The BMO Canadian Dividend ETF (TSX:ZDV) is a great investment for Canadians who are looking for some strong dividend income to add to their portfolios.
Without having to worry about withholding taxes on U.S. equities, investors can maximize their dividend income by holding a portfolio of Canadian dividend stocks. And inside of a tax free savings account, those earnings would not be taxable at all.
Currently, the ETF pays investors a yield of 4.8%, which is a fairly strong payout that offers a good balance between not being too low that it’s not worth your while and not being too high that it might not be sustainable.
The fund holds some of the top dividend stocks on the TSX, including Enbridge Inc (TSX:ENB)(NYSE:ENB) and Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM).
Financial services accounts for 37% of the fund’s holdings while energy is the next largest at just under 20%, followed by utilities at nearly 12%.
With many of these stocks regularly increasing their dividend payments over the years, there’s plenty of reason to hold the ETF for the long term. And while the stocks often pay quarterly, the fund pays investors every month, providing for a very consistent stream of income.
In addition to dividend income, the fund has provided investors with some great capital gains this year as well, rising more than 15% since January.
The only real negative about the fund is that it is near its 52-week high. But with a beta of around one, the stock shouldn’t be any more volatile than the TSX.