vdy stock

Review of VDY – Vanguard FTSE Canadian High Dividend Yield Index

What’s VDY stock?

VDY is one of the most popular Canadian dividend ETFs. It provides instant exposure to a high quality portfolio of high dividend paying stocks. In this post, we will be going over VDY’s objective, strategy, volatility and performance. We will also compare VDY stock with its rival ETFs.

VDY is Canadian dividend ETF. It invests exclusively in the Canadian stock market. VDY’s objective is to replicate the performance of the FTSE Canada High Dividend Yield Index, which consists of Canadian stocks having a high dividend yield.

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What is FTSE High Dividend Yield Index?

FTSE is a world leader in the creation and management of indexes. The high dividend yield index follows the steps show below:

  • Select companies part of the borad Canadian equity index also called FTSE Canada Index;
  • Gather data on the 12 months forward dividend yield using I/B/E/S (Institutional Brokers’ Estimate System managed by Thomson Reuters)
  • Exclude all stocks that pay or forecasted to pay in the next 12 months 0 regular dividend;
  • Establish a ranking and screens periodically for liquidity.

Is VDY a good investment?

VDY stock vs XDV and XEI

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

Table 1: AUM and MER

ETF AUM*MER*
XDV – Ishares Canadian
Select Div Index
                               1,7340.55
XEI – Ishares S&P TSX
Comp High Div Index
                               1,0880.22
VDY – Vanguard FTSE
CDN High Div Yld Index
                                1,1370.21
Source: Barchart – VDY Stock

Looking at the management fees, VDY is attractive. The MER is only 0.21% in comparison with XDV, which stands at 0.55%.

Table 2:  VDY Stock – Performance comparison and analysis

Updated every 15 minutes – VDY Stock

VDY has the best long term performance in both the 3 and 5 years span.

In terms of allocation, the banking sector dominates both VDY and XEI holdings. It’s essential to keep this in mind when constructing your portfolio. In essence, you want your overall holdings to be diversified across various sectors.

XDV holds 30 high dividend-paying stocks in its holdings while VDY 39. In terms of volatility, XDV and VDY have the same volatility (Beta: 0.9). Since VDY offers a better performance, it’s clear it’s a better choice than XDV.

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Table 3: Dividend schedule and Beta

ETFMonthly
Div
Beta*
XDVYes0.9
XEIYes1.1
VDYYes0.9
Source: TD Market research, Beta is measure of volatility over 5 years period. The higher the Beta / The higher the volatility. A beta of 1 means the stock or ETF is as volatile as the TSX.

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VDY Stock Morningstar rating

The Morningstar rating for VDY is 5 stars:

Rating: 5 out of 5.

How much is the dividend for VDY?

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

TypeEx-div
Date
Record
Date
Payment
Date
Total
Distribution
per Unit
Income29 Apr02 May09 May$0.115010
Income31 Mar01 Apr08 Apr$0.155311
Income28 Feb01 Mar08 Mar$0.154913
Income31 Jan01 Feb08 Feb$0.136834
Income30 Dec31 Dec10 Jan$0.122368
Capital
Gains (ETFs)
30 Dec31 Dec10 Jan$0.158938
Please refer to issuers’ website for the most up-to-date data –

What Holdings are in VDY?

Holding Name% of
Market
Value
Royal Bank of Canada13.86%
Toronto-Dominion Bank12.62%
Enbridge Inc.7.46%
Bank of Nova Scotia7.45%
Bank of Montreal6.63%
Canadian Imperial
Bank of Commerce
4.80%
Canadian Natural
Resources Ltd.
4.67%
TC Energy Corp.4.51%
Please refer to issuers’ website for the most up-to-date data

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VDY Sectors allocation

SectorFund
Financials57.1%
Energy26.3%
Telecommunications7.8%
Utilities5.9%
Consumer Discretionary1.7%
Please refer to issuers’ website for the most up-to-date data

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