10 Best Dividend ETFs in Canada for October 2024

August 8, 2024

Fact Checked

The best dividend ETFs in Canada use investor funds to buy and hold a basket of high-paying dividend
stocks. Instead of picking individual dividend stocks on your own and worrying about diversification,
dividend ETFs are pre-designed to be diversified across various sectors and industries. In this article, I
cover some of the best Canadian dividend ETFs you can buy and their benefits and downsides.

What is a Dividend ETF?

A dividend ETF holds dividend-paying assets, usually stocks, and distributes regular income to its
shareholders. Dividend ETF fund managers screen for reliable (blue-chip) companies with a solid history
of paying and increasing dividends over the years. They also screen these stocks for other performance
criteria (e.g. size, liquidity, ROE, yield, debt levels, etc.) before adding them to the ETF. Dividend ETFs
issue dividends to investors periodically, either monthly, quarterly, or annually. You can either take the
cash or reinvest the dividends to increase your stake in the ETF.

Best Dividend ETFs in Canada

The top 10 dividend ETFs in Canada you can buy on the Toronto Stock Exchange are:

Vanguard FTSE Canadian High Dividend Yield Index ETF

iShares S&P/TSX 60 Index ETF

iShares S&P/TSX Canadian Dividend Aristocrats Index ETF

BMO Canadian Dividend ETF

iShares S&P/TSX Composite High Dividend Index ETF

Fidelity Canadian High Dividend Index ETF Fund

iShares Core MSCI Canadian Quality Dividend Index ETF

iShares Canadian Select Dividend Index ETF

Horizons Active Dividend ETF

Tesla Yield Shares Purpose ETF

1. Vanguard FTSE Canadian High Dividend Yield Index ETF

Vanguard FTSE Canadian High Dividend Yield Index ETF (VDY) invests in the common stocks of high-yield
Canadian companies. It tracks and seeks to replicate the performance of the FTSE Canada High Dividend
Yield Index after accounting for fees and expenses. VDY provides exposure to 52 different stocks across
various sectors, including financials (54.09%), energy (29.33%), telecommunications (7.04%), utilities
(5.37%), and several others. Its top-10 holdings as of January 2024 are:

VDY Holdings Sector Allocation

RBC (RY.TO) Financials 14.25%

TD (TD.TO) Financials 11.8%

Enbridge Inc. (ENB.TO) Energy 7.64%

Bank of Montreal (BMO.TO) Financials 7.16%

Canadian Natural Resources Ltd. (CNQ.TO) Energy 7.03%

Bank of Nova Scotia (BNS.TO) Financials 5.89%

Canadian Imperial Bank of Commerce (CM.TO) Financials 4.37%

Suncor Energy Inc. (SU.TO) Energy 4.18%

TC Energy Corp. (TRP.TO) Energy 4.04%

Manulife Financial Corp (MFC.TO) Financials 4.03%

Key facts for VDY are:

MER: 0.22%

Number of stocks: 52

Dividend yield: 4.64%

Distribution frequency: Monthly

Assets Under Management (AUM): $2.35 billion

1-year performance: 8.40%

Cost-conscious investors would note that VDY has a competitively low management expense ratio of
0.22%. This is equivalent to a $2.20 fee per year per $1,000 investment.

This fund has a “medium” risk rating, and its annualized yield is 4.64%.
2. iShares S&P/TSX 60 Index ETF

BlackRock’s iShares S&P/TSX 60 Index ETF (XIU) provides exposure to large Canadian companies that
have a long history of paying dividends. It seeks long-term capital growth and aims to replicate the
performance of the S&P/TSX 60 Index, less fees and expenses. If you are looking for an ETF with a
storied history, XIU was the first ETF in the world, with an inception date of September 28, 1999. With
assets nearing $12 billion, it is also one of the most liquid ETFs in Canada. While Financials and Energy
sector equities constitute almost half of the fund, several others are also represented, including IT,
industrials, communication, consumer staples, health care, utilities, real estate, and materials.

XIU’s top-10 holdings as of January 2024 are:

XIU Holdings Sector Allocation

Royal Bank of Canada (RY.TO) Financials 7.58%

Toronto Dominion Bank (TD.TO)Financials 6.01%

Shopify Class A (SHOP.TO) Technology 5.37%

Enbridge Inc (ENB.TO) Energy 4.29%

Canadian National Railway (CNR.TO) Industrials 4.04%

Canadian Pacific Kansas City Ltd (CP.TO) Industrials 3.95%

Canadian Natural Resources (CNQ.TO) Energy 3.87%

Bank of Montreal Financials 3.73%

Bank of Nova Scotia (BNS.TO) Financials 3.10%

Brookfield Corp Class A (BN.TO) Financials 3.07%

Key facts to note for XIU are:

MER: 0.18%

Number of stocks: 61

Dividend yield: 3.15%

Distribution frequency: Quarterly

AUM: $11.9 billion

1-year performance: 11.82%

3. iShares S&P/TSX Canadian Dividend Aristocrats Index ETF

iShares S&P/TSX Canadian Dividend Aristocrats Index ETF offers exposure to several high-dividend stocks
and is one of the best monthly dividend ETFs in Canada. The underlying stocks held by this fund are
screened to only include Canadian companies that have increased dividends every year for at least 5
consecutive years. The fund aims to replicate the performance of the S&P/TSX Canadian Dividend
Aristocrats Index, less any fees and expenses.

CDZ’s top-10 holdings as of January 2024 are:

CDZ Holdings Sector Allocation

Aecon Group (ARE.TO) Industrials 3.24%

Chartwell Retirement Residence REIT (CSH.UN) REIT 2.75%

Great Westlife Co Inc (GWO.TO)Financials 2.48%

Power Corporation of Canada (POW.TO) Financials 2.06%

Canadian Imperial Bank of Commerce (CM.TO) Financials 2.05%

Fiera Capital Corp Class A (FSZ.TO) Financials 2.03

Parkland Corp (PKI.TO) Energy 1.97%

Manulife Financial Group (MFC.TO) Financials 1.92%

TC Energy Group (TRP.TO) Energy 1.90%

Enbridge Inc (ENB.TO) Energy 1.85%

CDZ holds equities from 11 different sectors, including a significant percentage in real estate via REITs
(9.09%). The top 2 sectors are Financials (30.54%) and Industrials (12.10%).

Key facts for this fund are:

MER: 0.66%

Number of stocks: 90

Dividend yield: 4.06%

Distribution frequency: Monthly

AUM: $931 million

1-year performance: 9.26%

4. BMO Canadian Dividend ETF

BMO Canadian Dividend ETF (ZDV) is designed for investors looking to earn regular income while also
giving their portfolio. The fund invests in dividend-paying Canadian stocks that have been screened
based on their liquidity and 3-year dividend growth rate, yield, and payout ratio. ZDV’s top holdings are
concentrated in the financials, energy, utilities, and communication sectors.

ZDV Holdings Sector Allocation

Royal Bank of Canada (RY.TO) Financials 5.28%

Enbridge Inc (ENB.TO) Energy 5.14%

Bank of Nova Scotia (BNS.TO) Financials 4.96%

BCE Inc (BCE.TO) Communication 4.88%

Toronto Dominion Bank (TD.TO)Financials 4.61%

Canadian Imperial Bank of Commerce (CM.TO) Financials 4.54%

Canadian Natural Resources (CNQ.TO) Energy 4.53%

Bank of Montreal (BMO.TO) Industrials 4.03%

Manulife Financial Corp (MFC.TO) Financials 3.97%

Canadian National Railway (CNR.TO) Industrials 3.69%

Key facts for ZDV are:

MER: 0.39%

Number of stocks: 51

Dividend yield: 5.48%

Distribution frequency: Monthly

AUM: $1.00 billion

1-year performance: 8.19%

This “medium” risk fund has a decent yield and is easily one of the best Canadian dividend ETFs.
5. iShares S&P/TSX Composite High Dividend Index ETF

BlackRock’s iShares S&P/TSX Composite High Dividend Index ETF (XEI) holds 75 high-dividend paying
stocks with exposure to 10 sectors. More than 75% of its holdings are concentrated in the financials
(30.14%), energy (30.02%), and utilities (17.36%) sectors. This fund holds more than $1.58 billion in
assets under management and is eligible in all registered and non-registered accounts.

XEI’s top-10 holdings as of January 2024 are:

XEI Holdings Sector Allocation

Suncor Energy (SU.TO) Energy 5.17%

Royal Bank of Canada (RY.TO) Financials 5.15%

Canadian Natural Resources (CNQ.TO) Energy 5.08%

Enbridge Inc (ENB.TO) Energy 5.05%

TC Energy Group (TRP.TO) Energy 4.95%

Toronto Dominion Bank (TD.TO)Financials 4.83%

BCE Inc (BCE.TO) Communication 4.78%

Bank of Montreal (BMO.TO) Financials 4.72%

Telus Corp (T.TO) Communication 4.56%

Fortis Inc (FTS.TO) Utilities 4.56%

Key facts to note for XEI include:

MER: 0.22%

Number of stocks: 75

Dividend yield: 5.37%

Distribution frequency: Monthly

AUM: $1.57 billion

1-year performance: 6.74%

XEI’s low MER of 0.22%, diversification, and dividend yield make it a great choice if you are looking for a
Canadian dividend ETF you can hold long-term.
6. Fidelity Canadian High Dividend Index ETF Fund

This Fidelity Canadian dividend ETF (FCCD.TO) was established in September 2018 and has provided an
annualized return of 5.19%. It holds more than 50% of its weighted allocation in financial and energy
stocks, which is not uncommon for Canadian ETFs. Its top-10 holdings as of January 2024 are:

FCCD Holdings Sector Allocation

Royal Bank of Canada (RY.TO) Financials 5.44%

Canadian Natural Resources (CNQ.TO) Energy 4.85%

Enbridge Inc (ENB.TO) Energy 4.46%

Toronto Dominion Bank (TD.TO)Financial 4.37%

Fortis Inc (FTS.TO) Utilities 4.18%

Emera Inc (EMA.TO) Utilities 3.57%

BCE Inc (BCE.TO) Communication 3.36%

Suncor Energy Inc (SU.TO) Energy 3.27%

Chartwell Retirement Residences (CSH-UN.TO) Energy 3.17%

Telus Corp (T.TO) Communications 3.03%

Key facts for FCCD.TO include:

MER: 0.39%

Number of stocks: 65

Dividend yield: 4.73%

Distribution frequency: Monthly

AUM: $175.9 million

1-year performance: -1.41%

Related: Best ETF Trading Apps.

7. iShares Core MSCI Canadian Quality Dividend Index ETF

iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV) is one of the best dividends ETFs in
Canada when you look at the combination of dividend yield and exceptionally low MER. It seeks to
replicate the performance of the MSCI Canada High Demand Yield 10% Security Capped Index, less all
expenses and fees. It is not as diversified across sectors as some of the others, with equity holdings in
only 6 sectors: financials (43.60%), energy (21.12%), utilities (17.60%), communication (10.25%),
consumer discretionary (3.72%), and materials (3.48%).

XDIV’s top-10 stock holdings as of January 2024 are:

XDIV Holdings Sector Allocation

Royal Bank of Canada (RY.TO) Financials 9.70%

Manulife Financial Corp (MFC.TO) Financials 9.55%

Pembina Pipeline Corp (PPL.TO) Energy 9.14%

Sun Life Financial Inc (SLF.TO) Financials 8.66%

Fortis Inc (FTS.TO) Utilities 8.65%

Suncor Energy Inc (SU.TO) Utilities 8.46%

Toronto Dominion Bank (TD.TO)Financials 8.37%

Emera Inc (EMA.TO) Utilities 6.86%

Great-West Lifeco (GWO.TO) Financials 5.91%

Telus Corp (T.TO) Communications 5.73%

Key facts for XDIV include:

MER: 0.11%

Number of stocks: 18

Dividend yield: 4.80%

Distribution frequency: Monthly

AUM: $953 million

1-year performance: 12.00%

8. iShares Canadian Select Dividend Index ETF

BlackRock’s iShares Canadian Select Dividend ETF (XDV) seeks to replicate the performance of the Dow
Jones Canada Select Dividend Index by investing in 30 high dividend-yielding stocks. Investors looking to
generate monthly dividend income can consider this dividend ETF for their portfolio. XDV’s top-10 stock
holdings as of January 2024 are:

XDV Holdings Sector Allocation

Canadian Tire Ltd (CTC.A.TO) Consumer Discretionary7.76%

Bank of Montreal (BMO.TO) Financials 7.59%

Royal Bank of Canada (RY.TO) Financials 6.81%

Bank of Nova Scotia (BNS.TO) Financials 5.05%

National Bank of Canada (NA.TO) Financials 5.00%

Toronto Dominion (TD.TO) Financials 4.74%

TC Energy Corp (TRP.TO) Energy 4.71%

BCE Inc (BCE.TO) Communications 4.68%

Canadian Imperial Bank of Commerce (CM.TO) Financials 4.57%

Sun Life Financial Inc (SLF.TO) Financials 3.95%

Key Facts of XDV include:

MER: 0.55%

Number of stocks: 30

Dividend yield: 4.99%

Distribution frequency: Monthly

AUM: $1.61 billion

1-year performance: 7.93%

9. Horizons Active Dividend ETF

This ETF invests in a mix of Canadian and American companies which seek long-term capital growth and
dividend appreciation. The Horizons Active Dividend ETF (HAL.TO) has a high MER and pays out its
dividends quarterly. As with many other Canadian dividend ETFs, HAL.TO has a high weighted allocation
to the Financial (25.56%) and Energy (25.73%) sectors. The top 10 holdings in HAL.TO as of January 2024
are:

HAL Holdings Sector Allocation

Royal Bank of Canada (RY.TO) Financials 6.56%

Toronto-Dominion Bank (TD.TO) Enbridge Inc (ENB.TO) Financials 6.06%

Telus Corp (T.TO) Communication 3.99%

BCE Inc (BCE.TO) Communication 3.99%

WSP Global Inc (WSP.TO) Financials 3.51%

Exchange Income Corp (EIF.TO) Financials 3.36%

Canadian Natural Resources (CNQ.TO) Energy 3.33%

Tourmaline Oil Corp (TOU.TO) Energy 3.27%

Great-West LifeCo Inc (GWO.TO) Financials 3.23%

Power Corporation of Canada (POW.TO)Financials 3.21%

Key facts to note for HAL.TO include:

MER: 0.68%

Number of stocks: N/A

Dividend yield: 3.01%

Distribution frequency: Quarterly

AUM: $122 million

1-year performance: -0.78%

10. Tesla (TSLA) Yield Shares Purpose ETF

The last ETF on our list is a unique one: the Tesla (TSLA) Yield Shares Purpose ETF (YTSL.NE). This is a
covered call ETF that aims to provide a high distribution yield with exposure to Tesla’s stock. YTSL.NE,
therefore only holds shares of Tesla’s stock and covered call options contracts. It is a risky investment
but one that can provide generous income to shareholders. Since its inception in December 2022, it has
provided a monthly distribution and offers a current sky-high distribution yield of 22.13%.

Key facts for YTSL.NE include:

MER: 0.58%

Dividend yield: 22.13%

Distribution frequency: Monthly

AUM: $67.2 million

1-year performance: 89.84%

YTSL.NE Has a higher risk rating because the underlying price of the ETF is dependent on the price of
Tesla’s stock. It is an interesting way for Canadian investors to gain exposure to Tesla and options
trading without foreign exchange fees or the risk of options.

Are Dividend ETFs a Good Investment?

Investing your portfolio using dividend ETFs offers some benefits. They are good for generating steady
income periodically (monthly or quarterly). With proper budgeting and planning, you can live off this
income stream and pay your bills when they are due. Dividend ETFs generally hold multiple equities,
helping you diversify your investments across different sectors. It could be challenging to achieve a
similar diversification if you hold individual stocks. In the same vein, it is cheaper to buy extra units of 1-
2 dividend ETFs as opposed to purchasing 50 individual stocks every time you want to add more shares
to your positions. Compared to the interest income generated by savings accounts and other fixed-
income assets, dividends are taxed more favourably.

Downsides of Dividend ETFs

All the best Canadian dividend ETFs on this list charge a fee yearly, ranging from 0.11% to 0.67%. You
don’t pay this recurring fee (MER) if you buy the individual stocks. Dividends are not guaranteed, and
companies can choose to lower their distributions or cut them entirely. A dividend ETF may not offer
you the level of diversification required to meet your investment objectives and risk tolerance. To
counter this deficiency, you may need to hold more than one dividend ETF, plus individual stocks, bonds,
and other securities. Effectively, you may be better off just buying a ‘one-solution’ asset allocation fund
to avoid all the hassle. Overall, always do your due diligence before investing your money.