iShares offers a compelling blend of tax-efficient income and capital appreciation potential in a favourable environment.
Major Canadian and U.S. stock markets remain volatile, but they still continue to offer attractive prospects for investors, especially if you buy the top stocks. All in all, we think that if you can afford to stay in the market for several, now is a good time for new buying. Here is an ETF we like.
ISHARES CANADIAN SELECT DIVIDEND INDEX ETF (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yield Canadian stocks. The ETF also considers dividend growth and payout ratios to make its selections.
The weight of any one stock is limited to 10% of the fund’s assets. Its MER is 0.55%. The ETF, which began trading on September 28, 1999, yields a high 3.3%.
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 the sustainability of their dividend payouts.
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iShares’ dividend stability should be maximized by this active management team
This ETF is more actively managed than the largest TSX ETF: iShares S&P/TSX 60 Index ETF. As a result, it charges a higher MER.
The fund’s top holdings are Royal Bank at 8.8%; Bank of Montreal, 8.4%; Canadian Tire, 7.4%; Bank of Nova Scotia, 5.9%; TD Bank, 5.7%; CIBC, 5.2%; Sun Life Financial, 4.8%; Great-West Lifeco, 4.0%; and TC Energy,3.7%.
Recommendation in Canadian Wealth Advisor.: iShares Canadian Select Dividend Index ETF is a buy.
