The Rise of Dividend ETFs in Canada: A New Era of Investment? | Canada News Media
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The Rise of Dividend ETFs in Canada: A New Era of Investment?

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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.

 

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Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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