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Building a Strong Portfolio with ETFs: Essential Steps and Strategies

Investing in ETFs is a prudent and effective method to build a diversified portfolio that aligns with one’s investment goals. To achieve this objective, there are several essential steps that an investor should consider.

Firstly, an investor must define their investment goals. They need to carefully assess whether they want to focus on long-term growth, generate income, or a combination of both. This crucial step will help them select the appropriate ETFs to achieve their objectives.

Next, an investor should select the asset classes that are best suited to their investment strategy. This could include equities, bonds, real estate, commodities, or other asset classes that align with their risk appetite and financial goals.

After selecting the asset classes, an investor should then research the ETFs that track those asset classes. This research must include evaluating their expense ratios, liquidity, and other metrics to ensure that they align with their investment goals.

An investor should also focus on diversification to ensure that their portfolio remains balanced and aligned with their goals. This can be achieved by selecting multiple ETFs that track different asset classes and rebalancing them periodically to ensure the portfolio remains on track.

Finally, an investor should monitor their portfolio regularly to ensure that it continues to meet their investment objectives. Any changes to the portfolio must be made based on objective assessments to avoid emotional or irrational decisions.

In conclusion, investing in ETFs is a well-established and effective method for building a diversified portfolio. By following these steps, an investor can make informed decisions and create a portfolio that aligns with their financial goals, risk appetite, and investment objectives.

Portfolios by level of risk

Investors have different levels of risk tolerance, which influences the types of portfolios that they may choose to build. Here are some common types of portfolios based on risk tolerance:

Conservative Portfolio

A conservative portfolio is suitable for investors who have a low tolerance for risk. This type of portfolio usually contains a mix of fixed-income securities such as bonds, money market funds, and low-risk stocks. The primary goal of this portfolio is to preserve capital and generate steady income with low volatility.

Moderate Portfolio

A moderate portfolio is suitable for investors who are willing to take on some level of risk to achieve moderate returns. This type of portfolio may contain a mix of stocks, bonds, and other asset classes. The goal of this portfolio is to achieve a balance between capital preservation, steady income, and moderate growth.

Aggressive Portfolio

An aggressive portfolio is suitable for investors who are willing to take on higher levels of risk to achieve potentially higher returns. This type of portfolio may contain a mix of high-risk stocks, small-cap stocks, and other high-risk investments. The goal of this portfolio is to achieve high growth, and investors should be prepared for higher volatility and potential losses.

Income Portfolio

An income portfolio is suitable for investors who prioritize generating income over capital appreciation. This type of portfolio usually consists of high-yielding fixed-income securities such as bonds, preferred stocks, and dividend-paying stocks. The goal of this portfolio is to generate a steady stream of income with minimal risk.

Growth Portfolio

A growth portfolio is suitable for investors who prioritize long-term growth over current income. This type of portfolio may contain a mix of high-growth stocks, mutual funds, and ETFs. The goal of this portfolio is to achieve long-term capital appreciation, and investors should be prepared for higher volatility and potential losses.

It’s essential to note that each investor’s risk tolerance is unique, and portfolios should be tailored to individual needs and goals. A financial advisor can help investors determine their risk tolerance and create a portfolio that aligns with their investment objectives.

Growth Portfolio – allocation breakdown

80% Equity / 20% Fixed Income

Fund	Name	Asset class	Weight
XIU.TO	Ishares S&P TSX 60 Index ETF	Equity	25%
ZSP.TO	BMO S&P 500 Index ETF	Equity	35%
ZQQ.TO	BMO Nasdaq 100 Hedged To CAD Index ETF	Equity	10%
ZEA.TO	BMO MSCI EAFE ETF	Equity	10%
CSAV.TO	CI High Interest Savings ETF	Fixed Income	10%
ZAG.TO	BMO Aggregate Bond Index ETF	Fixed Income	10%
Total			100%

100% Equity

			Growth
Fund	Name	Asset class	Weight
XIU.TO	Ishares S&P TSX 60 Index ETF	Equity	25%
ZSP.TO	BMO S&P 500 Index ETF	Equity	35%
ZQQ.TO	BMO Nasdaq 100 Hedged To CAD Index ETF	Equity	20%
ZEA.TO	BMO MSCI EAFE ETF	Equity	10%
ZEM.TO	BMO MSCI Emerging Markets Index ETF	Equity	10%
			100%

The recent stock market correction represents an opportunity to invest in quality Canadian securities at attractive prices. If you’re an investor looking to build a dividend portfolio, a good place to start is the Dividend Aristocrats list. In this article, we’ll be looking at 7 best dividend stocks to buy and hold right now. The selected stocks are near their 52-week lows and are part of the ‘Dividend Aristocrats’. We will review key financial indicators including several popular ratios. Finally, we will discuss the following securities in detail: Royal Bank, TD Bank, Enbridge and BMO.

Note: This list is only a starting point for further research and not a purchase recommendation.

This post is available in video format!

Selection criteria

The most important criterion is that the stock is a ‘Dividend Aristocrat’. That is to say a company known to pay and increase its dividends from year to year. To be part of the Canadian Dividend Aristocrat, a company must have paid and increased its dividends for at least 5 years in a row.

The list of “Dividend Aristocrats” is managed by the firm Standard and Poors. The index is titled S&P Canadian Dividend Aristocrats. It requires a minimum of 5 years of successive dividend increases. For the full list of Canadian Dividend Aristocrats stocks, please follow the link here.

Other criteria used are listed below:

Price close to the lowest price in the past 52 weeks
Dividend yield above 4%
Reasonable Price / Earnings Ratio
Low dividend payout ratio and sustainable dividends
Beta less than 1.5
Analyst consensus

Best Dividend Stocks to Buy and Hold

Current price vs 52 weeks low and high

Dividend yield

As you can see the list is dominated by financial stocks especially the big banks. The Canadian banking sector is among the most stable in developed economies. Canadian banks are also mostly ‘Dividend aristocrats’ with a history of paying and increasing their dividends year after year. In addition, the gradual increase in the prime rate by the central bank can only benefit banks in the short and medium term.

In the short to medium term, banks tend to pass on any increase in the cost of credit to their customers quickly, but interest on deposits follow much more slowly. This practice allows banks to improve their profits in the short term. Another strength of Canadian banks is their long-term growth potential. So, in addition to having access to a decent dividend income, one can expect to benefit from a long-term capital gain.

We also note the presence in the list of one non banking stock: Enbridge. Enbridge is a company with stable cash flows thanks to the business model specific to the Gas transmission industry (long-term contract with price fixed in advance and minimum quantity to be delivered guaranteed). The dividends of Enbridge is considered by analysts to be sustainable.

DGR Streak

Name	DGR Streak
MFC -Manulife Financial Corp	12
CM -CIBC	11
RY -Royal Bank of Canada	10
BMO -Bank of Montreal	11
BNS -BNS Bank	11
TD -TD Bank	10
ENB -Enbridge Inc.	27

Source: Finviz, DGR Streak: Number of consecutive years the stock paid and increased its dividends

15 Best Monthly Dividend Stocks in Canada for passive income

Full list of ‘Dividend Kings’ stocks by sector – 2022

Financial ratios and comments

As you can see in the tables below, the valuation of Canadian banks seems adequate. the Price to Earning multiple is around 10, which could represent a buying opportunity. The ratios that assess the ability to maintain dividends are all excellent. Dividend payout ratios are sustainable being below 60%.

Enbridge has a very high dividend payout ratio. It pays almost all of its cash flow in dividends. So there is little potential for growth.

According to analysts, the business model of Enbridge makes its dividend sustainable in the long term.

Definition:

P/E: Price to earnings ratio
Total Cash per Share: total cash divided by the number of shares
Payout Ratio: Dividend payout ratio (Dividend divided by the company’s earnings)
ROE: Return on Equity. That is to say, as a shareholder, what is your return on the equity you have invested.
Beta: Measure of volatility, for example a Beta of 0.5 means that historically when markets have fallen by 10%, a stock with a Beta of 0.5 will fall by 5% on average (less sensitive to the market’s mouvements)

Table 4: updated daily – best dividend stocks to buy and hold

Table 5: updated daily – best dividend stocks to buy and hold

Further analysis

TD Bank

TD is listed on the Toronto Stock Exchange (TSE). It’s a dividend aristocrat stock with 10-year consecutive dividend increases!

This major canadian bank has a very good track record of growth throughout its 100 year history. Their revenue and EPS have been steadily growing 4-5% per year for the past 5 years. They are actively working to grow their digital presence and are implementing several strategies to increase their revenue across their top three business lines.

TD is also forming a strategic alliance with several leading companies (e.g., Amazon (NASDAQ:AMZN) and Starbucks (NASDAQ:SBUX) to better connect with retail customers. They have also recently acquired several key businesses (p. Headlands Tech Global in 2021) to enhance their global reach.

Dividend growth over the past five years has been 7.91%. This is very good news for any investor. The continued increase in dividends helps investors cope with the impact of inflation.

Enbridge

Enbridge is one of the largest operators of pipelines and midstream energy infrastructure (Midstream) in North America. The company is listed on the Toronto Stock Exchange (TSX) under the symbol ENB. The title is recognized as a ‘dividend aristocrat’ i.e. a company that has a long history of increasing these dividends.

Highlights

transports approximately 25% of all crude oil produced in North America
Exports approximately 65% of Canadian production to the United States;
transports approximately 20% of all natural gas consumed in the United States with an extensive pipeline network that spans approximately 23,850 miles
provides natural gas utilities in Canada with 3.8 million metered connections in Ontario and Quebec serving more than 15 million people

Dividend history

The graph below demonstrates that the company’s cash flow continued to grow even during the 2008 financial crisis or more recently the pandemic. Over the last 5 years, the dividend has increased by 9.52%.

Business model

Enbridge makes its money by transporting crude oil, natural gas and related compounds through its pipelines and charging fees based on the volume of resources transported. Volume billing immunizes the business against fluctuations in commodity values.

Enbridge conducts all of its operations under long-term contracts that should remain in place despite any short-term economic problems. These contracts contain what are known as minimum volume commitments, which specify a certain minimum amount of resources that the customer must receive through the company’s pipelines or pay for anyway. These minimum volume commitments help ensure that Enbridge will be able to maintain cash flow even if production declines.

BMO

Bank of Montreal offers diversified financial services primarily in North America.

key strenghts:

The strength of their capital market segment makes them less vulnerable to a downturn in Canadian real estate.
BMO has the highest return on equity among Canadian banks.
BMO is recognized in the Canadian banking industry for the sustained growth of these non-interest revenues.
The dividend payout ratio is only 30% which means that the risk of the bank lowering its dividend is quite low.
BMO’s track record of net income growth and low dividend payouts present the safety of dividends.
BMO is a good buy for income-seeking investors who want to hold securities for the long term.
Dividend growth over the past five years has been 4.51%.

Royal Bank

Royal Bank of Canada is a Canadian multinational bank and the largest bank in Canada by market capitalization. The bank has $1.690 billion in assets, about 86,000 employees along with 1,300 bank branches and almost 4,400 ATMs and is, without a doubt, one of the largest and most successful banks in the world.

Royal Bank of Canada operates in five segments, allowing it to generate profits in a variety of ways in different market environments.
Royal Bank shares offer an attractive yield of 3.89%. The dividend represents 43% of the results. The company has increased its dividends for 10 consecutive years, a sign of a solid financial situation.
Dividend growth over the past five years has been 5.92%. This is very good news for any investor. The continued increase in dividends helps investors cope with the impact of inflation.
Beta is a measure of volatility. Royal Bank’s Beta is 0.72, which means the stock is less volatile than the broader market.

Video

TSX RY – Canadian Dividend aristocrat

RY trades in the Toronto Stock Exchange (TSE). RY is a dividend artistocrat stock with 10 years consecutive dividend increases!. The list of Canadian ”Dividend Aristocrats” stocks is managed by the firm Standard and Poors. The index is titled the S&P Canadian Dividend Aristocrats. It requires a minimum of 5 years of successive dividend increases. For the full list of Canadian Dividend Aristocrats stocks, please follow the link here.

RY: Stock analysis

Strengths

+ Royal Bank of Canada holds a very strong balance sheet and is fundamentally sound;

+ Well-positioned to take advantage of an environment with rising interest rates;

+ 10 consecutive years of dividend increases.

Weaknesses

– Competition from both large banks and fintech companies.

TSX RY – Dividend profile

RY stock offers an attractive yield. The dividend is safe as the pay out ratio is low. The bank increased its dividends for 10 consecutive years which is a sign of a solid financial situation.

The dividend growth in the past five years was 7.91%. This is really good news for any investor. The continuous increase in dividends helps investor cope with the impact of inflation.

The Beta is a measure of volatility. RY’s Beta is less than 1 meaning the stock is less volatile than the overall market.

The Bank witnessed both growth in earnings and revenues in the past 5 years. So, the increase in dividend was supported by actual growth in the banks revenues.

TSX RY – Financial data

RY profile

The Toronto-Dominion Bank (the Bank) operates as a bank in North America. The Company’s segments include Canadian Retail, U.S. Retail, Wholesale Banking and corporate.

TSE TD – Canadian Dividend aristocrat

TD trades in the Toronto Stock Exchange (TSE). TD is a dividend artistocrat stock with 10 years consecutive dividend increases!. The list of Canadian ”Dividend Aristocrats” stocks is managed by the firm Standard and Poors. The index is titled the S&P Canadian Dividend Aristocrats. It requires a minimum of 5 years of successive dividend increases. For the full list of Canadian Dividend Aristocrats stocks, please follow the link here.

TSX: TD Stock analysis

Strenghts

– Cross-border diversification. TD continues to expand in the US market. The latest trend is the announcement of a merger agreement that will unite TD and First Horizon. The deal will still need to obtain approval from US regulators. Following this merger, TD will be the sixth-largest bank in the US!

– Cost synergies expected from TD and Fisrt Horizon merger;

– Gorwth opportunities in the US retail market;

– 10 consecutive years of dividend increases.

Weaknesses:

– TD’s premium leisure and travel-oriented credit card business has been weak during the pandemic;

– The pandemic negatively impacted the growth in both personal and business lowns segments;

– Competition from both large banks and fintech companies.

TSE TD – Dividend profile

TD stock offers an attractive yield. The dividend is safe as the pay out ratio is low. The bank increased its dividends for 10 consecutive years which is a sign of a solid financial situation.

The dividend growth in the past five years was 7.91%. This is really good news for any investor. The continuous increase in dividends helps investor cope with the impact of inflation.

The Beta is a measure of volatility. TD’s Beta is less than 1 meaning the stock is less volatile than the overall market.

The Bank witnessed both growth in earnings and revenues in the past 5 years. So, the increase in dividend was supported by actual growth in the banks revenues.

TSE TD – Financial data

TD profile

In this post, we will go over 6 stocks that offer both attractive dividend yields and strong historical total returns. These stocks are ideal for long term investors looking for the best long-term dividend stocks. We will in analyze for each stock: the dividend yield, dividend growth, return on equity, level of debt and historical total returns.

Please always consult a financial advisor before making any investment decision.

Methodology

Below are the criteria used to select the best long term Dividend stocks:

Have a minimum capitalization of 1 billion dollars;
Had an annualized 3 year total return near or above 10%;
offer a minimum dividend yield of 4%;
Price earning ratio below 25;
Payout ratio below 100%
A high return on equity (above 10%)
Low Debt to Equity ratio.

Focus on total return

The total return on a stock is the sum of the annual dividends paid while the stock is held and the capital gain (or loss) realized when it is sold. As long as the share has not been sold, the capital gain estimated according to the share price is virtual (unrealized).

The Dividend Yield, or dividend to share price ratio, can be misleading. Indeed, a very high dividend yield is usually due to a price decline in the stock price. In this scenario the investor risks having only a small capital gain or even suffering a capital loss, if he sells his share. The total return on his investment may be low or negative, while the dividend yield displayed will be high.

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

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

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

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%.

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 decreases to reflect the loss of valuable cashflows. In the long term, the payment of dividends attracts shareholders and retains current shareholders. This has a positive effect on the share price. But on the other hand, an excessive levy on the resources of the company can penalize the capacity to finance future projects.

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;

How to interpret the PE Ratio

When the PE ratio is between 10 and 17, analysts consider generally that the stock is fairly priced. Below 10, it signals the undervaluation of the stock, or assumes future deficits for the company. Above 17, it tends to underline the overvaluation of the stock.

When the PE ratio is above 25, it is often synonymous with a speculative bubble or high expected profits. The PE ratio is very useful and relevant for comparing two companies with similar size and operating in the same sector of activity.

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Devon Energy Corp

Devon Energy Corporation engages in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States.

+ The company has enough free cashflow to sustain its dividends. Its payout ratio is low;

+ Attractive dividend yield

+ Devon increased its dividends in each of the last 5 years;

+ PE ratio is not high which suggest the company is fairly valued;

-Devon is a energy play which means its short term performance is heavily dependent on the price of oil. The Beta is at 2.47 meaning DVN is much more volatile than the overall market.

MED – Medifast Inc

Medifast, Inc manufactures and distributes weight loss, weight management, healthy living products in the United States and the Asia-Pacific.

+ Attractive dividend yield

+ Operates in a growing market and has a great business model (recurring revenue)

+ In the second quarter, revenues increased by 15% to $453M

+ Medifast increased its dividends by 39% in the past 5 years!

+ PE ratio is not high which suggest the company is fairly valued;

+Beta is 1.20, so it’s not a volatile stock even if it’s technically a small cap;

Source: Investor’s presentation – Large adressable market for Medifast

PNC – PNC Financial Services Group Inc

The PNC Financial Services Group, Inc. operates as a diversified financial services company in the United States. Segments: Retail Banking segment, Corporate & Institutional Banking and Asset Management Group. The company has 2,591 branches. It was founded in 1852 and is headquartered in Pittsburgh, Pennsylvania.

+ PNC increased its dividends by 17.76% in the past 5 years;

+ PNC has a low debt and payout ratio!

+ PE ratio is not high which suggest the company is fairly valued;

+ PNC Financial surpassed analyst expectations in Q2

+ Exposure to over 30 largest markets

+ Synergies from the BBVA acquisition allowed PNC to reduce expenses’ growth;

Source: Investors’ presentation – Growth of revenues (quarterly view)

Source: Investors’ presentation – Nonintesrest expense overview

JEF – Jefferies Financial Group Inc

Jefferies Financial Group Inc. engages in the investment banking and capital markets, and asset management businesses. The company operates in Investment Banking and Capital Markets, Asset Management, Merchant Banking, and Corporate segments. Jeffries serves clients in the Americas, Europe, the Middle East, Africa, and Asia

+ JEF increased its dividends by 29% in the past 5 years!

+ Investment Banking is the most profitable segment for JEF. The company plans to reduce the size of its merchant banking portfolio as part of a restructuring aimed at focusing on its global investment banking business

+ Jefferies Financial Group Inc have a low payout ratio

+ PE ratio is not high which suggest the company is fairly valued;

T – Telus (or symbol TU for US investors)

TELUS Corporation, together with its subsidiaries, provides a range of telecommunications and information technology products and services in Canada. It operates through Wireless and Wireline segments. The company runs also Telus Health which provides digital solutions to insurance companies, physicians and hospitals.

+ Telus is a dividend aristocrat stock with 17 years of consecutive dividend increases!

+ The growth of Telus health will definitely help boost the company’s earning (recent of acquisition of LifeWorks $2.3B demonstrate the commitments to this segment)

+ Attractive dividend yield

+ Telus increased its dividends by 6.68% in the past 5 years;

+ Telus has a high payout ratio at 91%

+ PE ratio seems high is at 19. It’s higher than its rival Bell Canada (BCE). This being said, Telus remains attractive considering it offers both dividend and growth potential;

TROW – T. Rowe Price Group Inc

T. Rowe Price Group, Inc. provides investment services to individuals, institutional investors, retirement plans, financial intermediaries, and institutions.

+ T. Rowe increased its dividends by 14.87% in the past 5 years;

+ PE ratio is not high which suggest the company is fairly valued;

-The current market conditions are not favourable for T Rowe. Asset management companies tend to underperform during market corrections or decline, since most of their revenues are tied to the value of the asset they manage.

In this post, we will be presenting stocks with the highest dividend yields in Canada. This list is starting point for income seeking investors to further research and select the best fit for their portfolio. We will also be discussing strategies to follow when investing in dividend stocks.

Highest Dividend Stock Canada

Highest dividend stock Canada – Data updated on a daily basis

Best dividend stocks to buy – Dividend aristocrats 2022

Best Canadian Reits 2022

Best Dividend Stocks 2022 – with Strong Cash Flow

Investment horizon

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).

How to select dividend stocks?

Look at the payout ratio

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

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

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

Focus on total return

How REITs operate?

As you can see above the list is dominated by Reits. See below a definition and a description of the activities of a REIT.

A REIT is a real estate company. Its business is to invest the capital it raises in the acquisition or construction of buildings, with a the purpose of leasing them. Its activity provides it with rents and, where appropriate, capital gains. REITs are listed on the stock exchange, so REITs shares are open to individual investors within an regular investment account.

However, REITs have several particularities. They are present in different sectors of activity. They invest, for example, in different types of assets, such as shopping centres, offices, logistics buildings, hotels, among others. The other specificity of listed property companies is that they use financial leverage. That is to say that these companies will have equity to invest in real estate. But they will also use the loan to be able to maximize the return on their equity.

The third specificity of listed real estate investment companies is that they benefit from a tax exemption. Their income and capital gains are taxed at the level of its shareholders and not at the level of the property company itself. Note that REITs are required to redistribute to their shareholders at least 95% of their revenues. After deduction of costs, rents are distributed to shareholders as dividends, without being taxed at the company level.

In this post, we will go over five stocks that offer attractive dividend yields and strong cash flow ratios to sustain them. These stocks are ideal for long-term investors looking for the best dividend stocks 2022. We will analyze each stock: the dividend yield, dividend growth, return on equity, cash dividend payout ratio and free cash flow growth.

Methodology

Below are the criteria used to select the best long term Dividend stocks:

Have a minimum capitalization of 10 billion dollars;
offer a minimum dividend yield of 4%;
Price earning ratio below 25;
Cash Dividend Payout ratio below 50%
A high return on equity
Growing Free Cashflows
Recent dividend increases

Cash dividend payout ratio vs Dividend payout ratio

The Dividend distribution rate is the ratio between the dividends paid and the company’s profits. A sustainable payout ratio can vary from one industry to another and from company to company. Indeed, there is no standard. Some ‘mature’ industries with little growth potential can have dividend payout rates up to 100% of their profits. In extreme cases, some companies take on long-term debt to be able to pay their dividends in the short term!

This is why investors should pay particular attention to the distribution rate. The purpose is to assess the sustainability of dividends.

The best indicators are:

– A dividend payout ratio below 80%. But since this ratio is the ratio between dividends and earnings, analysts prefer the cash dividend payout ratio. Companies can manipulate earnings but not the cash in hand!

– Analysis of cash flow growth is also an excellent indicator of the sustainability of dividends. Indeed, the continued decline in the company’s cash flows indicates a possible future dividend cut.

– The level of Debt (Debt to Equity ratio, Long-term debt to Equity, Current ratio, Interest coverage and Cash ratio). The purpose is to assess both long-term and short-term debt and the pressure they have on the company’s financial situation.

Best Dividend Stocks 2022

Devon Energy (DVN)

Devon Energy Corporation engages in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States.

Ticker	DVN
Name	Devon Energy
Div Yield	7.75%
Market Cap	39.37B
Return on Equity	57.26%
Payout Ratio	45.20%
Free Cashflow per Share (Annual)	4.349
Dividend Growth 1yr	34.83%
Div paid (TTM)	3.6
Dividend Growth 5yr	36.22%
Free Cashflow 3yrs Growth	75.72%
Cash Dividend Payout ratio	45.47%

Y Charts – October 3rd 2022 – Best Dividend Stocks 2022

Strengths

+ The company has enough free cashflow to sustain its dividends. The payout ratio is at 45%;

+ Attractive dividend yield 7.75%!

+ Devon increased its dividends in each of the last 5 years. Overall in the past 5 years, the dividend grew by 36%. As mentioned above, the dividend can be considered safe since Devon’s cash payout ratio is really low;

Weaknesses

-Devon is an energy play which means its short-term performance is heavily dependent on the price of oil. The Beta is at 2.55 meaning DVN is much more volatile than the overall market.

LyondellBasell Industries NV (LYB)

LyondellBasell Industries N.V. operates as a chemical company in the United States and internationally. The company is a major producer and refiner of plastic resins.

The company operates in six segments:

Olefins and Polyolefins
Olefins and Polyolefins (International)
Intermediates and Derivatives;
Advanced Polymer Solutions;
Refining; and
Technology.

Ticker	LYB
Name	LyondellBasell Industries NV
Div Yield	6.16%
Market Cap	24.56B
Return on Equity	45.94%
Payout Ratio	59.29%
Free Cashflow per Share (Annual)	17.17
Div paid (TTM)	9.78
Dividend Growth 5yr	5.92%
Free Cashflow 3yrs Growth	19.44%
Cash Dividend Payout ratio	25.91%

Y Charts – October 3rd 2022 – Best Dividend Stocks 2022

Strengths

+ Diversified segments which help the company alleviate the risk of a recession in the economy

+ Strong balance sheet with higher Return On Equity than competitors. A higher ROE indicate sound management of expenditures especially during time of rising costs

+ Attractive dividend yield over 6%

+ Low price to earning ratio which indicate that the stock at the current levels is affordable

+ Dividend increased 12 years in a row and the cash dividend ratio is less than 30%! This means the dividend is sustainable in the future. In addition, management supports continuing its current dividend policy. CEO Peter Vanacker said in a statement, “As the incoming CEO, I would like to make it very clear that I support the continuation of our balanced and disciplined capital allocation strategy with both dividends and share repurchases playing a central role.”

Weaknesses

–In case Natural Gaz prices soar and stay high in the long term, the company’s financial position might deteriorate since Natural gas is its main input cost

Source: LyondellBasell Investors’ relations

Canadian Natural Resources Ltd (CNQ)

Canadian Natural Resources Limited acquires, explores for, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids (NGLs). CNQ is present primarily in Western Canada; the UK; and Offshore Africa.

Strengths

Ticker	CNQ
Name	Canadian Natural Resources Ltd
Div Yield	4.74%
Market Cap	53.76B
Return on Equity	30.68%
Payout Ratio	23.35%
Free Cashflow per Share (Annual)	6.712
Dividend Growth 1yr	11.03%
Div paid (TTM)	2.01
Dividend Growth 5yr	17.55%
Free Cashflow 3yrs Growth	22.03%
Cash Dividend Payout ratio	21.73%

Y Charts – October 3rd 2022 – Best Dividend Stocks 2022

+ Low Cash Dividend Payout ratio which that CNQ’s dividend is sustainable

+ Market conditions have been so far favourable to Energy stocks. The S&P/TSX Capped Energy Index is up 34.4% so far year (in comparison to the S&P/TSX Composite Index, which is down -13%).

+ Operating cash flow doubled, to $5.9 billion (Canadian dollars). This great performance pushed CNQ increased its dividend and pay a special dividend of $1.50 a share on August 28.

+ CNQ is Canadian dividend aristocrats with 22 years of dividend increases

AbbVie (ABBV)

AbbVie Inc. discovers, develops, manufactures, and sells pharmaceuticals in the US and international markets.

Ticker	ABBV
Name	AbbVie Inc
Div Yield	4.12%
Market Cap	237.30B
Return on Equity	87.20%
Payout Ratio	76.46%
Free Cashflow per Share (Annual)	12.37
Dividend Growth 1yr	2.07%
Div paid (TTM)	5.42
Dividend Growth 5yr	17.93%
Free Cashflow 3yrs Growth	19.80%
Cash Dividend Payout ratio	42.11%

Y Charts – October 3rd 2022 – Best Dividend Stocks 2022

Strengths

+ AbbVie’s best selling drug (Humira) is widely used for a variety of conditions and continues to boost profits. Anlaysts expect however sales of Humira to slow with the loss of Humira’s exclusivity

+ Immunology and the neuroscience segments grew in the double digits in the last quarter. In the immunology field, drugs such as Rinvoq and Skyrizi should insure AbbVie profitability in the future. Analysts expect the combined sales of these two drugs to reach $15 Billion in 2025

+ Currently the stock’s Price earning ratio is low which indicates that it’s affordable at these levels

+ AbbVie is a Dividend Kings with a long history of paying and increasing its dividends every year for over 50 years! The dividend is sustainable in the future considering the company cash dividend payout ratio is still relatively low at 40%

+ Dividend yield is 4.12% which higher than similar firms in the pharmaceutical field

Weaknesses

-Investors continue to worry about the loss of exclusivity for the company’s star drug ‘Humira’. The stock’s price performance is directly related to the capacity of management to prove that the new developed drugs will sustain its revenues in the future.

Royal Bank stock (RY)

Ticker	RY
Name	Royal Bank of Canada
Div Yield	4.18%
Market Cap	125.31B
Return on Equity	16.88%
Payout Ratio	41.36%
Free Cashflow per Share (Annual)	32.79
Dividend Growth 1yr	3.60%
Div paid (TTM)	3.766
Dividend Growth 5yr	7.04%
Free Cashflow 3yrs Growth	57.20%
Cash Dividend Payout ratio	10.91%

Y Charts – October 3rd 2022 – Best Dividend Stocks 2022

Strengths

+ Royal Bank of Canada holds a very strong balance sheet and is fundamentally sound;

+ Well-positioned to take advantage of an environment with rising interest rates;

+ Excellent Return On Equity (ROE) at 18.28% (back to pre-pandemic levels);

+ 10 consecutive years of dividend increases.

Weaknesses

– Competition from both large banks and fintech companies.

Investment objective

HISA High Interest Savings Account Fund was launched by Evolve ETF on November 20, 2019. Its primary objective is the preservation of capital. The holdings of the fund are primarily high interest saving accounts.

Ticker: HISA.NE

HISA is great for:

– Conservative investors who would like to invest in a high interest low risk investment;

– Investors who would like to keep some cash on the side for future investment opportunities.

HISA price evolution in the past 5 years (Yahoo finance)

ZWC – Full review of BMO High Dividend ETF Covered Call

Review of VDY – Vanguard FTSE Canadian High Dividend Yield Index

HISA ETF Dividend yield

The trailing dividend yield (past 12 months) is 1.16%. However, the forward dividend yield based on the last distribution is around 3%.

Yield and Asset under management as of September 22nd (source: Evolve ETF website)

HISA ETF performance

	YTD	1Y	2Y
HISA	1.19	1.35	0.96

As of September 22nd (Issuers website) – HISA ETF

Review HYLD: Hamilton Enhanced U.S. Covered Call ETF

HISA Fees

The effective annual management fee for HISA will be five basis points (0.05%) plus applicable sales taxes. It’s one of the lowest among this category of ETFs. See below Evolve ETF’s announcement regarding their fees:

Evolve Announces Fee Reduction on High Interest Savings Account Fund (Ticker: HISA)

HISA ETF Dividend distribution

EX-DIV DATE:	PAYMENT DATE:	PAYMENT AMOUNT
01/31/22	02/07/22	$0.02357
02/28/22	03/07/22	$0.02059
03/31/22	04/07/22	$0.03304
04/28/22	05/06/22	$0.03956
05/30/22	06/07/22	$0.05989
06/29/22	07/08/22	$0.07468
07/28/22	08/08/22	$0.09621
08/31/22	09/08/22	$0.13448
09/28/22	10/07/22	–
10/31/22	11/07/22	–

What’s an ETF?

ETF is an exchange traded fund. This fund is managed by a professional manager. There are several ETF issuers in Canada:

• Banks (BMO, TD… etc)

• Investment companies such as (Vanguard, iShares, etc.)

There are currently over 1000 ETFs available on the market. There is an ETF for every type of investor. They are suitable for active or passive management.

What type of ETFs are there?

ETFs are so popular to the point where there is on for each taste:

Index ETFs: tracks a major index like the TSX or the S&P500 or the NASDAQ…etc
Fixed income ETFs: tracks an index but for fixed income (bonds, treasury bills…etc)
Commodity ETFs: they track the price of a commodity Oil, Gas, Gold, Silver…etc
Sector driven ETFs: they invest in a specific sector/industry for instance Blockchain, Retail, Energy…etc
Multi asset ETF: they are a hybrid, they will invest for example 50% in Stock index and 50% in Bond index

You get the idea! You can constitute now a well diversified portfolio just by using ETFs. That’s why several companies are now offering ‘Robo advisor’ which is basically a portfolio of ETFs that fit your risk tolerance. They charge a small fee for this service.

How can I buy an ETF?

It’s the same process as buying a stock. You need simply to access the online website of your broker and place the order using the ticker/symbol of the ETF

Who are the main issues of ETFs in Canada?

BMO Asset Management
Claymore Investments
BlackRock Inc
Horizons ETFs Management
Vanguard Investments Canada Inc.

In this article, we’ll conduct a comprehensive review of the Best 10 dividend ETFs in the United States for the year 2023. Our analysis will revolve around key metrics such as dividend yield, performance over a five-year span, and volatility. Within each ETF’s profile, we will offer insights into their investment objectives and holdings, providing you with a well-rounded perspective on these investment options.

Best dividend stocks to buy – Dividend aristocrats 2023

Full list of ‘Dividend Kings’ stocks by sector – 2023

Best Dividend ETF 2023 (Top 10)

Symbol	Name	Mgmnt Fee	AUM in B
VIG	Dividend Appreciation Vanguard	0.06%	66
VYM	High Dividend Yield Vanguard	0.06%	45
SCHD	Schwab US Dividend Equity	0.06%	34
DGRO	Dividend Growth Ishares Core	0.08%	23
DVY	Select Dividend Ishares	0.38%	22
SDY	S&P Dividend SPDR	0.35%	21
FVD	Value Line Dividend Idx FT	0.70%	12
NOBL	S&P 500 Dividend Aristocrats	0.35%	10
HDV	High Dividend Ishares Core	0.08%	9
RDVY	Rising Dividend Achievers FT	0.50%	9

Source: Barchart – Best dividend etf 2023

Performance comparison

Among the 10 dividend ETFs compared, let’s take a closer look at the three best-performing ones based on their 5-year average returns:

RDVY (6.56% YTD, 14.89% 3-year avg, 9.61% 5-year avg): RDVY stands out as a top performer, delivering an impressive 9.61% average return over the past 5 years. This ETF has also shown robust performance year-to-date. Investors seeking consistent growth and dividend income may find RDVY particularly attractive.

VIG (5.29% YTD, 9.79% 3-year avg, 9.12% 5-year avg): VIG is another strong contender, offering a competitive 9.12% average return over the past 5 years. Despite a slightly lower YTD return compared to RDVY, VIG has demonstrated stability and a solid track record, making it a reliable choice for income-focused investors.

SCHD (-2.89% YTD, 13.12% 3-year avg, 9.50% 5-year avg): Despite a negative YTD return, SCHD has posted an impressive 9.50% average return over the last 5 years. This ETF’s 3-year average return of 13.12% is particularly noteworthy, suggesting resilience and strong dividend performance over the medium term.

Dividend yield comparison

Symbol	Div Yield
VIG	1.78%
VYM	2.76%
SCHD	2.88%
DGRO	2.04%
DVY	2.91%
SDY	2.59%
FVD	1.81%
NOBL	1.92%
HDV	3.14%
RDVY	1.21%

Source: Barchart – Best dividend etf 2023

HDV offers the highest dividend yield among the top 10 Dividend ETFs selected.

VIG – Dividend Appreciation Vanguard

VIG, short for the Vanguard Dividend Appreciation ETF, is strategically designed to invest in businesses with a strong track record of consistently increasing dividends over time. This impressive exchange-traded fund (ETF) meticulously tracks the S&P U.S. Dividend Growers Index, which is renowned for featuring companies committed to shareholder value through consistent dividend growth.

One noteworthy characteristic of VIG is its emphasis on large-cap stocks. The ETF predominantly allocates its investments to established, industry-leading companies with substantial market capitalization. This focus on large-cap stocks not only provides stability and reliability but also aligns with the fund’s core objective of delivering long-term dividend growth to its investors. Furthermore, VIG’s comprehensive portfolio is curated to capture the potential for sustained income and capital appreciation, making it an attractive choice for investors seeking a blend of stability and income potential in their portfolios.

VIG Holdings

HOLDINGS	% OF FUNDS
Microsoft Corp. (MSFT)	4.09%
UnitedHealth Group Inc. (UNH)	3.69%
Johnson & Johnson (JNJ)	3.58%
JPMorgan Chase & Co. (JPM)	3.09%
Procter & Gamble Co. (PG)	2.84%

VIG Holding: Best Dividend ETF 2023

VYM – High Dividend Yield Vanguard

VYM, the Vanguard High Dividend Yield ETF, is an investment option that focuses on common stocks of companies known for their relatively high dividend yields. It tracks the FTSE High Dividend Yield Index, which includes companies recognized for their consistent dividend payouts.

Primarily, VYM invests in large-cap equities, emphasizing stability within its portfolio. This approach aims to align with investors seeking well-established companies with substantial market capitalization. Additionally, VYM places an emphasis on selecting stocks with above-average dividend yields. This approach may appeal to investors looking to enhance their income potential while maintaining exposure to the typically stable large-cap equity segment. In summary, VYM offers a diversified approach to achieve financial goals, striking a balance between capital appreciation and income generation.

VYM Holdings

HOLDINGS	% OF FUNDS
Johnson & Johnson (JNJ)	3.13%
JPMorgan Chase & Co. (JPM)	2.68%
Procter & Gamble Co. (PG)	2.47%
Exxon Mobil Corp. (XOM)	2.35%
Chevron Corp. (CVX)	2.11%

VYM Holdings – Best Dividend ETF 2023

SCHD – Schwab US Dividend Equity

VYM, or the Vanguard High Dividend Yield ETF, is an investment option that focuses on common stocks of companies recognized for their relatively high dividend yields. It closely tracks the performance of the FTSE High Dividend Yield Index, known for including companies with a history of consistent dividend distributions.

The primary strategy of VYM is to invest in large-cap equities, which can provide stability and reliability within its portfolio. This approach caters to investors who value well-established companies with substantial market capitalization.

Additionally, VYM places an emphasis on selecting stocks with above-average dividend yields, making it potentially attractive to investors seeking to enhance their income potential. This balanced approach, offering a mix of capital appreciation and income generation, positions VYM as a diversified tool for pursuing various financial objectives.

SCHD holdings

Symbol	Name	Percent of Assets (%)
MRK	MERCK & CO INC	4.26%
PEP	PEPSICO INC	4.23%
KO	COCA-COLA	4.22%
AMGN	AMGEN INC	4.21%
PFE	PFIZER INC	4.19%

DGRO – Dividend Growth Ishares Core

DGRO invests in U.S. equities with a history of consistently growing dividends. The fund manager aims also to provide a diversified investments across various sectors. Also, the sustainability of the dividendes is a key factor in the selection process.

DGRO Holdings

Ticker	Name	Weight %
JNJ	JOHNSON & JOHNSON	2.86
PFE	PFIZER INC	2.86
MSFT	MICROSOFT CORP	2.84
AAPL	APPLE INC	2.81
PG	PROCTER & GAMBLE	2.62
JPM	JPMORGAN CHASE & CO	2.56
MRK	MERCK & CO INC	2.28
KO	COCA-COLA	2.10
HD	HOME DEPOT INC	1.95
PEP	PEPSICO INC	1.90

DVY – Select Dividend Ishares

DVY invests in high dividend paying U.S. equities. Most of the portfolio is made of large cap stocks. The investment approach used the following conditions:

Consistent history of dividends
At least 5-year records of paying dividends

DVY Holdings

Ticker	Name	Weight %
MO	ALTRIA GROUP INC	2.51
OKE	ONEOK INC	2.03
VLO	VALERO ENERGY CORP	1.87
IBM	INTERNATIONAL BUSINESS MACHINES CO	1.78
PM	PHILIP MORRIS INTERNATIONAL INC	1.78

SDY – S&P Dividend SPDR

SDY invests in companies that have consistently increased their dividend for at least 20 consecutive years. The aim is to provide not only income but also growth. The stocks are weighted within the portfolio by yield.

SDY Holdings

Name	Weight
Exxon Mobil Corporation	2.82%
Chevron Corporation	2.50%
AbbVie Inc.	2.08%
International Business Machines Corporation	1.96%
South Jersey Industries Inc.	1.93%

FVD – Value Line Dividend Idx FT

FVD is an index ETF that tracks the Value Line® Dividend Index. Value Line® selects companies with a higher than average dividend yield. There is a mimimum market capitalization of less than $1 billion for any stock selected.

As you can see below, each equity part of this ETF has the same weight (around 0.53%).

FVD Holdings

Holding	Percent
Entergy Corporation	0.54%
Exelon Corporation	0.54%
General Mills, Inc.	0.54%
Archer-Daniels-Midland Company	0.53%
AT&T Inc.	0.53%
Crown Castle International Corp.	0.53%
Kellogg Company	0.53%
Merck & Co., Inc.	0.53%
Public Storage	0.53%
Rogers Communications Inc. (Class B)	0.53%

NOBL – S&P 500 Dividend Aristocrats

NOBL invests in the S&P 500® Dividend Aristocrats® Index. The index includes businesses that have raised dividends for at least 25 consecutive years.

NOBL Holdings

Weight	Ticker	Description
2.66%	NUE	NUCOR CORP
2.16%	ADM	ARCHER-DANIELS-MIDLAND CO
2.07%	CVX	CHEVRON CORP
1.90%	CAH	CARDINAL HEALTH INC
1.88%	ABBV	ABBVIE INC
1.85%	XOM	EXXON MOBIL CORP
1.83%	ED	CONSOLIDATED EDISON INC
1.81%	CINF	CINCINNATI FINANCIAL CORP

HDV – High Dividend Ishares Core

HDV invests in high dividend paying U.S. equities. The stocks part of the portfolio have been screened for financial health.

HDV Holdings

Ticker	Name	Weight %
XOM	EXXON MOBIL CORP	7.77
ABBV	ABBVIE INC	6.74
JNJ	JOHNSON & JOHNSON	5.83
CVX	CHEVRON CORP	5.55
JPM	JPMORGAN CHASE & CO	5.49
VZ	VERIZON COMMUNICATIONS INC	5.28
PG	PROCTER & GAMBLE	4.41
PM	PHILIP MORRIS INTERNATIONAL INC	4.15

RDVY – Rising Dividend Achievers FT

RDVY is an index ETF that meticulously tracks the NASDAQ US Rising Dividend Achievers Index (the “Index”). The underlying index adheres to a distinctive approach, which can be summarized as follows:

Firstly, it excludes Real Estate Investment Trusts (REITs), aiming to focus on a diversified selection of companies from various sectors.

To be considered for inclusion, a stock must meet specific criteria, including a minimum trading volume of $5 million, a track record of paying growing dividends, and a history of increasing earnings. Additionally, these selected companies should have a low pay-out-ratio, not exceeding 65%, indicating that they retain a significant portion of their earnings for growth and stability. Furthermore, a high Cash to Debt ratio, greater than 50%, is required, underscoring the importance of financial health and liquidity. Lastly, to ensure diversification, the index limits exposure to any single sector to a maximum of 30%, promoting a well-balanced investment approach across various industries and reducing sector-specific risks.

RDVY Holdings

Holding	Percent
Archer-Daniels-Midland Company	2.41%
Corteva Inc.	2.29%
Anthem, Inc.	2.26%
Cincinnati Financial Corporation	2.26%
EOG Resources, Inc.	2.22%
Pioneer Natural Resources Company	2.22%
The Allstate Corporation	2.21%
UnitedHealth Group Incorporated	2.21%
Humana Inc.	2.19%
Aflac Incorporated	2.17%

Below you will find details about the top 3 ETFs in the United States based on their Asset Under Management. All 3 are index ETFs. After the presentation of each ETF, you will find a detailed analysis with pros and cons.

SPDR S&P 500 ETF (SPY)

With 333 Billion dollars asset under management, SPY is the king of the hill! Here’s some key facts:

The management expense ratio is only 0.09%. This means if the ETF make a 10% gain, there is only 0.09% that will be deducted to cover the fund’s management expenses;
The ETF will try to mimic the performance of the S&P 500 index. The S&P 500 index includes the largest 500 companies traded in the US;
Performance of this ETF is shown below (data extracted from https://etfdb.com/ Cumulative return)

This ETF has a cumulative return of 113.9% over 5 years period which is really remarkable. This performance can be explained by the fact that the S&P 500 is more and more dominated by the technology sector (companies like Facebook, Google, Amazon…etc). This sector has shown great strength and also was not impacted by the pandemic.

This ETF is popular and it’s understandable. With low MER and high diversification which includes only large solid companies (mostly Blue chips), it’s a no brainer.

BTW, it’s worth noting that this ETF was the first ever ETF created in the US.

Holdings:

Name	Weight
Apple Inc.	6.73%
Microsoft Corporation	5.69%
Amazon.com Inc.	4.48%
Tesla Inc	2.00%
Facebook Inc. Class A	1.98%
Alphabet Inc. Class A	1.79%
Alphabet Inc. Class C	1.73%
Berkshire Hathaway Inc. Class B	1.40%
Johnson & Johnson	1.34%
JPMorgan Chase & Co.	1.24%

Analysis and comments regarding SPY

Pros: The companies held in the portfolio of SPY are all large or mega cap companies. So, it’s basically dominant players in their industries and the largest in the country. This gives any investor an exposure to a high quality diversified portfolio. Whether you have a small amount to invest or a large one, one of the easiest ways to benefit from the return of large corporations is to buy SPY.

Cons: the MER in comparison for instance to ishares Core S&P 500 ETF (IVV) is high. SPY charges 0.09% MER while IVV has an MER of only 0.03%. Notes both ETFs have the same objective and holdings. Index investing is subject to market volatility. However, if you are long term investor this should not be a concern.

iShares Core S&P 500 ETF (IVV)

iShares Core S&P 500 ETF (Ticker IVV) is very similar to SPY (SPDR S&P 500 ETF). Same objective, which is tracking/mimicking the performance of the S&P 500. This ETF has 242 Billion dollar in assets! The MER is super low at 0.03 % only. That’s lower than the most popular ETF in the US the SPDR S&P 500 ETF which MER is 0.09%.

The performance of the fund is quite similar to SPY since both track the S&P500 (data extracted from https://etfdb.com/ Cumulative return)

This ETF has a cumulative return of 114.12% over 5 years period which is really remarkable and a bit superior to SPY. And, you guessed it! It has a higher return because the MER is lower.

Holding

Name	Weight (%)
APPLE INC	6.72%
MICROSOFT CORP	5.68%
AMAZON COM INC	4.47%
TESLA INC	2%
FACEBOOK CLASS A INC	1.97%
ALPHABET INC CLASS A	1.78%
ALPHABET INC CLASS C	1.73%
BERKSHIRE HATHAWAY INC CLASS B	1.4%
JOHNSON & JOHNSON	1.34%

Analysis and comments regarding IVV

Pros: The companies held in the portfolio of IVV are all large or mega cap companies (similar to SPY). IVV has the same advantages of SPY with a lower MER. It’s definitely a great choice.

Cons: Index investing is subject to market volatility. However, if you are long term investor this should not be a concern.

Vanguard Total Stock Market ETF (VTI)

The Vanguard Total Stock Market ETF (VTI) is in the third spot in the list of the largest ETFs in the United states with Asset under management of over 211 Billion dollars. The objective of this ETF is to track the whole stock market whether it’s Large mega cap part of the S&P500 or the mid/small caps. So, it offers an exposure to the market in large with a wide range of stock holdings.

One other strength of this ETF is its MER which is only 0.03%.

The performance of this ETF is slightly better than SPY and VTI (data extracted from https://etfdb.com/ Cumulative return)

Holdings

Name	Weight
Apple Inc.	5.28%
Microsoft Corporation	4.37%
Amazon.com Inc.	3.61%
Facebook Inc. Class A	1.71%
Tesla inc	1.39%
Alphabet Inc. Class A	1.38%
Alphabet Inc. Class C	1.27%
Johnson & Johnson	1.08%
Berkshire Hathaway Inc. Class B	1.07%
JPMorgan Chase & Co.	1.01%

Analysis and comments regarding VTI

Pros: Has the largest number of holdings in the top 3 because this ETF tries to mimic the whole market (Large, mid and small caps). The MER is low at 0.03%! The performance of this ETF (cumulative return) was highest among the Top 3.

Cons: Even though, this ETF tracks the whole market it still has most of the value of its holding in the top 500 companies which is similar to IVV and SPY. Index investing is subject to market volatility. However, if you are long term investor this should not be a concern.