XEI ETF

Review of XEI – Ishares S&P TSX Comp High Div Index ETF

What’s the objective of XEI ETF?

XEI managers follow a passive strategy consisting of tracking an index. The main objective is to replicate the performance of the S&P/TSX Composite High Dividend Index ETF. Standard & Poors manages the index and establishes the criteria’s used for selecting components. This ETF is ideal for investors who are seeking long term capital growth by investing in Canadian companies operating across diversified sectors.

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

Updated daily – XEI ETF

S&P/TSX Composite High Dividend Index

The S&P/TSX Composite High Dividend Index is an index focused on dividend income. The index is made up of 50 to 75 stocks selected from the S&P/TSX Composite. The weight of each Constituent Issuer is limited to 5%, while each sector is capped at 30% weight.

Criteria used by the index:

  • Market Capitalization: To be eligible for inclusion in the S&P/TSX Composite, a security must represent a minimum weight of 0.04% of the index
  • Liquidity
  • Domicile: The primary stock exchange listing is on the Toronto Stock Exchange.
  • Sector Classification. The index provides geographic and economic balance across the 11 GICS® Sectors. These Sectors are Communication Services, Consumer Discretionary, Consumer Staples, Energy, Financials, Health Care, Industrials, Information Technology, Materials, Real Estate, and Utilities.

Note: Rebalancing frequency: quarterly

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XEI ETF vs VDY vs XDV

In this section, we will compare XEI with Both XDV – Ishares Canadian Select Div Index and VDY Vanguard FTSE CDN High Div Yld Index. See tables below:

Table 1: AUM and MER

ETFAUM*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

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

Table 2:  Performance comparison and analysis

Performance updated daily

ETFDiv
yld %
XDV4.64
XEI4.51
VDY4.33
Source: Yahoo finance

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Analysis

Performance:

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

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

Diversification, Volatility and Dividend yield:

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

Conclusion:

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

Table 3: Dividend schedule and Beta

ETFMonthly
Div
Beta*
5yrs
XDVYes0.9
XEIYes0.9
VDYYes0.9

Source:, 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.

XEI Morningstar rating

The Morningstar rating for XEI is 3 stars:

Rating: 4 out of 5.

XEI dividend history

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

Ex-DateCash
Amount
Total
Distribution
Reinvested
Dec 29, 2022CAD 0.13571CAD 2.07381CAD 1.93810
Nov 21, 2022CAD 0.10300CAD 0.10300CAD 0.00000
Oct 25, 2022CAD 0.10300CAD 0.10300CAD 0.00000
Sep 23, 2022CAD 0.10900CAD 0.10900CAD 0.00000
Aug 25, 2022CAD 0.10900CAD 0.10900CAD 0.00000
Jul 25, 2022CAD 0.10900CAD 0.10900CAD 0.00000
Jun 24, 2022CAD 0.08300CAD 0.08300CAD 0.00000
May 24, 2022CAD 0.08300CAD 0.08300CAD 0.00000
please consult issuers’s website for up-to-date data

XEI ETF holdings

NameWeight (%)
CANADIAN NATURAL RESOURCES LTD5.72
NUTRIEN LTD5.39
TC ENERGY CORP5.12
ENBRIDGE INC5.03
TORONTO DOMINION5.02
SUNCOR ENERGY INC4.85
ROYAL BANK OF CANADA4.83
BCE INC4.62
BANK OF NOVA SCOTIA4.43
TELUS CORP4.18
please consult issuers’s website for up-to-date data

XEI ETF Sectors allocation

TypeWeight
%
Financials29.44
Energy27.49
Communication13.61
Utilities12.17
Materials7.26
Real Estate5.59
Consumer Discretionary2.61
Industrials0.94
Health Care0.39
Cash and/or Derivatives0.32
please consult issuers’s website for up-to-date data