The major Canadian and U.S. stock markets have moved back up since their initial COVID-19 drop. However, we think that if you can afford to stay in the market for several years or longer, now is a good time for new buying.
We see ETFs as one way for you to profit from the continuing rise, while at the same time cutting your risk.
The best of these funds offers a diversified group of stocks and charge low management fees. Here’s one we really like.
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SHARES CANADIAN SELECT DIVIDEND INDEX ETF (Toronto symbol XDV) lets you hold 30 of the highest-yielding Canadian stocks. The ETF also considers dividend growth and payout ratios to make its selections.
The weight of any one stock holding is limited to 10% of the fund’s assets. Its MER is 0.55%. The ETF, which began trading on September 28, 1999, yields 3.7%.
Most market indexes are set up for investors so that the stocks in the index are those with the highest market capitalization and are also the most widely traded. However, the iShares Canadian Select Dividend Index ETF focuses on the 30 stocks that it sees as having the highest dividend yields; it also considers their prospects for dividend growth and sustainability.
That means this ETF is more actively managed than, say, the iShares S&P/TSX 60 Index ETF (Toronto symbol XIU). As a result, you pay a higher MER.
ETFs: Top holdings include banks and natural resources
The fund’s top holdings are CIBC at 8.9%; Bank of Montreal, 6.7%; Royal Bank, 6.4%; Canadian Tire, 5.9%; Bank of Nova Scotia, 5.1%; BCE, 4.8%; Labrador Iron Ore, 4.8%; TD Bank, 4.8%; TC Energy, 4.5%; and National Bank of Canada, 4.0%.
The ETF’s approximate breakdown by economic sector is Finance, 57%; Utilities, 23%; Resources, 12%; Manufacturing, 2%; and Consumer, 6%.
iShares Canadian Select Dividend Index ETF is our #1 pick for your ETF buying in 2022.
Recommendation in Best ETFs for Canadian Investors: iShares Canadian Select Dividend Index ETF is a buy.
