC
3,08%
NVIDIA CORP
2,33%
PAYPAL HOLDINGS INC
2,00%
COMCAST CORP
Please consult issuers’ website for up-to-date data
ZUQ – BMO MSCI USA High Quality Index
ZUQ strategy and sector allocation
The BMO MSCI USA High Quality seeks to replicate, to the extent possible, the performance of the MSCI USA Quality Index, net of expenses. The index is 100% invested in the United States.
The fund selects the securities according to the criteria below:
• Large or medium-sized business;
• High return on equity;
• Sustained growth in revenues;
• Low debt ratio
ZUQ Sector allocation – Top 3
45.83% Technology
20.49% Healthcare
10.80% Communication service
ZUQ Holdings
Weight (%)
Name
5,11%
FACEBOOK INC
5,00%
MICROSOFT CORP
4,84%
APPLE INC
4,50%
JOHNSON & JOHNSON
4,01%
MASTERCARD INC
3,87%
NVIDIA CORP
3,80%
VISA INC
3,74%
UNITEDHEALTH GROUP INC
2,71%
PAYPAL HOLDINGS INC
2,71%
ADOBE INC
Please consult issuers’ website for up-to-date data
RIT is an actively managed portfolio comprised primarily of securities of Canadian real estate investment trusts, real estate operating corporations and entities involved in real estate related services. Up to 30% of the Fund’s assets may be invested in foreign securities.
RIT ETF Distribution
RIT
Total
Cash
21-May
$0.0675
$0.0675
26-Apr
$0.0675
$0.0675
25-Mar
$0.0675
$0.0675
22-Feb
$0.0675
$0.0675
25-Jan
$0.06750
$0.0675
Sector breakdown
Sector
Weight %
Residential
30.73
Industrials
21.07
Retail
18.64
RIT ETF Holdings
Name
%
CANADIAN APARTMENT PPTYS REIT
4.96
TRICON RESIDENTIAL INC
4.88
DREAM INDUSTRIAL REIT
4.87
SUMMIT INDUSTRIAL INCOME REIT
4.70
INTERRENT REIT
4.68
GRANITE REIT
4.62
KILLAM APT REAL ESTATE INVT TR
4.21
MINTO APARTMENT REIT
4.06
CHARTWELL RETIREMENT RESIDENCE
4.01
CHOICE PROPERTIES REIT
3.74
ZRE – BMO Equal Weight Reits Index ETF
ZRE is an index fund that tracks the Solactive Equal Weight Canada REIT Index. It invests in Canadian securities that fall within the Real Estate Investment Trust sector. Each security in the Index is allocated a fixed weight rather than a market capitalization weight. This is the largest REITS ETF by asset under management with 1.3 Billion.
The ZWB aims to provide exposure to a portfolio of dividend-paying securities (Canadian Banks), while collecting premiums related to call options. The portfolio is chosen on the basis of the criteria below:
• dividend growth rate,
• yield
• payout ratio and liquidity.
ZWB holdings
Name
Weight
BMO Equal Weight Banks ETF
27.2%
Bank of Montreal
12.9%
Canadian Imperial Bank of Commerce
12.7%
Royal Bank of Canada
12.1%
National Bank of Canada
11.9%
The Toronto-Dominion Bank
11.9%
Bank of Nova Scotia
11.4%
Please visit issuers’ website for up-to-date figures
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.
ZWC is an excellent option for conservative investors looking for a steady income and low volatility. It’s tax-efficient because the dividends are all coming from Canadian companies. The financial sector and Energy represents 53% of the total overall sector allocation.
Funds objective: Seeks long-term capital growth by replicating the performance of the S&P/TSX Capped Energy Index, net of expenses.
In terms of holdings, Canadian Natural Resources and Suncor Energy make up almost 50% of the holdings. This high exposure reduces the benefit of diversification that’s usually desired by investors when buying an ETF.
The management fee is 0.55%.
Name
Weight (%)
SUNCOR ENERGY INC
26.21
CANADIAN NATURAL RESOURCES LTD
23.48
CENOVUS ENERGY INC
13.50
TOURMALINE OIL CORP
8.97
IMPERIAL OIL LTD
6.47
ARC RESOURCES LTD
5.73
WHITECAP RESOURCES INC
2.40
MEG ENERGY CORP
2.29
ENERPLUS CORP
2.25
CRESCENT POINT ENERGY CORP
2.23
ZEO – BMO S&P TSX Eql Weight Oil Gas Index
The BMO Equal Weight Oil & Gas Index ETF (ZEO) has been designed to replicate, to the extent possible, the performance of the Solactive Equal Weight Canada Oil & Gas Index, net of expenses. The Fund invests in and holds the Constituent Securities of the Index in the same proportion as they are reflected in the Index.
Rating: 3 out of 5.
Weight (%)
Name
14.35%
CENOVUS ENERGY INC
13.34%
SUNCOR ENERGY INC
12.13%
IMPERIAL OIL LTD
11.82%
CANADIAN NATURAL RESOURCES LTD
11.04%
TOURMALINE OIL CORP
9.56%
PEMBINA PIPELINE CORP
9.44%
TRANSCANADA CORP
9.37%
ENBRIDGE INC
8.87%
KEYERA CORP
Why should I consider buying an ETF?
The quick answer is diversification. Assume you have 5,000 $, you can’t buy a lot of stocks with that amount (may be 4 or 5). Also, you will incur fees to trade them. Your portfolio will be certainly too dependent on a performance of 1, 2 …or even 5 sectors that your stocks are in. If you buy with that 5,000 $ an ETF that tracks let’s say the TSX/S&P 60, it basically means you just bought share in 60 of the largest companies that are trading in the stock exchange in Canada. It’s clearly a powerful tool to diversify your portfolio with a small amount of money.
ETFs offer a wide variety of choices, you can basically decide the allocation yourself based on your risk tolerance or rely on Robo advisers services (such as Questrade or Wealth simple).
What are the risks?
An ETF trades like a stock. So it’s volatile. You have to accept the fact the value can go up or down like any stock. There is no question that an ETF covering let’s say the TSX is for most of the time less volatile than holding 1 stock. Because the TSX ETF is a bundle of over 100 stocks not just one. It’s diversified by nature so it’s less volatile.
Recent Dividend Increases – Canadian Banking sector
Company
Amount
Previous Amount
Increase Amount
Ex-Date
CWB Canadian Western Bank
$0.32
$0.31
3.23%
12/14/2022
CM Canadian Imperial Bank of Commerce
$0.85
$0.83
2.41%
12/23/2022
BMO Bank of Montreal
$1.43
$1.39
2.88%
1/27/2023
TD Toronto-Dominion Bank
$0.96
$0.89
7.87%
1/5/2023
RY Royal Bank of Canada
$1.32
$1.28
3.13%
1/25/2023
NA National Bank of Canada
$0.97
$0.92
5.43%
12/22/2022
SLF Sun Life Financial
$0.72
$0.69
4.35%
11/22/2022
FN First National Financial
$0.20
$0.1960
2.04%
11/29/2022
Dividend Increases Canada
Dividend cuts – Novembre-Décembre 2022
Company
Amount
Previous Amount
Decrease Amount
Ex-Date
AQN Algonquin Power & Utilities
$0.2460
$0.4670
-47.32%
12/29/2022
PSD Pulse Seismic
$0.0125
$0.0130
-3.85%
11/11/2022
BRE Bridgemarq Real Estate Sces
$0.1120
$0.1125
-0.44%
11/29/2022
MAL Magellan Aerospace
$0.0250
$0.05
-50.00%
12/14/2022
ABX Barrick Gold
$0.15
$0.20
-25.00%
11/29/2022
TIH Toromont Industries
$0.0040
$0.39
-98.97%
12/7/2022
TRI Thomson Reuters
$0.4450
$0.5720
-22.20%
11/16/2022
CGI Canadian General Investments
$0.23
$0.2730
-15.75%
11/29/2022
GWR Global Water Resources
$0.0320
$0.0630
-49.21%
10/14/2022
Source: Market beats
Dividends (Definition)
Dividends are paid by companies to their shareholders. They constitute a portion of the company’s profit. It is the board of directors which proposes a rate called (Ratio of payment of the dividends or ‘Pay out ratio’. The ratio is a percentage of the profit. Example, a company made a profit of 1,000,000 $, and it decides to pay 50% in dividends and the rest will be reinvested in the company.
Amount of dividends $ 500,000
Number of outstanding shares: 100,000 shares
Each shareholder will receive $ 5 in dividends.
Dividends can be distributed quarterly or annually. In rare cases, companies pay their dividends monthly.
• “declaration date”: The declaration date is the day on which the board of directors announces its intention to pay a dividend.
• “ex-dividend date”: Date to be retained, each person who holds the share on this date is automatically eligible to receive the declared dividends.
Example: the ex-dividend date is May 3.
You must acquire the share at least 3 business days before the ex-dividend date, which is April 27.
You can sell the stock on May 4th and you will still receive your dividend.
• “payment date” / “payment date”: The payment date is the date on which the dividend will actually be paid. Everything is done automatically, there is nothing you can do.
