This High-Yielding ETF Pays Monthly and Invests in Top Canadian Dividend Stocks

Globe and Mail

4 days ago

If you're investing in dividend stocks, you know the importance of trying to balance safety and yield. You want the best yield you can, without having to sacrifice safety or have to worry about a dividend cut in the future.
A good way to maintain safety while taking advantage of a high yield is by investing in an exchange-traded fund (ETF) that offers a good payout. For Canadian investors, an excellent option is the Invesco Canadian Dividend Index ETF (TSX:PDC). The fund's portfolio gives you a position in approximately 44 stocks, with a heavy focus on bank stocks. Its top four holdings are Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM), Toronto-Dominion Bank (TSX:TD)(NYSE:TD), Bank of Montreal (TSX:BMO)(NYSE:BMO), and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS). In total, financial stocks account for around 40% of its overall portfolio.
The ETF has a management fee of 0.50%, which is comparable to similar funds, and isn't too expensive overall. It makes distributions to investors every month and yields around 4.3%.
Since the start of the year, the Invesco fund has generated returns of around 8%. With a beta value of more than 0.9, the ETF's performance will largely follow how the overall market performs, and thus, it can be a relatively safe investment; it isn't likely to be highly volatile given the nature of its holdings and their stability.
The fund can be a solid option whether you want a good buy-and-hold investment to not worry about, or if you simply want some recurring monthly dividend income to collect.