Question: what is td easyweb? What is the best Canadian dividend ETF?, Which ETF pays highest dividend?, Do ETFs pay dividends Canada?, Which Canadian banks pay the best dividends?
hey guys it’s Adrian here the Pakainfo and today I’ll be breaking down the td easyweb best ETFs in Canada for dividends these are the Canadian ETFs that pay a generous dividend that you could hold on to for life and collect that easy passive income every month or every quarter plus they’ll give you a well diversified exposure to the Canadian market that makes them great for any investor especially for beginners with a lot of room in their TFSA I’m only going to be talking about ETFs in Canadian dollars that track Canadian companies so no ETFs that track the US market like the S&P 500 all of my US ETFs I hold in US Dollars and I keep them in my RRSP to avoid paying US withholding taxes the ETFs that I’m talking about today give you purely Canadian income so I keep them in my TFSA and once that’s maxed out put them in your RSP so that you won’t be paying any taxes on the income that you earn I’ll be breaking down which types of investments I put in my TFSA vs.
BEST CANADIAN ETFs FOR DIVIDENDS | TFSA Passive Income td easyweb 2022
td easyweb RRSP to minimize taxes in an upcoming article so stay tuned for that before I jump into my list make sure you watch my previous Articles in my dividend investing guide I have a article on the basics of stock market investing and dividends my top three dividend stocks in Canada and a article on ETFs so click the pop up at the top right to check these out for this article I’m going to assume that you know what an ETF is and what a management fee or MER is if you don’t then watch my ETF article first where I cover all the basics in a short summary an ETF is a way to buy hundreds of stocks within a single fund so instead of putting all your eggs in one basket by investing in one company you are diversifying your portfolio by investing in a little piece of hundreds of companies all at once and you collect profits through dividends from each of these companies so without further ado let’s jump into the best Canadian ETFs for dividends let’s start with XIC and td easyweb.
XIC tracks the TSX capped composite index and so it tracks the 235 largest Canadian companies on the Toronto Stock Exchange unlike the other ETFs on this list XIC is not specifically designed to target high dividend stocks it just contains the 235 largest companies in Canada and the Canadian market is dominated by the financial industry energy companies utilities telecommunications and materials all of which pay a generous dividend by collecting the dividends from these 235 company XIC is able to pay out a dividend yield of 3% every quarter this is definitely the lowest dividend yield on this list but XIC does have a few advantages it has the lowest management fee and it has the widest diversification since XIC is just tracking the Canadian market it is purely passive management there are no decisions to make in terms of the breakdown in this fund and so XIC can get away with rock-bottom management fees with an MER of only 0.06% that means that if you have $1000 invested in XIC you’ll only be paying 60 cents every year in fees that’s practically nothing remember with ETFs you’ll never see this management fee taken out as a transaction this fee is built into the price of the ETF that you’re looking at another way to consider the effect ofthe management fee is to subtract it away from the dividend yield.
What are the best Canadian ETFs?
so if our dividend yield is 3% but we pay 0.06% in management fees then our net income is 2.94% every year of course this doesn’t consider capital gains as the value of the ETF grows this is just the cash that we obtain every single year through dividends I can also calculate the amount you need to qualify for a DRIP remember in my previous article I went over the benefits of DRIPs is that a receiving that dividend in cash you can use a dividend to automatically purchase a new share of that stock or ETF without paying any Commission this is incredibly useful when you’re investing in stocks but if you’re using Ques trade which is my favorite online broker you don’t pay any Commission on ETFs anyway and so using a DRIP on ETFs won’t save you any money but it does automate the compounding growth of your ETF rather than having to manually purchase a new share every time you receive a dividend if you’re not using Ques trade and you do pay commissions on ETFs then definitely sign up for a DRIP it will save you tons of money in the long run or better yet to sign up for Ques trade and never pay commissions on ETFs ever again check out my article on why Ques trade is my favorite online broker and for a step-by-step guide on how to buy stocks and ETFs using Ques trade and if you’d like to sign up use my referral link in the box below to get $50 in Commission free trades plus I’ll get a small referral bonus.
so back to XIC with the yield of 3% you’ll need to own $3,615 in xic to qualify for a DRIP that 3% dividend gives you $108 a year or $27.11 every quarter the share price for XIC is $27.10 and so your dividend is enough to automatically purchase anew share of XIC so that covers the dividend and the MER but we also want to consider the holdings of this ETF this ETF contains the largest and most secure Canadian companies and so it contains Canadian staples like td easyweb RBC TDEnbridge Scotia Bank Canadian National Railway BMO Sun cor Energy and Shopify and those are just in the top ten there are 235 companies in total in this ETF all of the companies in the top ten except for Shopify pay out a generous dividend that’s why XIC is still a great ETF for dividends even though that wasn’t its intended goallet’s also look at the industry exposure of XIC.
How do I invest for Passive Income in Canada?
XIC just tracks the Canadian market and td easyweb you can see that the majority of the Canadian market is in financials energy materials and industrial you’ll notice that technology is very small only 5% of the Canadian market in the US the largest companies are the tech companies like Microsoft Apple and Amazon but in Canada there are only a few big players like Shopify Open Text and Blackberry but there is a silver lining tech companies almost never pay dividends whereas the heaviest Canadian industries all paid generous dividends looking at the share price of XIC over the past year you can see that it has steady growth our main goal with these ETFs is to collect passive income but still great to see some capital appreciation while we collected those 3%dividends at number 2 we have the Vanguard ETF VDY is essentially a specialized subset of XIC focusing only on the Canadian companies that paya high dividend XIC contains the 235 largest companies in Canada but VDY contains only 54 of these companies who pay out a large dividend mostly over 4%so you won’t see any tech companies like Shopify but VDY does pay out a significantly higher dividend yield at 4.25% and this dividend is paid out every month.
so you’ll get very steady income the td easyweb, VDY fund requires a bit more work and maintenance they’re not just tracking the largest Canadian companies they also need to filter out the companies that pay high dividends and companies can raise or cut their dividends anytime because of this extra work VDY charges a higher management fee than XIC with an MER of 0.22% that’s almost four times the cost of XIC but it’s still less than 10 times the price of the average mutual fund mutual funds charge an MER between 2%and 3% so only paying 0.22% in MER is definitely a better option if you own one thousand dollars in VDY you’ll be paying $2.20 in fees every year again this fee is built into the price of each share or we can take it out of our dividend income VDY pays a dividend yield of 4.25% minus the MER of 0.22% that gives us an annual net income of 4.03% this is a great source of passive income while gaining decent exposure of the Canadian market this dividend is paid monthly we’ll be getting smaller dividend payments but more frequently because of this we’ll need at least $9,800 to qualify for a DRIP with ninety eight hundred dollars and a yieldof 4.25% we’ll get $416 a year or $34.70 every single month that’s enough to buy yourself a free share every month that’s 12 free shares a year plus every month your dividend will be getting larger and larger and that is the definition of compound growth looking at the top ten holdings of VDY they’re almost exactly the same as XICexcept that they took away the low dividends Shopify and Canadian National Railway and instead bumped up Manulife CIBC and sunlight financial into the to pten looking at the industry breakdown VDY is even more focused on the financial industry with 65% of this fund invested in banks and insurance companies oil gas and utilities make up 29% and the rest is pocket change this td easyweb fund is far less diversified than XIC and even though the Canadian banks are some of the best investments in the world having too much of your money tiedup in one single industry can be risky.
How do I Diversify my Portfolio while still earning High Dividends?
so don’t rely entirely on VDY make sure you also own the other ETS on this list to get better diversification looking at the price chart of VDY over the past year it definitely shows more volatility with some significant dips but it still shows an overall increasing trend again by tracking such already large Canadian companies wedon’t expect a huge amount of growth we just want to collect that 4.25%of passive income any capital appreciation we get is a nice bonus at number 3 we have the Black rock ETF XEI XEI is very similar to VDY in that it isa subset of the XIC holdings.
so XEI only contains 75 of the largest Canadian companies pay out a high dividend but they significantly shake up the proportion of these companies compared to VDY and XIC. XEI has an even larger dividend yield of 4.72%and this dividend is paid out monthly like VDY this etf requires more work to manage and it has an identical MER of 0.22% soif you own a thousand dollars in XEI you’ll be paying two dollars and 20 cents a year in fees with a dividend of 4.72% and an MER of 0.22% that gives us an annual net income of 4.5% collected monthly to qualify for a DRIP you’ll need to own $5,660 dollars in XEI with a yield of 4.72% that gives us$267 a year in dividends or $22.65 every month the share price of XEI is currently $22.25 so with $5,660 invested in XEI you’ll earn a free share every single month or twelve shares a year XEI gives us a little bit more income than vdy but its main difference is in its holdings XEI contains 275 companies and it focuses more on energy stocks and less on financials the top ten holdings still contain a lot of the same big companies like Enbridge TC energy BMO CIBC and scotia bank with td easyweb but interestingly this ETF does not contain TD or RBC which were the two largest holdings in vdy those two banks alone made up 30% of VDY’s value but they are completely absent in XEI.
I’ll be breaking down the BEST CANADIAN ETFs FOR DIVIDENDS.
XEI’s holdings are spread out more equally in fact all of their top 10 holdings have an equal weight of 5% each looking at XEI’s industry exposure you can see that energy and financials are equal at 30% compared this to VDY which has 65% in financials By stepped away from the financial industry XEI is able to gain more exposure in telecommunications utilities and real estate and so it is definitely more diversified and it is more representative of the overall Canadian market looking at the price chart over the past year it also appears to be a little less volatile with a more consistent and gradual increase all while paying a generous 4.72% in income every month the last ETF is VRE and it is the most unique ETF on this list VRE is a real estate ETF tracking the largest REITs in Canada in the same way that ETFs are a collection of hundreds of stocks REITs are a collection of hundreds of real estate properties all packaged together intoone fund and the dividends or distributions of a REIT come from the monthly rent earned from these properties VRE is an ETF which contains 18 of the largest REITs in Canada REITs are some of the best dividend investments out there.
so it’s no surprise that VRE has the highest dividend yield on this list with a yield of 5.16% although this yield is a little higher than usual since the price dropped a little bit last week but VRE usually has a yield around 4.8% this ETF requires even more work to manage .
so it has the highest MER on this list with 0.39% but that’s still pretty reasonable with a thousand dollars invested in VRE you’ll be paying less than four dollars a year in fees subtracting this from our dividend of 5.16% gives us a net annual income of 4.77% paid monthly to qualify for a DRIP you’ll need to own $8,100 in VRE with the yield of 5.16% that gives us $418 a year in dividends or $34.83 a month the current share price of VRE is $34.72 .
so we’ll be earning a free share every month that’s twelve shares a year VRE only contains 18 Holdings all of which are REITs the main holdings include Rio Can which i talked about in my top three dividend stocks.
Canadian apartments allied properties smart centers and choice properties these REITs are fairly spread out among st the different real estate sectors we have 33% invested in industrial and office properties 23% in residential and 20% in retail malls and shopping plazas.
REITs are the best way for anyone to get involved in real estate even if you don’t have tens of thousands of dollars for a down payment and with VRE you are getting exposure to the entire Canadian real estate market looking at the price chart over the past year again we see fairly steady and consistent growth all while collecting that monthly passive income.
so there you have it those are my four td easy web favorite Canadian ETFs for dividend income XIC has the lowest yield but the widest exposure of the entire Canadian market VDY has a higher yield and pays monthly income but it is heavily concentrated in the financial sector XEI has an even higher yield paid monthly.
it is more heavily weighted in the energy sector and VRE also has a high-yield paid monthly but it is entirely focused in the Canadian real estate market you’ll want to buy each of these ETFs and hold onto them for life to collect that consistent quarterly or monthly passive income and hold these ETFs in your TFSA to avoid paying any taxes on this income if your TFSA is maxed out then put them in your RRSP .
I suggest buying these ETS using Ques trade to avoid paying any Commission when you buy ETFs and this will save you a ton of money in the long run so if you’d like to get signed up with Ques trade click my referral link in the box below and you’ll get $50 in Commission free trades when you buy stocks and you’ll be helping support my channel I hope this article helps you get started with ETF investing in Canada.
I’ll be releasing more td easyweb stock pick recommendations such as my favourite bond ETFs my favorite US dividend stocks and my favorite u.s.
ETFs so stay tuned for those thanks for watching guys and be sure to LIKE comment and subscribe if you found this article helpful every thumbs up and comment really helps me build this websites.