13 Best Dividend ETF Canada 2021 Reviews | To Help You Make the Right Investment

November 6, 2021 | Editorial Team

ETFs are becoming a more popular investment choice in Canada, and for a good reason. With ETFs, you can increase your wealth while still receiving monthly dividend payments. 

Choosing the best Canadian ETFs can be challenging. This is because of the ever-increasing number of ETFs on the market. Stocks that pay dividends to investors are continuously tracked in the Canadian Dividend Indexes, which is a good thing (see stocks investing for beginners).

With a variety of strategies, investors have access to dividend income through various ETFs (see top ETFS). This article gives an in-depth look at the best Canadian dividend ETFs currently available.

Our recommendation:

What Is a Dividend Exchange Traded Fund (ETF)?

A dividend ETF is an exchange-traded fund that invests in stocks that pay out high dividends. These exchange-traded funds (ETFs) track a specific index (see ETF and Index fund) selected to contain blue-chip companies. 

They also follow well-established businesses that are robust and have a lower risk. The ETF also prefers companies with a long history of significant dividend growth. Dividend ETFs seek high yields by investing in real estate investment trusts (REITs), equities, and stocks.

Are Dividend ETFs Worth It?

First off, while choosing dividend-paying ETFs, you must conduct your research. Another way is to engage with a trustworthy professional. It is important to note that there are no assurances of future performance. 

The best way to choose ETFs is to look for well-diversified ones with a strong track record and charge low fees. One of the ‘blue-chip’ ETFs that can bring stability is a bank ETF that focuses only on the financial sector. 

The financial sector accounts for 28.6% of the TSX (Toronto Stock Exchange) Index. So, the Canadian dividend ETFs often hold major financial stocks.

The ideal dividend ETF for you depends on market conditions and investment timeframe. It is vital to compare the performance of dividends paid out and management costs (MER fees). Although sometimes, it can differ between funds.

Which ETFs Have the Highest Dividend Yield?

The following are some of the most regarded dividend-paying ETFs.


The Vanguard High Dividend Yield ETF

Most Vanguard offerings, like (VYM) ETF, are low-cost and straightforward to understand. All investor demographics can trade in this stock because it reflects the FTSE High Dividend Yield Index. 

One peculiarity of VYM’s strategy is its focus on companies that pay huge dividends when investing. As a result, the financial and consumer staples sectors make up most of this ETF’s holdings.


The Vanguard Dividend Appreciation ETF

It follows the S&P Dividend Growers Index through the Vanguard Dividend Appreciation Fund (VIG). This market capitalization-weighted index includes dividend-paying companies but only those that have paid over the past ten years.

Its assets and investments are in the United States. The portfolio includes many well-known high-paying corporations such as Johnson and Johnson (JNJ) and Microsoft Corporation (MSFT).


Spdr S&P Dividend ETF 

This ETF is an excellent choice for investors and brokerages looking to get the most out of dividend ETFs (SDY). Aristocrats follow the S&P Aristocrats Index performance.

Only companies with at least a 20-year dividend growth history are in the S&P Composite 1500. Investors seeking a total return will find these companies to be less risky. It is because they have paid out dividends for a long time.


Ishares Select Dividend ETF

The ishares (DVY) ETF is the largest ETF available to investors who follow a dividend-weighted index. In contrast to (VIG), this ETF only invests in American companies, despite its focus on smaller companies. 

About 25% of DVY’s 100 stock holdings are in utility companies. They also have stocks in the financial, consumer goods, energy, and communication industries.


Ishares Core High Dividend ETF

This ETF from BlackRock, the iShares (HDV), is newer and has a smaller portfolio than BlackRock’s (DVY). It tracks 75 U.S. stocks chosen by Morningstar for their dividend sustainability and earnings growth potential.

These are two characteristics of the entire analysis school founded by Benjamin Graham and Warren Buffett. Morningstar’s sustainability ratings rely on Warren Buffett’s “economic moat” concept. It safeguards a business from threats such as those posed by competitors.

What Should You Look For in a Dividend ETF?

When selecting a dividend ETF, keep the following factors in mind:

  • Fee Ratio

Before you invest, be sure you know the ETF’s fee ratio. Some ETFs have modest fees, while others have more costs that eat into your profits.

  • Yield

Dividend ETF yield is essential because it tells you how much money you may expect to receive over the coming year. It would be best to keep in mind that future dividends are not a guarantee. However, a yield will give you an idea of what to expect.

  • Liquidity 

The liquidity of some ETFs may be lower than that of others offered by well-known ETF managers. It could make it difficult to sell when the time comes.

  • Portfolio 

Examine the fund’s portfolio to see if it has a lot of exposure to specific companies or industries. An investment fund with extensive exposure to one sector may not provide you with the same level of diversity as other funds.

ETF trading concept illustration

How to Buy the Best Canadian Dividend ETFS

The top two and cheapest ways to buy the best dividend ETFs in Canada are:

  • Questrade

Questrade allows you to invest in ETFs, bonds, GICs, mutual funds, and precious metals. On the Questrade platform, you can buy ETFs without paying a commission. Also, you can sell them for a low fee starting at $4.95 per trade.

  • Wealthsimple Trade

In buying and holding dividend ETFs, this is the most cost-effective option. There are no trading commissions, and this also applies to dividend stock purchases. You can use Wealthsimple Trade which is compatible with any device.

The Best Dividend ETFS in Canada

BMO Canadian Dividend ETF

The following are the key facts about this fund:

  • Ticker: ZDV
  • Fees: 0.35% MER
  • Dividend Yield: 3.96%
  • AUM: CAD 757.89 million
  • Distribution Frequency: Monthly

It is hard to overlook this ETF when evaluating the best Canadian Dividend ETFs. (ZDV), issued by the Bank of Montreal may be a good investment for you if you want to diversify your holdings while earning a regular income (you may seek robo advisors for help, too).

Over the last three years, the fund invested in Canadian dividend-paying stocks. It screens stocks for liquidity, yield, growth rate, and payout ratio. This medium-risk ETF has performed well over the years. 

It provides investors with a steady stream of monthly dividend income. Most of ZDV’s holdings are in the financial, energy, utility, and communication sectors.

Currently, the ZDV’s top 10 holdings are:

TickerZDV HoldingsSectorAllocation (%)
ENBEnbridge IncEnergy5.33
RYRoyal Bank of CanadaFinancials5.11
BNSThe Bank of Nova ScotiaFinancials4.86
BCEBCE IncCommunication4.86
CNRCanadian National RailwayIndustrials4.82
CMCanadian Imperial Bank of Commerce  Financials4.80
TDToronto Dominion BankFinancials4.79
TRPTransCanada CorpEnergy4.14
BMOBank of MontrealFinancials4.02
TTelus CorpCommunication3.84

iShares S&P/TSX Canadian Dividend Aristocrats Index (CDZ) ETF

The following are the key facts about this fund:

  • Ticker: CDZ
  • Fees: 0.66% MER
  • Dividend Yield: 3.14%
  • Distribution frequency: Monthly
  • AUM: CAD 1.01 Billion

With this ETF, investors can invest in the dividend’s performance, incurring no costs. It is one of Canada’s best monthly dividend ETFs because it provides exposure to several high-dividend stocks.

The S&P Canada Broad Market index includes stocks and income trusts listed on the (TSX) that pay dividends. Investors can expect a rising annual income from the index’s equity securities. It has a track record of increasing dividend payments for the last five years. 

Every month, the ETF distributes dividends to its shareholders. CDZ owns stocks in various industries, such as real estate investment trusts (REITs). REITs account for a significant part of its portfolio. Financials and energy are its top two sectors.

Currently, the CDZ’s top 10 holdings are:

TickerCDZ HoldingsSector Allocation (%)
KEYKeyera CorpEnergy3.13
SRU.UNSmartCenters REITReal Estate3.04
PPLPembina Pipeline CorpEnergy2.89
ENBEnbridge IncEnergy2.88
CNQCanadian Natural Resources LtdEnergy2.76
POWPower Corporation of CanadaFinancials2.45
FSZFiera Capital Corp Class AFinancials2.20
TRPTC Energy CorpEnergy2.18
EIFExchange Income CorpIndustrials2.12
CPXCapital Power CorpUtilities2.12

Horizons Active Canadian Dividend ETF

The following are the key facts about this fund:

  • Ticker: HAL
  • Fees: 0.67% MER
  • Dividend Yield: 3.18%
  • Distribution frequency: Quarterly
  • AUM: CAD 96.58 Million

Canadian dividend ETF Horizons Active Canadian Dividend is one of the best options available. Its approach to achieving long-term total returns comprises investing in dividend-paying assets. The ETF aims to provide investors with capital growth long term. 

It does so by using assets that generate consistent income and modest, long-term capital growth. The ETF seeks to invest in companies with high appreciation potential and grow their dividends over the long term. It examines a wide range of businesses from various industries and sectors

The ETF invests in stocks of large North American corporations. The corporations must have above-average dividend yields and solid prospects for dividend growth. Most of its holdings are in the energy, financial, industrial, real estate, and utility sectors. 

Currently, the HAL’s top 10 holdings are:

TickerHAL HoldingsSectorAllocation (%)
RYThe Royal Bank of CanadaFinancials6.21
TDThe Toronto Dominion BankFinancials5.04
TTelus CorpCommunication3.96
SMU.UNSummit Industrial Income REITReal Estate3.38
BNSBank of Nova ScotiaFinancials3.33
TOUTourmaline Oil CorpEnergy3.29
IMOImperial Oil LtdEnergy3.26
GRT.UNGranite REITReal Estate2.97
WSPWSP Global IncIndustrials2.89
OTEXOpen Text CorpTech2.86

iShares S&P/TSX Composite High Dividend Index (XEI) ETF 

This fund’s important facts are:

  • Ticker: XEI
  • Fees: 0.22% MER
  • Dividend Yield: 3.74%
  • Distribution frequency: Monthly
  • AUM: CAD 1.11 Billion

It is an ETF managed by BlackRock, which tracks the Dividend Index. The fund’s goal is to introduce investors to the income generated by high-quality Canadian dividend-paying stocks.

The ETF provides investors with a monthly dividend income. It does so by investing in a diversified portfolio of Canadian companies. All the companies in the portfolio have excellent long-term capital growth prospects.

As a long-term foundational holding, it is a low-cost ETF. It employs a high-risk/high-reward strategy. It attempts to replicate the performance of the equity Income Index.

BlackRock’s (XEI) ETF invests in 75 stocks with high dividend yields across ten sectors. Its holdings are in the financials (30.23%), energy (28.34%), communication (14.12%), and utilities (11.66%) sectors. 

There is also a small representation of the following sectors. They are real estate, industrial, healthcare, and raw materials. XEI is an excellent long-term investment in Canadian dividend ETFs. This is because of its low expense ratio, diversification, and dividend yield.

Currently, the XEI’s top 10 holdings are:

TickerXEI HoldingsSectorAllocation(%)
CNQCanadian Natural Resources LtdEnergy5.91
TRPTC Energy CorpEnergy5.32
NTRNutrien LtdMaterials5.24
TDToronto DominionFinancials 5.16
ENBEnbridge IncEnergy4.98
RYRoyal Bank of CanadaFinancials4.89
SUSuncor Energy IncEnergy4.57
BNSThe Bank of Nova ScotiaFinancials4.53
BCEBCE IncCommunication4.53
TTelus CorpCommunication4.15

Invesco Canadian Dividend Index ETF

The following are the key facts about this fund:

  • Ticker: PDC
  • Fees: 0.50% MER
  • Dividend Yield: 3.59%
  • Distribution frequency: Monthly
  • AUM: CAD 833.50 Million

Investors can replicate the NASDAQ Select Canadian Dividend Index’s performance before fees and expenses with this ETF. The fund’s holdings are Canadian equity securities with a history of increasing dividend payouts.

Equity and income trusts hold 95% of the fund’s assets in Canadian companies. The fund also allocates 5% of its assets to companies from around the globe. 

It has a well-diversified portfolio across various industries and pays investors monthly dividends. (PDC) has a significant stake in financials (51.28%), energy (20.49%), telecommunications (12.11%), and utilities (9.97%).

Currently, the PDC’s top 10 holdings are:

TickerPDC HoldingSectorAllocation (%)
ENBEnbridge IncEnergy8.48
RYRoyal Bank of CanadaFinancials8.25
BNSNova Scotia BankFinancials7.56
BMOThe Bank of MontrealFinancials7.50
TDToronto DominionFinancials7.44
BCEBCE IncCommunication4.28
TTelus CorpCommunication4.17
CMCanadian Imperial BankFinancials4.04
SLFSun Life Financial IncFinancials3.94
CNQCanadian Natural Resources Energy3.89

iShares Core MSCI Canadian Quality Dividend Index (XDIV) ETF

The following are the key facts about this fund:

  • Ticker: XDIV
  • Fees: 0.11% MER
  • Dividend Yield: 3.75%
  • Distribution frequency: Monthly
  • AUM: CAD 546.62 Million

For investors looking for a high yield with a low expense ratio, (XDIV) is a superb choice. It aims to match the performance of the MSCI Security Capped Index, minus all costs and fees. 

It looks for companies with solid balance sheets and a track record of increasing shareholder value over the long term when investing.

As a result, it lacks the sector diversification of some of the other companies. Its equity holdings are in only five industries: Financials (58%), energy (14.60%), Utilities (12.68%), Materials (7.88%), and Communication (6.04 % ).

Currently, the XDIV’s top 10 holdings are:

TrackerXDIV HoldingSectorAllocation (%)
TRPTC Energy CorpEnergy9.99
TDToronto DominionFinancials8.97
BNSBank of Nova ScotiaFinancials8.84
RYRoyal Bank of CanadaFinancials8.80
CMCanadian Imperial Bank of CommerceFinancials8.80
NTRNutrien LtdMaterials8.38
MFCManuLife Financial Corp Financials 8.27
SLFSun Life Financial IncFinancials7.00
FTSFortis IncUtilities4.38
POWPower Corporation of CanadaFinancials4.02

Vanguard FTSE Canadian High Dividend Yield Index ETF (VDY)

The following are the key facts about this fund:

  • Ticker: VDY
  • Fees: 0.21% MER
  • Dividend Yield: 3.83%
  • Distribution frequency: Monthly
  • AUM: CAD 1.2 Billion

VDY holds Canadian common stocks with high dividend yields as part of its investment portfolio. It aims to match the dividend yield of the FTSE Canada High Dividend Yield Index by accounting for fees and expenses (the benchmark). Diverse Canadian equity securities with high dividend yields make up the index.

The ETF uses a passively managed approach to invest in Canadian stocks with high dividend yields. It includes large, mid, and small-capitalization stocks from a variety of industries. 

VDY has a competitive low 0.21% management expense ratio, which will appeal to investors on a tight budget. Annualized returns are 3.84% on this “medium”-risk investment.

The ETF uses cost-effective index management techniques and pays monthly dividends to investors. (VDY) gives investors exposure to 39 stocks across a range of industries. They include financials (58.6%), energy (22.3%), telecommunications (8.7%) and utilities (6.2%).

Currently, the VDY’s top 10 holdings are:

TrackerVDY HoldingSectorAllocation (%)
RYRoyal Bank of CanadaFinancials14.15
TDToronto Dominion BankFinancials12.01
ENBEnbridge IncEnergy8.04
BNSNova Scotia BankFinancials 7.44
BMOThe Bank of MontrealFinancials6.44
CNCanadian Imperial Bank of CommerceFinancials4.86
TRPTC Energy CorpEnergy4.70
BCEBCE IncCommunication4.52
CNQCanadian Natural ResourcesEnergy4.23
MFCManuLife Financial CorpFinancials3.73

XIU: iSHARES S&P/TSX 60 INDEX 

Here are the key facts about this fund:

  • Ticker: XIU
  • Fees: 0.18% MER
  • Dividend Yield: 2.53%
  • Distribution frequency: Quarterly
  • AUM: CAD 10.125 Billion

The (XIU) ETF introduces investors to large Canadian corporations with a history of paying dividends. Investing in the index seeks long-term capital growth while minimizing fees and expenses.

If you’re looking for an ETF with a long history, look no further than XIU. It is the world’s first ETF, launched on September 28, 1999. It is also one of Canada’s most liquid ETFs, with assets exceeding CAD 10 billion.

Fast-moving consumer goods, health care, utilities, real estate, and materials are a significant part of the fund. It splits the remaining half between financial services and energy companies.

Currently, the XIU’s top 10 holdings are:

TrackerXIU HoldingSectorAllocation (%)
SHOPShopify Class AIT8.30
RYRoyal Bank of CanadaFinancials7.91
TDToronto DominionFinancials6.77
BAM.ABrookfield Asset ManagementFinancials4.59
ENBEnbridge IncEnergy4.47
CNRCanadian National RailwayIndustrials4.26
BNSNova Scotia BankFinancials4.14
BMOThe Bank of MontrealFinancials3.66
CMCanadian Imperial Bank of CommerceFinancials2.81
TRPTC Energy CorpEnergy2.78

CI First Asset Active Canadian Dividend Common Unit ETF

The following are the key facts about this fund:

  • Ticker: FDV
  • Fees: 0.55% MER
  • Dividend Yield: 3.45%
  • Distribution frequency: Monthly if any
  • AUM: CAD 5.11 Million

The (FDV) ETF provides long-term returns to unitholders. It does so through solid capital appreciation and regular dividend income. 

Investing in the fund means buying shares of companies on the (TSX) list. Companies that pay dividends and have other income-producing securities. Providing unit holders with monthly dividend payments allows the fund to assign up to 30% of its assets to foreign securities. 

The portfolio includes investments from each of the ten economic sectors. CI Global Asset Management offers the CI Active Canadian Dividend ETF (FDV), which invests in over 33 stocks. According to Morningstar, FDV is a safe bet for investors because of its low to medium risk profile.

Currently, the FDV’s top 10 holdings are:

TickerFDV HoldingSectorAllocation (%)
RYRoyal Bank of CanadaFinancials5.33
GOOGL USAlphabet Inc Class ATech4.63
DOL Dollarama IncUtilities4.33
BAMBrookfield Asset Management IncFinancials4.06
OTEXOpen Text CorpTech3.91
BNSBank of Nova ScotiaFinancials3.89
MSFT USMicrosoft CorpTech3.62
BMOBank of MontrealFinancials3.57
IFCIntact Financial CorpFinancials3.29
BIP-UBrookfield InfrastructureUtilities3.15

First Asset Morningstar Canada Dividend Target 30 Index ETF (DXM)

The following are the key facts about this fund:

  • Ticker: DXM
  • Fees: 0.60% MER
  • Dividend Yield: 3.80%
  • Distribution frequency: Quarterly
  • AUM: CAD 11.48M

The (DXM) ETF aims to emulate the Morningstar Canada Target Dividend Index’s output, incurring no costs. It invests in Canada’s most prominent companies with the best liquidity, based on Morningstar’s research. 

The mutual fund provides investors with access to a wide range of Canadian dividend-paying companies. It makes it an excellent choice for those looking for regular quarterly cash flow. 

Also, investors are comfortable with a moderate level of risk in their portfolios. Utilities and materials account for a sizable part of the fund. It splits the remaining half between energy and financial services companies.

Currently, the DXM’s top 10 holdings are:

TickerDXM HoldingSectorAllocation (%)
EMAEmera IncUtilities3.51
ACO.XAtco LtdEnergy3.49
CUCanadian Utilities LtdUtilities3.45
GWOGreat-West Lifeco IncFinancials3.44
NPINorthland Power IncEnergy3.43
BCEBCE IncCommunication3.42
CPXCapital Power CorpEnergy3.39
ENBEnbridge IncEnergy3.39
IAGiA Financial CorpFinancials3.37
RYRoyal Bank of CanadaFinancials3.37

BMO Canada High Dividend Covered Call ETF

The following are the key facts about this fund:

  • Ticker: ZWC
  • Fees: 0.65% MER
  • Dividend Yield: 6.40%
  • Distribution: Monthly
  • AUM: CAD 1.23 Billion

Investing in the (ZWC) ETF provides investors with a significant dividend income. It also offers long-term portfolio growth through capital appreciation.

The ETF has a higher yield and a greater risk. Yet, it reduces the downside risk for investors through covered call options for the investment company. For the assets that are part of its portfolio, it has long positions and writes call options.

If the price rises above the strike price, the strategy reduces profits. However, the high dividend yield compensates. 

Investing in Canadian dividend-paying stocks qualifies the fund for tax credits, which adds to its appeal. It accomplishes this through accounts such as the Tax-Free Savings Account (TFSA). 

It is no surprise that most of ZDV’s holdings are in these industries:

TickerZWC HoldingSectorAllocation (%)
CNRCanadian National Railway CoIndustrials5.79
ENBEnbridge IncEnergy5.09
RYRoyal Bank of CanadaFinancials4.98
CMCanadian Imperial Bank of CommerceFinancials4.98
TDToronto Dominion BankFinancials4.89
BNSThe Bank of Nova ScotiaFinancials4.81
BCEBCE IncCommunication4.74
TTelus CorpCommunication4.48
MFCManuLife Financial CorpFinancials4.33
NTRNutrien LtdMaterials4.08

BMO Ultra Short-Term Bond ETF

The following are the key facts about this fund:

  • Ticker: ZST
  • Fees: 0.15% MER
  • Dividend Yield: 1.94%
  • Distribution: Monthly
  • AUM: CAD 665.84 Million

The (ZST) ETF aims to give investors exposure to a wide range of fixed-income securities. They do so with a term to maturity of one year or less. The securities in which (ZST) can invest include bonds ETFs issued by governments and corporations. Also, those bonds are issued by provinces and municipalities.

The ETF can invest in money market instruments and other ETFs. The fund may also invest in floating-rate instruments, preferred shares, and cash equivalents.

Even though it’s not a high-yield investment, unitholders can expect predictable, positive returns.

Currently, the ZST’s top 10 holdings are:

TickerZST HoldingSectorAllocation (%)
XGBCanadian Treasury BillFinancials15.49
PSA-TPurpose High Interest SavingsFinancials9.93
TDToronto Dominion BankFinancials7.99
NANational Bank of CanadaFinancials6.39
CMCanadian Imperial Bank of CommerceFinancials5.66
BNSBank of Nova ScotiaFinancials5.58
RYRoyal Bank of CanadaFinancials5.51
HNDAHonda Canada Finance IncFinancials5.23
BCIMCRBCIMC Realty CorpFinancials3.71
OMERSOMERS Realty CorpReal Estate3.47

XDV: iShares Canadian Select Dividend Index ETF 

The following are the key facts about this fund:

  • Ticker: XDV
  • Fees: 0.55% MER
  • Dividend Yield: 3.92%
  • Distribution frequency: Monthly
  • AUM: CAD 1.79 Billion

The (XDV) ETF aims to replicate net fewer expenses, the output of the Dow Jones Canada Dividend Index. It is yet another ETF launched and managed by BlackRock Asset Management Canada Ltd. With this strategy, investors can expect long-term capital gains.

The ETF’s holdings compose diverse investments. However, the financial sector has a larger share with over 50% of its funds. The ETF aims to give investors exposure to 30 reputable Canadian companies with high dividend yields.

If you’re looking to generate a steady stream of dividend income each month, this dividend ETF could be a good option for you. 

Currently, the XDV’s top 10 holdings are:

TickerXDV HoldingSectorAllocation (%)
CMCanadian Imperial Bank of CommerceFinancials8.83
BMOBank of MontrealFinancials6.54
RYRoyal Bank of CanadaFinancials6.23
CTC.ACanadian Tire Ltd Class AUtilities6.19
TRPTC Energy CorpEnergy5.12
BCEBCE IncCommunication4.77
LIFLabrador Iron Ore Royalty CorpMaterials4.73
BNSBank of Nova ScotiaFinancials4.67
TDToronto DominionFinancials4.36
NANational Bank of CanadaFinancials4.27

The Bottom Line

ETFs that pay dividends have a much higher level of diversification. They also provide a steady stream of income. Some ETFs are better than others in paying dividends. 

You must do your research before investing in dividend ETFs. A wide range of providers has significant ETFs available. BlackRock Asset Management has several best Canadian dividend ETFs. 

Each employs a different approach to providing capital growth to unitholders. They do so through the appreciation of underlying stocks and the development of dividends.

Knowing which Canadian dividend ETFs are the best will make it easier for you to select the best ones for your investment portfolio in the long term.