Dividend stocks offer investors a low-cost way to create a passive income stream. For instance, you can buy a single share of a dividend-paying company and begin your passive income journey.
However, investing in dividend stocks can be quite tricky. First, these payouts are not guaranteed and can be suspended at any time, especially if company financials deteriorate. Second, you need to consistently identify companies that generate cash flows across market cycles, allowing them to raise dividends over time.
It’s pretty challenging to screen a handful of quality stocks while tracking and analyzing their financials and earnings reports each quarter. Alternatively, you can still own a diversified portfolio of dividend stocks with minimal work by investing in exchange-traded funds, or ETFs.
Typically, ETFs hold a basket of stocks across sectors, which helps you lower investment risk significantly. Similar to stocks, ETFs are also traded on an exchange and are ideal for those without the expertise to pick individual stocks.
There are several dividend-paying ETFs on the TSX that may offer investors a steady stream of income. Let’s take a look at three such ETFs that income-seeking investors can buy right now.
iShares S&P/TSX Composite High Dividend Index ETF
The iShares S&P/TSX Composite High Dividend Index ETF (TSX:XEI) is a fund that pays you a monthly dividend. With $1.5 billion in assets under management, the XEI ETF holds 75 stocks, offering you a dividend yield of 5.5%. It charges a management fee of 0.20% and an expense ratio of 0.22%, which is not too steep.
In the last five years, the ETF has returned 8.88% annually to shareholders, while annual returns are much lower at 6.10% if the investment horizon is widened to 10 years.
Some of the largest holdings of the ETF include giants such as Royal Bank of Canada, Toronto-Dominion Bank, Suncor Energy, Canadian Natural Resources, and TC Energy, which cumulatively account for 25% of the ETF.
iShares S&P/TSX Canadian Dividend Aristocrats Index ETF
Another popular dividend ETF in Canada is the iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (TSX:CDZ), which holds 90 stocks. Each of these companies has grown dividends annually in the last five years, making it ideal for those looking to create a growing dividend base.
With $950 million in assets under management, the CDZ offers you a forward yield of 4.2%. Moreover, it has returned 6% annually in the last 10 years and close to 8% since 2018. The ETF has a management fee of 0.66% and an expense ratio of 0.66% which is much higher compared to XEI.
The top three holdings of the ETF include Aecon Group, Chartwell Residences, and Great West Lifeco. The ETF has a total of 90 stocks in its portfolio.
iShares Canadian Select Dividend Index ETF
The final ETF on my list is the iShares Canadian Select Dividend Index ETF (TSX:XDV). With a yield of over 5%, the ETF provides you access to 30 of the highest-yielding Canadian companies in the Dow Jones Canada Total Market Index.
The total assets under management for the ETF are over $1.6 billion, while its expense ratio and management fee stand at 0.55% and 0.50%, respectively.
This TSX ETF has returned 6.8% annually in the last five years.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
