Larry Berman CFA, CMT, CTABMO US Dividend ETFZDY.TOCOMMENTMay 29, 2020

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.

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.

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.

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$.

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.

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.

A 2-5 year hold?A good ETF with about a 30-basis point MER. Keep in mind this really is a ranking on a three-year dividend growth. It re-constitutes its holding every 6 months. You are probably seeing pretty high valuations, which would be a little bit concerning. One of the simplest things you could own.

He is a big fan of BMO’s suite of dividend funds. Rather than just rating stocks according to their overall yield, they have put in some constraints, such as a three-year rise in dividend payouts. This is sort of a high-quality sustainable yield oriented ETF. He likes this, but he is tending to move away from US equities.

This is a smart Index where they take the Russell 1000, top 100 quality US stocks on a dividend basis equal weighted. A dividend payer of around 3% in the US. It is going to trade very similar to what the S&P 500 does to the Dow. Wouldn’t be surprised if we end of the year at 2100, right about where we are now. If it is sideways, and maybe a little lower, you want to have more focus on dividends in your portfolio, because it is a bit more defensive way of playing the market. A complement to that could be the Dow with a covered call, which would hedge your currency.

Is hedged. If you think the CAD$ is going down further you want an unhedged ETF so that you can benefit from the currency change. He was waiting for $0.91/CAD$ to move out of US$ investments directly and then he will use hedged ETFs for US$ investments.