Best Canadian Dividend ETFs for 2022
One of the easiest ways to earn passive income is with a portfolio of dividend stocks. Companies that pay a regular dividend to shareholders tend to be reliable performers over the long term, with stable profits and strong balance sheets. But it takes a lot of money (and time) to properly diversify and generate regular dividend income from a portfolio of individual stocks.
Another option is to purchase a Canadian dividend exchange-traded fund or ETF. The best dividend ETFs offer instant diversification and low fees while allowing you to build a monthly dividend income over time. This article will cover a dozen of the best dividend ETFs you can buy in Canada. Unsurprisingly, several Blackrock (iShares) ETFs made the grade, and familiar names like Vanguard and CI Investments are also represented. Two Canadian bank ETFs also made it into our top 12, including the BMO Canadian Dividend ETF. Ready for our list? Let’s get started!
iShares S&P/TSX Canadian Dividend Aristocrats Index ETF
Dividend Yield (Weighted Avg.): 3.07% (May 27, 2022)
Number of Stocks: 94
AUM: $1.03 billion
Inception: September 2006
Benchmark: S&P/TSX Canadian Dividend Aristocrat Index
Notable Holdings: Keyera Corp (3.39%), SmartCentres REIT (2.97%), Pembina Pipeline Corp (2.84%), CIBC (2.09%)
When “Dividend Aristocrats” is included in the name, you know you’re dealing with a serious dividend ETF. What is a Dividend Aristocrat, you ask? It’s a company that has a track record of paying a consistent dividend and increasing its dividend payout regularly.
iShares S&P/TSX Canadian Dividend Aristocrats Index ETF seeks to replicate the net performance of the S&P/TSX Canadian Dividend Aristocrat Index, providing exposure to only the highest-quality dividend stocks in Canada.
For a stock to be included in the index, it must have increased dividends every year for at least five years. As a result, this ETF has a higher exposure to the real estate sector than other funds on our list, but the MER is on the high side, at 0.66%.
Vanguard FTSE Canadian High Dividend Yield Index ETF
Dividend Yield (Weighted Avg.): 3.83% (May 27, 2022)
Number of Stocks: 47
AUM: $88.3 billion
Inception: November 2012
Benchmark: FTSE Canada High Dividend Yield Index
Notable Holdings: Royal Bank of Canada (13.1%), Toronto Dominion Bank (12%), Enbridge (8%), Canadian Natural Resources (6.6%), BMO (6.44%)
The Top 10 holdings of Vanguard’s FTSE Canadian High Dividend Yield Index ETF reads like a who’s who of Canada’s largest banks and energy companies. In total, the financials and energy sectors comprise over 80% of this huge dividend ETF. Unlike CDZ, there is very little exposure to the real estate sector (0.2%). A low MER (0.22%) and attractive average dividend yield (3.83%) make this fund a contender for best Canadian dividend ETF. If you want to load up on Canadian banks and energy companies, give this one a close look.
iShares S&P/TSX 60 Index ETF
Dividend Yield (Weighted Avg.): 2.85% (May 27, 2022)
Number of Stocks: 60
AUM: $13 billion
Inception: September 1999
Benchmark: S&P/TSX 60 Index
Notable Holdings: Royal Bank of Canada (7.6%), Toronto Dominion Bank (7.25%), Brookfield Asset Management (3.76%), Canadian National Railway (3.62%), Suncor Energy (3.04%)
The second iShares ETF on our list tracks the top 60 stocks on the Toronto Stock Exchange. Naturally, holdings lean heavily towards financials and energy, followed by materials (11%) and industrials (10%). With over $13 billion in assets under management, the iShares S&P/TSX 60 Index ETF has been around for more than 20 years. The dividend yield lags other funds on our list, but the rock-bottom 0.18% MER makes this longstanding Canadian exchange-traded fund a keeper.
CI Active Canadian Dividend ETF Common
Dividend Yield (Weighted Avg.): 3.28% (May 27, 2022)
Number of Stocks: 33
AUM: $10.4 million
Inception: September 2014
Notable Holdings: Royal Bank of Canada (5.81%), Dollarama (5.06%), Alphabet Inc. (4.23%), Intact Financial Corp. (3.49%)
CI’s Active Dividend ETF has $10.4 million in Assets Under Management, making it one of the smaller dividend ETFs in Canada. Yet it’s very well diversified, with holdings across all industry sectors. Interestingly, the 2nd largest holding is Dollarama (5.06%). While the ETF is primarily a Canadian dividend fund, it may hold up to 30% in foreign securities.
Horizons Active Canadian Dividend ETF
Number of Stocks:
AUM: $117 million
Dividend Yield: 2.97% (Estimated)
Inception: February 2010
Notable Holdings: Royal Bank of Canada (5.83%), Toronto Dominion Bank (5.08%), Telus Corp (4.09%), Freehold Royalties Ltd (3.10%)
The objective of the Horizons Active Cdn Dividend ETF is to generate long-term returns by focusing on stocks with above average dividend yields within moderate levels of risk. The geographic breakdown of the fund holdings are approximately 93% Canadian and 7% US, so it’s positioned solidly as a Canadian dividend ETF. With assets under management of $117 million, there are larger dividend ETFs, but the fund is well diversified, with holdings spread across at least nine industry sectors.
TD Q Canadian Dividend ETF
Dividend Yield (Weighted Avg.): 3.37% (May 27, 2022)
Number of Stocks: 63
AUM: $59.40 million
Benchmark: S&P/TSX Composite Index (Total Return)
Geographic Allocation: Canada 99.7% / Latin America 0.3% / United States 0.10%
Notable Holdings: Loblaws (4.09%), Toronto-Dominion Bank (3.96%), Enbridge (3.89%), Great-West LifeCo (3.86%)
The TD logo is one of the most recognizable brands in North America, but many don’t realize that Toronto Dominion Bank has dozens of ETFs in its fund lineup. The TD Q Canadian Dividend ETF holds a portfolio of income-producing Canadian stocks and, according to TD Asset Management, may invest in other exchange-traded funds. The fund, whose holdings are almost exclusively Canadian (99.7%), may also hold Real Estate Investment Trusts (REITs). While the MER of 0.39% is higher than some other ETFs on our list, the average dividend yield of 3.37% is competitive, making TQCD a solid all-around Canadian Dividend ETF.
BMO Canadian Dividend ETF
Dividend Yield: 4.04%
Number of Stocks: 51
AUM: $910 million
Notable Holdings: The Bank of Nova Scotia (5.11%), BCE Inc (4.95%), Canadian National Railway (3.74%), Manulife Financial Corp (3.72%)
Like TD, the Bank of Montreal is another big bank that offers its own family of ETFs. The BMO Canadian Dividend ETF uses a “rules-based methodology” for choosing stocks, considering the three-year dividend growth rate. The result for investors is exposure to higher dividend paying Canadian stocks and lower volatility than the overall market. The geographic allocation is 100% Canadian stocks. The industry allocation is broad – I counted eight different sectors, led by financials (39.42%) and energy (17.61%). The MER of 0.39% stands out in a good way, as it is one of the lower ones on the list.
iShares S&P/TSX Composite High Dividend Index ETF
Dividend Yield: 3.59%
Number of Stocks: 75
AUM: $1.6 billion
Inception: April 2011
Benchmark: S&P/TSX Composite High Dividend Index
Notable Holdings: Suncor Energy Inc (6.35%), TC Energy Corp (5.07%), Toronto Dominion (4.85%), Telus Corp (4.61%)
Blackrock ETFs tend to have lower than average MERs, and the iShares S&P/TSX Composte High Dividend Index ETF is no different. With an MER of 0.22%, this broad index ETF tracks the S&P/TSX Composite High Dividend Index. The energy sector features prominently here, with energy stocks making up almost 33%of overall fund holdings. Investors in this fund should have a long-term mindset and a willingness to accept a medium level of risk.
Invesco Canadian Dividend Index ETF
Dividend Yield: 4.15%
Number of Stocks: 45
AUM: $927 million
Inception: June 2011
Benchmark: NASDAQ Select Canadian Dividend Index
Notable Holdings: Enbridge (8.50%), Royal Bank of Canada (7.95%), Telus Corp (4.03%), TC Energy (4.01%)
The Invexco Canadian Dividend Index ETF attempts to replicate the performance of the NASDAQ Select Canadian Dividend Index, which tracks Toronto Stock Exchange-listed companies with stable or increasing annual regular dividend payments at least five consecutive years.
The index is weighted heavily towards financial services, at 46.8%, followed by energy, at 21%, typical of the Canadian market. We’re impressed by the rather high dividend yield of over 4%.
CI WisdomTree Canada Quality Dividend Growth Index ETF
Dividend Yield: 2.14%
Number of Stocks: 50
AUM: $366 million
Inception: September 2017
Benchmark: WisdomTree Canada Quality Dividend Growth Index
Notable Holdings: Bank of Montreal (5.1%), Magna International (5.0%), Thompson Reuters Corp (5.0%), Canadian Pacific Railway (4.8%), Manulife Financial (4.8%), Rogers Communications (4.8%)
According to CI, the WisdomTree Canada Quality Dividend Growth Index ETF “seeks to track to the extent possible, the price and yield performance of the WisdomTree Canada Quality Dividend Growth Index” before fees and expenses. The top 10 holdings of this ETF include some dividend stocks not seen in the other ETFs top 10’s, including Magna International, Thompson Reuters Corp, and Rogers Communications. The risk level of this ETF is medium.
iShares Core MSCI Canadian Quality Dividend Index ETF
Dividend Yield: 4.00%
Number of Stocks: 23
AUM: $725 million
Inception: June 2017
Benchmark: MSCI Canada High Dividend Yield 10% Security Capped Index
Notable Holdings: Nutrien Ltd (10.23%), Royal Bank of Canada (8.53%), Sun Life Financial (6.39%), Fortis Inc (5.19%), Rogers Communications (non-voting) (4.00%)
iShares Core MSCI Canadian Quality Dividend Index ETF seeks to replicate the MSCI Canada High Dividend Yield 10% Security Capped Index, which includes fewer stocks (23) than other indices on our list. An ultra-low MER of 0.11% and an attractive dividend yield of 4.00% make this an attractive ETF for dividend investors. Financials make up more than 50% of the fund, while utilities, energy, communication, and materials, are all closely weighted, between 10 and 13%. Stocks included in this ETF possess strong overall financials, balance sheets, and stable earnings.
iShares Canadian Select Dividend Index ETF
Dividend Yield: 3.78%
Number of Stocks: 30
AUM: $1.7 billion
Inception: December 2005
Benchmark: Dow Jones Canada Select Dividend Index
Notable Holdings: Canadian Tire Ltd – Class A (6.65%), TC Energy Corp (4.97%), BCE Inc (4.93%), National Bank of Canada (4.63%), Labrador Iron Ore Royalty Corp (4.19%)
The iShares Canadian Select Dividend Index ETF offers access to 30 of the highest yielding Canadian companies in the Dow Jones Canada Total Market Index. The risk level of the fund is medium. The top 10 holdings of this ETF are heavily weighted towards financials, at 54%.
Where Can I Buy Canadian Dividend ETFs?
It’s never been easier to buy and sell Canadian dividend ETFs, and the cheapest way is to open a discount brokerage account that will allow you to execute trades online. There are at least a dozen leading online brokers in Canada, but a couple that we recommend here at MapleMoney is Questrade and Wealthsimple Trade.
Questrade offers self-directed investors a solid desktop trading platform and a slick mobile app. You can open an account online, but the best part is the low fees. Questrade offers some of the lowest fees in the business, including free ETF purchases. You can buy any of the dividend ETFs covered in this article for free with Questrade. Learn more in our full Questrade Review.
If you prefer to keep things simple, Wealthsimple Trade also offers free ETF purchases. In fact, all stock purchases are free with Wealthsimple Trade. If there’s a drawback, it’s that their platform is mobile-only. But if you’re ok trading ETFs on your phone, Wealthsimple Trade is a great option. Their mobile app is super easy to use. Our Wealthsimple Trade review has all the details.
The Bottom Line on Canadian Dividend ETFs
There you have it, our list of the best Canadian Dividend ETFs for 2022. With most of the funds on our list, the financial and energy sectors carry the largest weighting, by far; but that’s indicative of the makeup of the Canadian stock market. While these ETFs have some minor differences, the bottom line is that you really can’t go wrong with any of them as long as you maintain a long-term mindset. If you want to learn more about dividend investing, check out this article on the Basics of Dividend Investing or the requirements of becoming a Dividend Aristocrat. If you’d like to do more research on individual Canadian dividend stocks, here is our list of the top 100 Canadian Dividend stocks.