Canada now has several dividend ETFs, because of demand from investors looking for income. Let’s take a look at the two largest, the iShares Dow Jones Canadian Select Dividend Index Fund (TSX:XDV) and the BMO Canadian Dividend ETF (TSX:ZDV).
Let’s start with the smaller ETF, the BMO version. It has $655 million in assets split between 51 different stocks. It has a more mid-cap feel to it, with the three largest holdings being Veresen, Vermillion Energy, and Capital Power, which have weightings in the fund of 3.3%, 3.2%, and 3.0%, respectively.
These large holdings have high dividends, which has boosted the yield of this ETF to 4.4%. That’s a very attractive payout in today’s low-yield world. The management expense ratio of 0.39% is also quite reasonable.
The iShares dividend ETF is quite similar in a lot of ways, starting with the dividend yield, which is also 4.4% on a trailing basis. But the iShares dividend ETF has about twice as much in assets, which translates into a lot more liquidity.
The BMO dividend ETF beats on the management fee pretty handily, with the iShares ETF charging investors a fee of 0.55%.
Top holdings are dominated by financials, with four of the top five holdings Canadian banks. Altogether, 57% of assets are in one sector--financials--and 32.9% of assets are in the top five holdings. The iShares dividend ETF is also less diverse, only holding 32 different positions.
