Opinions
Mike Philbrick
iShares Core MSCI CAD Qlty Div ETF
XDIV-T
BUY
Jul 30, 2025
Stock price when the opinion was issued
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VDY vs XEI ETF? VDY and XEI is very similar and their prices track closely. VDY tends to hold higher financial sector exposure, where yields are generally higher. Whereas XEI holds the highest yield payers on the composite Index. He also likes XDIV which has the lowest MER (0.11%). It holds "quality" holdings, using an algorithm to pick higher ROE, lower levered companies with earnings stability.
XDIV looks solid with a low MER and distribution yield near 5%. It is a smaller ETF with under $1B in assets under management but it did outperform some of the names on the list. The concentrated holdings likely allow XDIV to offer the lower MER that it provides but that can be riskier. XDIV does aim to invest in low risk companies however so the concentration risk is somewhat offset. We think XDIV is a decent income option.
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Basket of about 21 Canadian names; ENB is the top weighting, followed by TD, SU, and RY. Insurance, pipelines, banks, etc. Insurance adds the factor of quality. Total return about 10.7% over 5 years. Makes sense. Yield is ~4.5%.
No issues with it, but consider that the US is on stronger footing right now.
ETFs that focus on the dividend growers will concentrate on companies with really strong fundamentals such as ROE, free cashflow, and long-term history of raising dividends during ups as well as downs. The high payers will probably look at market capitalization and what's paying the highest dividend. Less concerned about quality.
This question precludes ETFs with covered call writing, as those are capital gains distributions rather than dividends.
VDY tracks performance of Canadian companies with high dividends. MER is about 0.22, yield is ~4-5%. Doesn't prioritize dividend growth.
Conversely, XDIV looks at dividend growers and their dividend sustainability and growth metrics. Concerned with growth of future dividends. MER is 0.10. Dividend yield is lower, about 4%.