Stan Wong
BMO US Dividend ETF
ZDY-T
COMMENT
Oct 24, 2019
Screens for flat or positive dividend growth, as well as dividend stability. Includes names like Wells Fargo, Abbvie, IBM. About a 34 basis point MER. Tilted to the value side. Not hedged. Pays about a 2.95% yield.
ZWH-T vs. ZWI-T. ZDY-T is dividend payers, the best US payers. ZWH-T has a covered call. In a downward market he likes the covered call overlay. In a strong market you don’t want it. He prefers ZDY-T right now.
BMO U.S. dividend: make sure there's a quality measure in this ETF. US equities are doing quite well. This is offered in hedged and unhedged. Consider both 50/50 for portfolio diversity. It'll be large-cap names. This is not horrible.
ZDY-T vs. ZUD-T. They are identical holdings. ZUD-T has a currency hedge. He buys ZDY-T to get exposure to the US dollar as well as US dividends. If he thinks the CAD$ will get stronger, he trades to ZUD-T. You can also get ZDY.U-T to buy it in US$.
$2,000 for his son to invest in? He'd buy a really simple ETF, the XIU, which is basically buying Canada's 60-largest companies. You're buying Canada, including 30% in energy and metals, which is a risk. Or you could try SPY to cover the U.S. market. You could split these two 50/50.
At market bottoms you don’t want ETFs with covered calls like ZWH-T because you are giving away some of the upside. You want ZDY-T or the currency hedged version of that. CYH-T is a benchmark for world dividends. It is a Canadian dollar currency hedged ETF. TDIV-Q is a technology dividend play.
ZDY-T vs. XDU-T. He is indifferent. We will be challenged for the next few years in dividend growth. XDU-T outperformed ZDY-T recently. You get a slightly different mix of companies. You get high dividend payers or quality dividend payers. He would get both, not one or the other.
VFV is about 34% tech and communications, so it's pricey. 25x PE, 4.4x price to book. Yield is 1.6%.
ZDY has better valuations, less exposure to tech and communications of about 20%. 18x PE, 3.3x price to book. Yield is 2.8%. More conservative. Better risk/reward.
Screens for flat or positive dividend growth, as well as dividend stability. Includes names like Wells Fargo, Abbvie, IBM. About a 34 basis point MER. Tilted to the value side. Not hedged. Pays about a 2.95% yield.