The stock market has been experiencing plenty of volatility lately. With economic uncertainty keeping many investors on edge, it is absolutely crucial to look for ways to safeguard your portfolio while still generating a reliable stream of income.
If you want to add some stability to your tax-free savings account (TFSA), one excellent exchange-traded fund (ETF) to consider right now is the BMO International Dividend ETF (TSX:ZDI).
What makes this fund particularly attractive for Canadian investors is its broad diversification combined with a complete lack of U.S. exposure. The fund is designed to provide exposure to a yield-weighted portfolio of dividend-paying equities domiciled exclusively in international developed markets, entirely outside of North America. This geographic focus provides a fantastic way to diversify away from heavily concentrated domestic and U.S. holdings.
ZDI utilizes a strict, rules-based methodology that screens for a strong three-year dividend growth rate, high yield, and a sustainable payout ratio. By targeting these high-quality international equities, the fund offers a much lower beta than the broader market, meaning investors can enjoy long-term growth with significantly less volatility.
Currently, the ETF offers an annualized distribution yield of roughly 3.2%. A massive bonus for income-focused investors is that ZDI makes its distributions on a monthly basis. This frequent payout schedule provides a steady and predictable stream of cash flow that you can easily use to cover living expenses or continuously reinvest.
With a reasonable management expense ratio of 0.44% and a solid track record of delivering sustainable international yield, this fund could make for an excellent, stress-free addition to your portfolio for the long haul.
