iSHARES SP TSX COMP HIGH DIV INDEX ETF (XEI.TO)

(A Top Pick Aug 26/20, Up 33%) Continues to buy. Makes sense for the strong dividend income plus capital appreciation. Almost 4% yield. Established, large cap Canadian companies such as ENB, TD, RY. Will continue to see upside in the space.

You have to be aware of the sector exposure. In overweight, high dividend ETFs, energy exposure doubles to almost 30%. If it's a standalone ETF for your retirement account, you probably want to be more diversified than that. But if it's one component of your portfolio, it's a good holding. An alternative is SDIV, which opens up the world of high dividends to you. SDIV is his preference as a one-stop shop for retirement, as it's more globally diversified without the cyclicality of the energy sector.

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. An equal weight approach that holds some of the largest Canadian companies who pay larger dividends. MER is quite reasonable at 0.2%. Good for stability, modest growth and outsized yield. Unlock Premium - Try 5i Free

Covered calls in ZWC give you a boost in the distribution. If market continues to go higher, you're better off owning the underlying securities. Consider XEI instead, no covered call. Owns the securities outright, and so you won't get as high a dividend, but you might get more performance. In last 6 months, XEI returned17-18%, whereas ZWC returned 10.68%.

As good as VDY or ZDV. They all suffer from the same sector exposure, with large exposure to financials. With low interest rates, there's risk to owning financial services companies. Think twice about any overexposure to financials.

XEI has a fair exposure to the overall business cycle with broad based holdings. You want to focus on areas of the market that have less impact from issues in the financial markets. He would opt more for a utility ETF (XUT) that is more of a regulated sector with a agreed return on capital and more likely to be sustained.

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.