12 Best Dividend ETFs in Canada For 2024

Are you tired of hunting for the best dividend stocks to add to your portfolio? Do you want to earn regular income without constantly monitoring the stock market? Look no further than the Best Dividend ETFs in Canada! 

These investment vehicles are designed to generate steady returns through dividend-paying stocks of top Canadian companies. With their potential for consistent returns and low fees, these funds could be your key to long-term financial success. 

In this article, we’ll explore the 10 Best Dividend ETFs in Canada, including their track records, fees, and performances to help you find the perfect ETF to suit your financial goals.

So if you’re ready to start earning a steady stream of passive income from your investments, let’s dive into the top options and see which works best for you!

12 Best Dividend ETFs in Canada

Investing in dividend ETFs can be an excellent strategy for new and seasoned investors. With the right ETFs in your portfolio, you can benefit from the stability and consistent returns of dividend-paying stocks while diversifying your holdings and minimising risk.

But with so many options available, choosing the best dividend ETFs in Canada for your investment goals can be challenging.

To make the most of your investment, consider the following best dividend ETFs in Canada:

1. Vanguard FTSE Canadian High Dividend Yield Index ETF (VDY)

• Assets Under Management (AUM): $1.84 billion
• MER: 0.22%
• Number of stocks: 47
• Distribution frequency: Monthly
• Dividend yield: 6.24% 
• 1-year performance: 3.68%

Vanguard FTSE Canadian High Dividend Yield Index ETF (VDY) is a top Canadian dividend ETF that invests in high-yield Canadian companies. 

With exposure to 47 stocks in various sectors, including financials, energy, telecommunications, and utilities, VDY aims to track the performance of the FTSE Canada High Dividend Yield Index after accounting for fees and expenses. 

The ETF has many of its holdings in the financial and energy sectors, making it ideal for investors seeking exposure to these sectors. With its solid track record, VDY is one of the best dividend ETFs in Canada worth considering for your investment portfolio.

2. BMO Canadian Dividend ETF (ZDV)

• AUM: $918 million
• MER: 0.39%
• Number of stocks: 51
• Distribution frequency: Monthly
• Dividend yield: 4.36% 
• 1-year performance: 1.85%

BMO Canadian Dividend ETF (ZDV) is a top Canadian dividend ETF focusing on dividend-paying Canadian stocks screened based on their liquidity and 3-year dividend growth rate, yield, and payout ratio. 

With a rules-based approach, ZDV invests in roughly 50 stocks, primarily concentrated in the financials, energy, utilities, and communication sectors. 

The ETF has a long performance track record, low MER, and pays out distributions monthly, making it an attractive option for investors seeking regular income. 

While relatively concentrated compared to other ETFs, ZDV still offers adequate diversification for investors. With a medium risk rating from BMO, ZDV is one of the best dividend ETFs in Canada worth considering for your investment portfolio.

3. BMO US Dividend ETF (ZDY)

• AUM: $481.73 million
• MER: 0.30%
• Number of stocks: 64
• Distribution frequency: Monthly
• Dividend yield: 2.64% 
• 1-year performance: 1.21%

BMO US Dividend ETF (ZDY) is a cost-effective option for Canadians interested in investing in US dividend-paying stocks, with holdings selected based on dividend growth, yield, and payout rates. 

ZDY is not hedged, and currency fluctuations can impact returns, ZUD offers a hedged version, while ZDY.U is available in US dollars.

The ETF has a long track record, a decent yield, pays monthly distributions, and is well-diversified with around 100 holdings, but it is heavily exposed to sectors like health care, information technology, and financials. 

BMO assigns ZDY a low to medium risk rating, but it may carry a higher risk than indicated. ZDY is an excellent option for those seeking a flexible, rules-based approach to investing.

4. iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ)

• AUM: $992 million
• MER: 0.66%
• Number of stocks: 93
• Distribution frequency: Monthly
• Dividend yield: 4.30% 

The iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ), managed by BlackRock, tracks the S&P/TSX Canadian Dividend Aristocrats Index and provides diversified exposure to high-paying Canadian dividend companies. 

The ETF holds Canadian companies that have increased dividends for at least five consecutive years and aim to replicate the index’s performance with fewer fees and expenses. 

The fund is invested in 11 different sectors, with a significant portion allocated to real estate via REITs (12.01%). Financials (24.15%) and Energy (15.51%) are the top two sectors. 

Overall, iShares S&P/TSX Canadian Dividend Aristocrats Index ETF is one of Canada’s best monthly dividend ETFs and worth considering.

5. iShares S&P/TSX 60 Index ETF (XIU)

• AUM: $10.6 billion
• MER: 0.18%
• Number of stocks: 60
• Distribution frequency: Quarterly
• Dividend yield: 3.05%
• 1-year performance: -4.18%

The iShares S&P/TSX 60 Index ETF (XIU) from BlackRock provides exposure to large Canadian companies with a long history of paying dividends, seeking long-term capital growth by replicating the S&P/TSX 60 Index’s performance, less fees and expenses. 

It’s the first ETF in the world, with assets exceeding $10 billion, making it one of Canada’s most liquid ETFs. 

With holdings across Financials and Energy, and representation in IT, industrials, communication, consumer staples, health care, utilities, real estate, and materials sectors, XIU offers diversified exposure to high-paying Canadian dividend companies. 

XIU is worth considering for those seeking an ETF with a storied history and broad exposure to Canadian equities.

6. TD Q Canadian ETF (TDCQ) 

• AUM: $75 million
• MER: 0.39%
• Number of stocks: 62
• Distribution frequency: Monthly
• Dividend yield: 4.03%
• 1-year performance: 1.70%

The TD Q Canadian Dividend ETF (TDCQ) invests in Canadian companies that consistently pay and increase their dividends. It has a high concentration in Financial Services and Energy sectors. 

TD’s Q Global Dividend ETF is the only global dividend ETF on the list and has a quantitative approach to investing. 

The ETF can invest in global stocks, preferred shares, and REITs and has a well-diversified portfolio of around 200 holdings. The fund pays monthly distributions and offers a good dividend yield but has a relatively high MER and a short track record, with a low to medium risk rating. 

However, its global mandate provides diversification, making it a medium-risk investment option.

7. Horizons Active Canadian Dividend ETF (HAL)

• AUM: $121 million
• MER: 0.68%
• Distribution frequency: Quarterly
• Dividend yield: 5.71%
• 1-year performance: 4.33%

The Horizons Active Canadian Dividend ETF (HAL) invests in high-yield North American equity securities to achieve long-term total returns and regular dividend income. 

It uses currency hedging and fixed-income assets for maximizing returns, while its holdings are primarily in the energy, financials, industrials, real estate, and utilities sectors. 

The ETF’s management fees are 0.67%, and its top holdings include Royal Bank, TD Bank, Ovintiv, Telus, and Exchange Income Corp. 

HAL has performed exceptionally well, outperforming the TSX over the short, mid, and long term. Its significant exposure to the energy sector is due to its active management strategy to take advantage of the rising crude and oil stocks’ popularity.

8. iShares S&P/TSX Composite High Dividend Index ETF (XEI)

• AUM: $1.3 billion
• MER: 0.22%
• Number of stocks: 75
• Distribution frequency: Monthly
• Dividend yield: 4.92% 
• 1-year performance: 3.70%

BlackRock’s iShares S&P/TSX Composite High Dividend Index ETF (XEI) is an ETF that invests in 75 high-dividend paying stocks across ten sectors. 

Most of its holdings are in the financials, energy, communication, and utilities sectors. The ETF aims to track the performance of the S&P/TSX Composite High Dividend Index and seeks to achieve long-term capital growth and total returns. 

It provides exposure to other sectors such as real estate, consumer discretionary, industrials, healthcare, materials, and consumer staples, albeit in smaller proportions.

9. Invesco Canadian Dividend Index ETF (PDC)

• AUM: $830.52 million
• MER: 0.56%
• Number of stocks: 45
• Distribution frequency: Monthly
• Dividend yield: 4.34% 
• 1-year performance: 6.62%

Invesco Canadian Dividend Index ETF (PDC) is a large, passive dividend-focused Canadian stock strategy that tracks the NASDAQ Select Canadian Dividend Index. 

The ETF has a long performance track record and invests 95% in Canadian equities and income trusts, with the remaining 5% invested in other countries. 

Its top holdings include Enbridge, Bank of Nova Scotia, TD Bank, Royal Bank, and Bank of Montreal. Despite being passively managed, its MER is relatively high compared to other Canadian dividend strategies on the list. 

The Invesco Canadian Dividend Index ETF holds highly liquid Canadian equity securities with growing dividend returns and aims to provide long-term capital growth and long-term total returns.

10. iShares Core MSCI Canadian Quality Dividend Index ETF

• AUM: $688 million
• MER: 0.11%
• Number of stocks: 20
• Distribution frequency: Monthly
• Dividend yield: 4.51% 
• 1-year performance: 0.38%

The iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV) is a highly-rated Canadian dividend ETF with a low MER and a focus on quality, high-yielding companies. 

It tracks the MSCI Canada High Dividend Yield 10% Security Capped Index, which comprises companies with a reliable track record of growing dividends and a strong balance sheet. 

XDIV invests in only five sectors and has a high financial, utilities, and communication concentration. Its top holdings include Scotiabank, Royal Bank, Sunlife, Manulife Financial, and Toronto Dominion Bank. 

Overall, XDIV offers exposure to high-paying dividend ETFs and long-term capital growth.

11. RBC Quant Canadian Dividend Leaders ETF (RDC)

• AUM: $113 million
• MER: 0.43%
• Number of stocks: 74
• Distribution frequency: Monthly
• Dividend yield: 4.36%
• 1-year performance: -0.8%

The RBC Canadian Dividend ETF (RCD) invests in a diversified portfolio of 74 Canadian high-dividend paying stocks with a medium risk rating. 

It has a high allocation to the financial (32.7%) and energy (23.2%) sectors, similar to other Canadian dividend ETFs.

RCD is managed using a quantitative approach, considering factors such as balance sheet strength and dividend payout. It pays out distributions to investors monthly and offers a good dividend yield. 

While its MER is slightly higher than others on the list, RCD has a decently sized AUM and is well-diversified. Its sector biases include financials, energy, and industrials. Overall, RCD is a great option for a Canadian dividend-focused stock ETF.

12. iShares Canadian Select Dividend Index ETF (XDV)

• AUM: $1.59 billion
• MER: 0.55%
• Number of stocks: 30
• Distribution frequency: Monthly
• Dividend yield: 4.66% 
• 1-year performance: -7.24%

The iShares Canadian Select Dividend ETF (XDV) is an attractive option for investors seeking monthly dividend income. 

This ETF invests in 30 high dividend-yielding Canadian stocks and tracks the performance of the Dow Jones Canada Select Dividend Index. Its holdings include Canadian Tire and Labrador Iron Ore, among others, and it has a highly weighted allocation to the financial sector. 

While the MER is reasonable, the fund’s financial sector exposure and lack of real estate investment trusts may limit diversification. 

Overall, iShares Canadian Select Dividend ETF is a great choice for income-seeking investors looking for single-click exposure to diverse blue-chip Canadian stocks.

READ MORE: Best Canadian ETFs: 22 Top-Performing Funds for 2024

How to Buy Dividend ETFs in Canada in 2024

There are different ways of buying dividend ETFs in Canada. Below are my two top choices for buying the best dividends ETFs in Canada:

1. Wealthsimple Trade

Wealthsimple Trade is a subsidiary of Wealthsimple, a leading Canadian robo-advisor that provides its clients with low-cost, automated investment portfolios. 

It is a Canadian-based online brokerage that allows investors to buy and sell stocks and ETFs (exchange-traded funds) through a user-friendly mobile app or website. 

The platform offers commission-free trading on Canadian and US stocks, ETFs, and options. It also provides real-time quotes, news, and charts to help users make informed investment decisions.

RELATED: Wealthsimple Trade Review: The Complete Pros and Cons in 2024

2. Questrade

Questrade is a Canadian online discount brokerage that provides a platform for individuals to buy and sell stocks, exchange-traded funds (ETFs), mutual funds, bonds, options, and other securities.

Questrade is known for its low fees, commission-free ETF purchases, and various account types, including registered accounts such as RRSPs, TFSAs, and RESPs. 

Questrade offers a user-friendly trading platform that is accessible through its website or mobile app.

RELATED: Questrade Review 2024: Canada’s Best Discount Brokerage

What is a Dividend ETF?

A dividend ETF is an investment fund that holds a collection of dividend-paying stocks and distributes regular income to its shareholders. 

Fund managers of dividend ETFs screen for reliable companies with a solid history of paying and increasing dividends over the years. Before adding them to the ETF, they also screen these stocks for other performance criteria, such as size, liquidity, ROE, yield, debt levels, etc. 

Dividend ETFs issue dividends periodically, either monthly, quarterly, or annually, and investors can choose to take the cash or reinvest the dividends to increase their stake in the ETF. 

The number of Canadian dividend ETFs has been growing over the years, with BlackRock Canada being one of the biggest portfolio managers in the country, managing some of the leading funds. 

RELATED: 12 Top Safe Investments With High Returns in Canada for 2024

Benefits and Downsides of Dividend ETFs

Pros

• Steady income: Most dividend ETFs distribute returns monthly and quarterly. Only a few distributes annually. Thus, a dividend ETF is ideal if you’re looking for steady income from your investment.
• Diversification: If you’re looking to hold different securities without investing in each, a dividend ETF is what you need. Diversification helps you avoid risk and maximise gains in the stock market.
• Low-cost: Investing in a dividend ETF is cheaper than investing in an individual stock. Dividend ETFs allow you to buy only a portion of different securities, saving you cost.
• Low fees: Dividend ETFs have low fees, unlike mutual funds. When you invest in a robo-advisor such as Wealthsimple, you can buy and sell your ETFs without commission.

Cons

• Recurring fees: Unlike individual stocks, dividend ETFs have recurring fees consisting of management expense ratio (MER) and management fee.
• Returns are not guaranteed: Even though dividend ETFs are high-paying, the returns are not guaranteed.

Final Thoughts on the Best Dividend ETFs in Canada

Investing in dividend ETFs can be a great way to build a steady stream of passive income while diversifying your portfolio. 

With various options available in Canada, including the popular Vanguard VDY, RBC RCD, and iShares XDV, there is no shortage of choices for investors seeking reliable dividends. 

But before jumping in, it’s important to carefully consider your investment goals and criteria, such as performance track record, fees, sector diversification, and risk tolerance. 

So, whether you’re a seasoned investor or just starting out, take the time to research and choose the best dividend ETF that aligns with your investment strategy. 

Start building your portfolio and secure your financial future today!