Why Canadian Dividend ETFs Still Make Sense for Income Investors

Investors looking for exchange traded funds (ETFs) which have outperformed the market will be hard-pressed to find any dividend-focused ETFs among such a list.

As interest rates have risen, companies with higher than average yields have seen their attractiveness decrease, as fixed income options become more interesting to long-term investors.

That being said, Canadian tax regulations still make investing in equities with higher-average yields generally more attractive to investors looking for regular income than bonds and other fixed income alternatives due to the dividend tax credit, a credit which allows investors to pay much less tax on dividend income than bond income, for example.

Finding those high yields, thus, remains a top priority for many investors; finding an ETF which can find those great companies with high yields, even more so.

One such ETF which investors ought to take a look at due to the relatively strong performance of late during an otherwise difficult time for dividend funds is the BMO Canadian Dividend ETF (TSX:ZDV).

This fund has a meaningful dividend yield of nearly 5% (coming in around 4.7% currently), and pays its distribution holders monthly, making for a much more attractive option for those in need of monthly distributions.

The BMO Canadian Dividend ETF is also one of the largest Canada-focused ETFs in this space, and as such, has benefited from both size and diversification, to a larger degree than many of its peers.


Invest wisely, my friends.