Many retirees are being forced to look at stocks for their income needs. Traditional fixed income sources like GICs and bonds just simply don’t pay enough. These folks can either build their own dividend portfolios or choose an ETF to do it for them.
Many are choosing ETFs like the iShares Core TSX Composite High Dividend Index ETF (TSX:XEI) for its built-in diversification and ample yield. The current payout is 7.58 cents per share each month, good enough for a 4.24% yield.
This ETF is one of the larger ones offered by iShares, with a current market cap of $484 million. It has 22 million shares outstanding and Google Finance lists average daily volume at 41,340 shares. That’s plenty for retail investors.
The portfolio is stuffed with many of Canada’s top dividend-growth stocks, including Telus, BCE, TransCanada, Royal Bank of Canada, and Bank of Montreal. The top ten holdings are approximately 47% of total assets and the ETF holds a total of 75 different stocks.
More than 30% of assets are invested in the energy sector, primarily in pipeline stocks. The financial sector is also heavily represented, with 28.6% of assets invested there.
Since inception in 2011, the fund has returned 43.4%, only barely lagging the index’s 46.8% return. In the last year, including dividends, the ETF has delivered a 20.8% return.
Perhaps the best feature about the High Dividend ETF is the ultra-low management fee. It checks in at just 0.22%, which is very competitive. Other competing products have management fees as high as 0.55%.
