The top Canadian banks reported earnings recently, and they all did incredibly well. Many of them also raised their dividend payments, as they continue to perform well. If you want to gain exposure to them along with many other top Canadian financial stocks, an excellent exchange-traded fund (ETF) to consider is the iShares S&P/TSX Capped Financials Index ETF (TSX:XFN), which tracks stocks in that sector.
It has 24 holdings, with the top chartered Canadian banks being among its top 10 holdings, including Royal Bank of Canada and Toronto-Dominion, which together account for around 38% of its entire portfolio. In addition to banks, there are also insurance companies including Sun Life Financial and Manulife Financial among the fund's top holdings.
This year, the ETF has risen by around 10%, providing investors with some great returns along with a dependable dividend that yields around 2.3%. Between the dividend income and long-term stability you can get from this fund, it's an excellent option to put into a tax-free savings account (TFSA) and simply hang on to for years.
Investing in financial stocks, specifically the big banks, are among the safest investments you can own in Canada. They are rock-solid companies with terrific track records for paying and increasing their dividend payments. They'll also benefit from the economy's growth over the years.
The ETF has management expense ratio of 0.61%, which is in line with many other funds of this nature. If you're looking for a top fund to build your portfolio around for the long term, this is a great choice to consider.
