iShares US High Div. Equity (XHD-T)

A US high dividend ETF. It is available as XHD-T in Canada as a hedged wrapper. It looks for companies with an economic moat. It is a good product, the dividend is good and the performance has been okay. The question is the currency exposure. It may help you or hurt you. XHD-T will insulate you from movements in the currency.

Holding both iShares Core S&P 500 Index (XSP-T) and iSHARES US High Dividend Equity (XHD-T). Is this a duplication? There is a fair bit of duplication, but there is also differences in that this one has very little financials, while XSP has about 20%. There is no reason to not keep both.

Mainly a dividend play. Most of the larger sectors within this are telecoms, pharmaceuticals, healthcare and consumer staples. He is more in favour of the more cyclical areas, switching away from those more defensive areas. If you are looking for dividends, this is a great ETF but in this category, he would prefer the US$ the equivalent, iShares High Dividend (HDV-N) because he thinks the Cdn$ will remain weak. If you look at the performance of either of these, versus the S&P, the S&P has done better in the last 12 months. The ETF that he would suggest is PowerShares Buyback Achiever (PKW-N).

This is a new product that has come out in the last couple of months. A good product, but you do have to remember that you do have the issue of dividend withholding and foreign dividends being treated as income.

High dividend story will be with us for years. Traditional investor who is retired have been migrating into high dividend payers. This is a good one. The multiple on these high dividend stocks are going up and way above what they would be if we didn’t need the income. If interest rates go back, the multiples are going to come down significantly, but we don’t need to worry about it soon.