Wednesday, June 20, 2018

Top Canadian Dividend ETFs

This post is a follow up to my earlier article on the top dividend ETFs for beginners. In this post I will be showcasing the top Canadian dividend ETFs. I have always been a fan of passive investing and dividend ETFs fit in very well with my strategy. I use dividend ETFs to diversify my portfolio and top it off with a few dividend aristocrats.

It is important to discuss performance of an ETF in the context of benchmark. For this article I will be using iShares Core S&P/TSX Capped Composite Index ETF (XIC) as my bench mark.





Ticker Holdings MER P/E Dividend Yield CAGR Best Year Worst Year Finance Energy Inception
XIC 247 0.06% 15.64 Q 2.48% 7.12% 2009 (34.54%) 2008 (-33.34%) 33.55% 19.38% 2001
CDZ 80 0.66% 15.82 M 3.74% 5.79% 2009 (38.44%) 2008 (-29.97%) 22.27% 24.44% 2006
XDV 30 0.55% 12.39 M 4.01% 5.57% 2009 (37.45%) 2008 (-31.15%) 58.70% 5.68% 2006
VDY 65 0.22% 14.60 M 3.84% 8.37% 2016 (26.55%) 2015 (-10.54%) 67.60% 17.30% 2012
XDIV 21 0.11% 15.66 M N/A 7.53% N/A N/A 54.74% 19.71% 2017
XEI 75 0.20% 16.30 M 4.73% 5.79% 2016(28.11%) 2015 (-14.57%) 29.66% 30.12% 2012
DXM 30 0.60% 16.44 Q 4.09% 4.94% 2016 (20.32%) 2015 (-15.44%) 25.30% 24.14% 2012
PDC 45 0.55% 15.50 M 5.09% 8.53% 2016 (23.37%) 2015 (-8.76%) 31.07% 31.22% 2012
ZDV 51 0.39% 15.90 M 4.42% 5.29% 2016 (24.83%) 2015 (-13.34%) 35.22% 20.21% 2012

iShares Core S&P/TSX Capped Composite Index ETF (XIC)

iShares Core S&P/TSX Capped Composite Index ETF provides a low cost exposure to the entire Canadian stock market. Since its inception XIC has average annualized return of 6.47%. $10,000 invested in March 2001 would be worth $30,917 today with a CAGR of 7.12%. Biggest decline in value was between June 2008 – February 2009 (-43.58%). The average (yearly) dividend increase is 24.65% (6 times) and the average (yearly) dividend decrease is 26.05% (4 times). Overall XIC has an average increase of 4.37%. In terms of sector diversification, this ETF is predominantly invested in Financials & Energy sector.

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

iShares S&P/TSX Canadian Dividend Aristocrats Index ETF provides a low cost exposure to Canadian companies that increased cash dividends every year for at least five consecutive years. Since its inception CDZ has average annualized return of 6.18%. $10,000 invested in October 2006 would be worth $19,015 today with a CAGR of 5.79%. Biggest decline in value was between November 2007 – February 2009 (-43.85%). The average (yearly) dividend increase is 47.36% (5 times) and the average (yearly) dividend decrease is 20.39% (5 times). Overall CDZ has an average annual dividend increase of 13.48% and a TTM yield of 3.74%.


iShares Canadian Select Dividend Index ETF (XDV)

iShares Canadian Select Dividend Index ETF provides a low cost exposure to 30 of the highest yielding Canadian companies. Since its inception XDV has average annualized return of 5.71%. $10,000 invested in January 2006 would be worth $19,599 today with a CAGR of 5.57%. Biggest decline in value was between November 2007 – February 2009 (-43.56%). The average (yearly) dividend increase is 20.04% (5 times) and the average (yearly) dividend decrease is 10.44% (5 times). Overall XDV has an average dividend increase of 4.80% and a TTM yield of 4.01%.


FTSE Canadian High Dividend Yield Index ETF (VDY)

FTSE Canadian High Dividend Yield Index ETF provides a low cost exposure to stocks that are characterized by higher than-average dividend yields. Since its inception VDY has average annualized return of 8.66%. $10,000 invested in December 2012 would be worth $15,456 today with a CAGR of 8.37%. Biggest decline in value was between September 2014 – February 2016 (-17.47%). VDY is a relatively young fund and as such its dividend history is not sufficient for analysis. Overall VDY has an average dividend increase of 18.99% and a TTM yield of 3.84%.


BMO Canadian Dividend ETF (ZDV)

BMO Canadian Dividend ETF provides exposure to yield weighted portfolio of 51 dividend paying stocks. Since its inception ZDV has average annualized return of 6.24%. $10,000 invested in February 2012 would be worth $13,224 today with a CAGR of 5.29%. Biggest decline in value was between September 2014 – February 2016 (-19.33%). The average (yearly) dividend increase is 19.51% (2 times) and the average (yearly) dividend decrease is 5.07% (3 times). Overall ZDV has an average dividend increase of 0.86% and a TTM yield of 4.42%.


iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV)

iShares Core MSCI Canadian Quality Dividend Index ETF provides a low cost exposure to stocks with strong overall financials, including solid balance sheets and less volatile earnings. XDIV is a relatively new fund and there is insufficient data to compute CAGR or yearly dividend increase. As of today XDIV has C$0.411 in distributions in 2017. Between July 2017 and May 2018 it has a CAGR of -7.53%. XDIV pays monthly dividends. With only 21 positions this ETF has low sector diversification a very high exposure to financials.


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

iShares Core S&P/TSX Composite High Dividend Index ETF provides exposure to 50 to 75 stocks selected from the S&P/TSX Composite index with a focus on dividends. Since its inception XEI has average annualized return of 5.27%. $10,000 invested in February 2012 would be worth $13,566 today with a CAGR of 5.79%. Biggest decline in value was between September 2014 – December 2015 (-21.73%). The average (yearly) dividend increase is 45.83% (3 times) and the average (yearly) dividend decrease is 15.36% (3 times). Overall XEI has an average dividend increase of 18.28% and a TTM yield of 4.73%.


First Asset Morningstar Canada Dividend Target 30 Index ETF (DXM)

First Asset Morningstar Canada Dividend Target 30 Index ETF provides exposure to 30 of the most fundamentally sound dividend paying stocks in Canada by replicating, to the extent possible, the Morningstar Canada Target Dividend Index. DXM takes into account the following factors Expected dividend yield (33.33%), Cash flow/debt (20%), 5-year normal EPS growth (13.33%) Return on equity (20%) and 3-month EPS estimate revision (13.33%). Since its inception DXM has average annualized return of 3.97%. $10,000 invested in March 2012 would be worth $12,984 today with a CAGR of 4.94%. Biggest decline in value was between September 2014 – December 2015 (-23.40%). The average (yearly) dividend increase is 17.76% (4 times) and the average (yearly) dividend decrease is 27.85% (1 time). Overall DXM has an average dividend increase of 10.80% and a TTM yield of 4.09%.


PowerShares Canadian Dividend Index ETF (PDC)

iShares Core S&P/TSX Capped Composite Index ETF provides a low cost exposure to Canadian stocks that exhibit a history of increasing dividend payments (at least five consecutive years of increasing annual regular dividends). Since its inception PDC has average annualized return of 8.36%. $10,000 invested in March 2012 would be worth $15,577 today with a CAGR of 8.53%. Biggest decline in value was between May 2015 – December 2015 (-11.42%). The average (yearly) dividend increase is 36.72% (2 times) and the average (yearly) dividend decrease is -42.28% (once). Overall PDC has an average increase of 10.39% and a TTM yield of 5.09%.


For obvious reasons I would like to classify the ETFs into two categories i.e. ETFs that were started before great recession and ETFs that were started after the great recession.

In the first category there are three funds namely XIC, CDZ and XDV. In terms of performance during 2008-09 CDZ stands out. It had the lowest drop in value (2008) and the largest increase in value (2009). Additionally, CDZ is a lot more diversified with financial and Energy sector at around ~ 25%. In terms of compounded annual growth rate XIC performs better at 7.12%. A maximum drawdown (MDD) is the maximum loss from a peak to a trough of a portfolio, before a new peak is attained. It focuses on capital preservation, which is a key concern for most investors. MDD for all of the three ETFs was around ~ -44%. However, XIC recovered the earliest i.e. in 245 days. CDZ and XDV took almost twice the time (458 days). Finally, in terms of annual dividend increases CDZ is again the winner. In addition CDZ holds companies that increased cash dividends every year for at least five consecutive years. This provides an additional quality tilt. My vote is for CDZ.

In the second category there are five funds namely DXM, PDC, VDY, XEI and ZDIV. In terms of best and worst performance spread, VDY has the best performance. It’s closely followed by PDC. MDD for the ETFs range from -11% to -23%, PDC has the lowest MDD of -11.23%. In addition, PDC had the lowest MDD time frame of 214 days. Couple this with a solid dividend yield 5.09% and CAGR of 8.53%, PDC is the best choice by far. Finally, PDC does not have an extreme tilt towards financial sector.


Attribution: Alpha Stock Images - http://alphastockimages.com













4 comments:

  1. Great list! I only have one of them but I am also not big on ETFs:)

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  2. An excellent all-in-one-place list! I prefer ETFs to buying individual stocks as it is much easier to diversify your holdings.

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  3. nice breakdown and list.

    i have never really looked into canadian etfs. this list may make me look into them more. 4% yields and monthly is definitely nice!

    cheers

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  4. Very nice list!

    I know it's not an ETF, and I know paying fees suck..but I have been VERY happy with my RBC Canadian Equity income fund (Class D). The MER is lower on the class D funds. Curious what your thoughts are on it - and how it compares to some of the top ETF's.

    ReplyDelete