10 of the Best Canadian Dividend ETFs for March 2025

ByMathieu Litalien Published On:

​
​
My Best ETF for 2025

I like the diversified element of this fund and the lack of certain industries, at a reasonable fee. I think this ETF has significant potential in Canada's market moving forward. Grab my report for yourself for free below:

    We won't send you spam. Unsubscribe at any time.

    ​
    ​Free Report: High Quality Niche ETF

    I like the diversified element of this fund and the lack of certain industries, at a reasonable fee. I think this ETF has significant potential in Canada's market moving forward.

    Get my report below:

      We won't send you spam. Unsubscribe at any time.

      ETF investors: my case study has fundamentally changed how ETF investors look at the markets and their portfolios.

        Key takeaways

        Strong Yield & Stability – Canadian dividend ETFs focus on financials, utilities, and energy, offering a balance of income and capital appreciation.

        Varied Strategies – Some ETFs track high-yield indices, while others use active management or factor-based approaches to enhance returns.

        Sector & Market Risks – Heavy exposure to banks and commodities means sensitivity to interest rates, economic cycles, and global demand fluctuations.

        One ETF I like way better than the ones on this list.

        While broad market exposure offers benefits, it might not suit investors who seek income. Comprehensive index funds aren’t always the solution, nor is choosing individual stocks in retirement.

        For this reason, many investors seek out income-based ETFs here in Canada. They give investors exposure to some of the highest-quality blue-chip stocks in the country and allow them to receive consistent distributions, sometimes even every month.

        This can ultimately help fuel cash flows in retirement and make managing spending easier.

        In this article, I will review some of the best Canadian dividend ETFs listed today. With the passive income craze in full swing, there are many new listings regarding income ETFs. I think it is very important that investors are able to sift through the noise, as there are a lot of outright horrible funds coming to market today.

        I’ve modified this page to include Canadian-listed international dividend ETFs

        Whether or not you’re in retirement or have 30 years left in your investing career, diversification is a must.
        Initially, I had always allocated this post to be strictly Canadian-based dividend ETFs that track Canadian companies. However, over the years, I have learned that many of these funds are sub-par, creating a dangerous situation of hyper-concentration within a Canadian’s portfolio.

        For this reason, I have added a few Canadian-listed ETFs that track international equities. Just understand these funds may have different tax implications.

        This list is in no particular order either, as each Canadian ETF on this list provides a unique approach to income investing.

        Lets dive into some of the top Canadian dividend ETFs on the market today.

        What are the best dividend ETFs in Canada?

        Quality-focused dividend growth ETF

        TD Q Canadian Dividend ETF (TSE:TQCD)

        This ETF selects high-quality Canadian dividend stocks with a strong track record of dividend growth. It balances yield with long-term capital appreciation potential.

        • Quality Screening – Focuses on financially strong companies with sustainable dividends.
        • Broad Sector Exposure – Includes financials, utilities, and consumer sectors for diversification.
        • Growth Potential – Targets companies with increasing dividends rather than just high yields.
        • Dividend Growth Stability – Companies with strong earnings can sustain payouts.
        • Sector Rotation – Defensive stocks outperform in uncertain markets.
        • Lower Initial Yield – Growth-focused ETFs may have lower starting payouts.
        • Market Volatility – Price swings can affect investor sentiment.

        High-yield Canadian blue-chip ETF

        Vanguard FTSE Canadian High Dividend Yield Index ETF (TSE:VDY)

        VDY tracks large-cap Canadian companies with the highest dividend yields, focusing on financials, energy, and telecom.

        • Top Yield Exposure – Targets stocks with above-average yields.
        • Bank & Energy Heavyweight – Major holdings include top Canadian banks and energy firms.
        • Reliable Income – Provides a consistent payout with a history of stable dividends.
        • Interest Rate Impact – Higher rates affect bank profitability.
        • Oil & Gas Demand – Energy sector earnings influence ETF performance.
        • Sector Concentration – Heavy reliance on financials and energy.
        • Dividend Cuts – Economic downturns could reduce payouts.

        High-quality dividend stock selection

        iShares Canadian Select Dividend Index ETF (XDV)

        XDV screens for stocks with consistent dividend growth and payout sustainability.

        • Focus on Dividend Sustainability – Screens for reliable dividend-paying stocks.
        • Strong Financial Sector Exposure – Canadian banks are core holdings.
        • Defensive Investment – Lower volatility compared to broad market indices.
        • Bank Profitability Trends – Interest rate changes affect earnings.
        • Regulatory Environment – Changes in banking and energy policies matter.
        • Limited Growth Exposure – Focuses on mature companies with stable dividends.
        • Economic Sensitivity – Financial stocks may decline in downturns.

        Active dividend strategy with growth

        Fidelity Canadian High Dividend ETF (TSE:FCCD)

        Actively managed, FCCD invests in high-dividend stocks while considering growth potential.

        • Active Management Advantage – Portfolio adjustments to optimize performance.
        • Dividend & Growth Balance – Mix of high-yield and growth stocks.
        • Sector Diversification – Less concentration in financials vs. index-based funds.
        • Active vs. Passive Performance – Can active funds beat the market?
        • Dividend Reinvestment Benefits – Compounding effects over time.
        • Higher Fees – Actively managed ETFs often have higher costs.
        • Market Timing Risks – Managerial decisions impact returns.

        Leveraged exposure to Canadian banks

        Hamilton Enhanced Canadian Bank ETF (TSE:HCAL)

        HCAL provides enhanced exposure to Canadian banks with a leverage factor for higher returns.

        • Leverage Boosts Dividends – Enhances both yield and total returns.
        • Canadian Banks’ Strength – Long-term stable earnings from major banks.
        • Income-Focused Strategy – Suitable for high-yield seekers.
        • Interest Rate Volatility – Impacts bank earnings.
        • Regulatory Changes – New banking policies affect profit margins.
        • Higher Volatility – Leverage increases risk.
        • Economic Cycles – Banking downturns affect returns.

        Broad exposure to Canadian dividends

        BMO Canadian Dividend ETF (TSE:ZDV)

        ZDV diversifies across dividend-paying stocks in multiple sectors, avoiding overconcentration in financials.

        • Balanced Sector Exposure – Lower risk than bank-heavy funds.
        • Stable Yield – Focuses on sustainable dividends.
        • Lower Volatility – Mix of defensive and growth stocks.
        • Dividend Stability – Defensive stocks provide reliability.
        • Consumer & Utility Stocks – Key to diversification benefits.
        • Lower Yield Than Bank-Focused ETFs – More balanced sector mix.
        • Slow Growth – Conservative stock selection limits upside.

        Active dividend investing approach

        Global X Active Canadian Dividend ETF (TSE:HAL)

        HAL is an actively managed dividend ETF selecting stocks for income and growth.

        • Fundamental Stock Selection – Screens for strong dividend-payers.
        • Flexible Allocations – Can shift sector exposure as needed.
        • Growth & Yield Balance – Potential for capital appreciation.
        • Active Management Trends – Performance vs. passive strategies.
        • Dividend Growth Stocks – Companies increasing payouts perform well.
        • Higher Fees – Active ETFs cost more than passive ones.
        • Stock Picking Risk – Managerial choices influence performance.

        Global dividend exposure with active management

        TD Active Global Enhanced Dividend ETF (TSE:TGED)

        Unlike the others, TGED focuses on global dividend stocks with an enhanced return strategy.

        • International Diversification – Reduces reliance on Canadian sectors.
        • Active Stock Selection – Aims for high-quality global dividend payers.
        • Enhanced Yield Strategy – Optimized for income and capital growth.
        • Global Market Trends – U.S. and international stock performance impacts returns.
        • Currency Fluctuations – Exchange rates affect global holdings.
        • Foreign Market Risks – Geopolitical and economic uncertainties.
        • Higher Expense Ratio – Active global strategies cost more.

        Stable dividends with reduced volatility

        BMO Low Volatility Canadian Equity ETF (TSE:ZLB)

        ZLB selects lower-volatility dividend stocks, offering defensive market exposure.

        • Lower Market Risk – Focuses on steady, stable companies.
        • Reliable Dividend Payers – Picks stocks with consistent payouts.
        • Defensive Strategy – Reduces downside risk in volatile markets.
        • Market Uncertainty – Low-volatility stocks attract investors in downturns.
        • Defensive Stock Performance – Healthcare, utilities, and consumer staples gain attention.
        • Lower Growth Potential – Stability comes at the cost of big gains.
        • Higher Valuations – Defensive stocks may be overpriced.

        Quality-focused Canadian dividend ETF

        iShares Core MSCI Canadian Quality Dividend Index ETF (TSE:XDIV)

        XDIV invests in high-quality Canadian dividend stocks with strong fundamentals.

        • Quality Screens – Focuses on financially stable companies.
        • Dividend Sustainability – Prioritizes earnings consistency.
        • Diversified Sector Exposure – Reduces reliance on any one industry.
        • Dividend Growth Stocks – Outperform in rising rate environments.
        • Fundamental Stock Strength – Key in volatile markets.
        • Lower Yield vs. High-Dividend ETFs – Emphasizes stability over high payouts.
        • Sector Rotation Risks – Quality stocks may underperform in strong bull markets.

        Are Canadian dividend ETFs worth the investment?

        Considering most of these Canadian dividend ETFs will contain blue-chip companies with a long history of reliable dividend payments, they can be seen as solid long-term investments. However, for the most part, they’re going to provide sub-par performance relative to the general market.

        For some, the fact that most of these ETFs issue monthly dividend income is also a huge bonus, as most stocks pay dividends every quarter.

        However, it is essential to note that we are paying for convenience. Fees and taxes erode investment returns over time.

        This is an undeniable fact in both ETFs and mutual funds. Some ETFs exist to avoid such events, such as low-fee ETFs or tax-efficient ETFs. But at any rate, investors need to figure out whether or not the expenses and likely underperformance are worth the cost of convenience.

        A warning about these dividend ETFs

        Canadian dividend ETFs are hyper-concentrated in a few select stock market sectors. This is because most of our dividends here in Canada come from industries like banking, oil and gas, and utilities, and telecom.

        As such, I feel these ETFs are more suited as complementary holdings in a more diverse portfolio. Holding large allocations to these funds could increase your overall risks regarding sector allocations.

        Ultimately, the decision is up to you. I just wanted to bring this up.

         

        Just announced: Free ETF study

        To give you a taste of what kind of research and opinions are available in my monthly ETF Insights newsletter I am releasing a game changing study I completed for my newsletter.
        ​
        In this study I scrutinize a very popular ETF strategy and investigate the ETFs it involves.
        ​
        This sample newsletter is completely free, no-BS. Just enter your email below and click the button and I will send the sample newsletter direct to your inbox.

          We respect your privacy. Unsubscribe at any time.