The best Canadian dividend ETF depends on what you weigh most: XDIV is the cheapest of the widely held funds, VDY and XEI are the broad low-cost index options, and ZWC trades some growth for a bigger monthly payout. This guide compares seven Canadian dividend ETFs (XDIV, VDY, XEI, ZDV, XDV, CDZ and ZWC) on fees, yield, concentration and returns, then shows which account to hold them in and how much income a given balance produces. YieldMaple re-checked the iShares and BMO fund pages and holdings files for XDIV, XEI, XDV, CDZ, ZDV and ZWC, and the Vanguard page and factsheet for VDY, on October 8, 2026. This is general education, not financial advice.
Best Canadian dividend ETFs at a glance
| Feature | MER | Yield | Holdings | Largest holding | 5-year return, a year (to Sep 30, 2026) |
|---|---|---|---|---|---|
| XDIV (iShares) | 0.11% (better on this row) | 3.15% (12-month trailing, Oct 6) | 20 | Suncor, about 9.7% | 19.01% (better on this row) |
| VDY (Vanguard) | 0.22% | 3.11% (12-month trailing, Sep 30) | 60 | Royal Bank, about 15.7% | 18.28% |
| XEI (iShares) | 0.22% | 3.51% (12-month trailing, Oct 6) (better on this row) | 75 | TD Bank, about 5.2% | 15.53% |
| ZDV (BMO) | 0.39% | 2.76% (annualized distribution, Oct 7) | 57 (BMO holdings file) | Royal Bank, 8.55% | 15.74% |
| XDV (iShares) | 0.55% | 3.40% (12-month trailing, Oct 6) | 30 | Royal Bank, about 8.6% | 14.90% |
| CDZ (iShares) | 0.66% | 3.05% (12-month trailing, Oct 6) | 93 (better on this row) | South Bow, about 3.3% (better on this row) | 11.60% |
| ZWC (BMO, covered call) | 0.72% | 6.50% (annualized distribution, Oct 7) | 74 (BMO count) | Royal Bank, 7.77% | 11.23% |
Sources: iShares Canada's XDIV, XEI, XDV and CDZ pages and holdings files; Vanguard Canada's VDY page and August 31, 2026 factsheet; BMO Global Asset Management's ZDV and ZWC pages and ZDV holdings file. ZDV and ZWC yields are BMO's annualized distribution yield (the latest monthly payment annualized and divided by NAV), not a 12-month trailing figure. VDY, ZDV and ZWC returns are NAV returns; iShares figures are its published total returns. All include reinvested distributions. All seven pay monthly.
What is the best Canadian dividend ETF?
There is no single best Canadian dividend ETF: XDIV is the cheapest at 0.11%, VDY and XEI are the broad low-cost options at 0.22%, and the other four cost more.
Cost is where the seven funds split first. XDIV’s MER is 0.11%. VDY and XEI both charge 0.22%, ZDV 0.39%, XDV 0.55%, CDZ 0.66% and the covered-call ZWC 0.72%. On a $10,000 holding, that is about $11 a year for XDIV, about $22 a year for VDY or XEI, about $39 a year for ZDV, about $55 a year for XDV, about $66 a year for CDZ and about $72 a year for ZWC.
Size shows which funds Canadian investors hold most. VDY is the largest at $9.0 billion, followed by XDIV at $6.2 billion and XEI at $4.2 billion. XDV holds $2.5 billion, ZWC $2.4 billion, ZDV $1.9 billion and CDZ $1.2 billion. XDV is the oldest of the seven, launched on December 19, 2005, and CDZ followed on September 8, 2006, though it tracked a different index until 2009. XEI (April 12, 2011), ZDV (October 21, 2011) and VDY (November 2, 2012) came next; ZWC (February 3, 2017) and XDIV (June 7, 2017) are the youngest, so neither has a 10-year record yet.
The cheapest fund is also the narrowest, so the real trade-offs are fee against concentration (XDIV vs VDY), bank weighting (VDY vs XEI) and cash now against growth (ZWC against everything else).
VDY vs XEI: which is better?
VDY suits investors who want the big banks at full weight and the stronger 10-year record; XEI suits those who want a higher yield and less riding on one stock.
VDY (Vanguard FTSE Canadian High Dividend Yield Index ETF) tracks the FTSE Canada High Dividend Yield Index, which Vanguard’s factsheet describes as market-capitalization-weighted, with stocks drawn from the FTSE Canada All Cap Domestic Index. Bigger companies get bigger weights, so the fund’s 60 stocks are far from equal:
- Royal Bank is about 15.7% of the fund on its own, and Royal Bank plus TD make up about 27%.
- The top 10 holdings add up to 68.9%.
- Financials are 59.0% and energy 28.5%, so two sectors are 87.5% of the fund.
VDY’s management fee is 0.20%; the rest of its 0.22% MER is fund costs and sales tax. The fund’s page lists its 12-month trailing yield at 3.11% as of September 30, 2026. For a longer look at this one fund, see our VDY review.
XEI (iShares S&P/TSX Composite High Dividend Index ETF) tracks the S&P/TSX Composite High Dividend Index. It holds 75 stocks, and its largest position, TD Bank, is only about 5.2%. According to iShares’ holdings file for October 6, 2026:
- The top 10 holdings add up to about 46%, against 68.9% for VDY.
- Financials are about 30.5%, energy about 30% and utilities about 14%.
XEI’s management fee is 0.20% and its 12-month trailing yield was 3.51% on October 6, 2026. The yield gap over VDY is 0.40 percentage points, or about $40 a year on $10,000.
The bank weighting is the most likely reason for the gap in returns. Over ten years to September 30, 2026, VDY returned 14.11% a year and XEI 11.82%, a gap of about 2.3 percentage points a year. The two funds hold similar amounts of energy, and the biggest difference between them is how much of each is in banks.
Pick VDY if:
- You’re comfortable with most of the fund in banks and energy
- You want the larger fund ($9.0 billion against $4.2 billion) with the stronger 10-year record
Pick XEI if:
- You want the higher trailing yield of the two
- You’d rather no single stock be much more than a twentieth of the fund
Holding both adds little. They own many of the same banks, pipelines and energy producers, so splitting money between them mostly averages their weights.
XDIV vs VDY: what does the lower fee get you?
XDIV charges half of VDY’s MER (0.11% against 0.22%) but holds only 20 stocks, so the saving comes with far more riding on each company.
XDIV (iShares Core MSCI Canadian Quality Dividend Index ETF) tracks the MSCI Canada High Dividend Yield 10% Security Capped Index. As the name says, no single company can be much above a tenth of the index, and iShares’ holdings file for October 6, 2026 shows the fund sitting close to that cap at the top:
- Suncor is the largest holding at about 9.7%, and the top 10 add up to about 78%, against 68.9% for VDY and about 46% for XEI.
- Financials are about 47% and energy about 30%. Insurers Manulife, Sun Life and Great-West Lifeco sit alongside TD and Royal Bank, so the financials slice is less bank-only than VDY’s.
XDIV’s management fee is 0.10%, and the MER gap to VDY or XEI works out to about $11 a year per $10,000. Its 12-month trailing yield was 3.15% on October 6, 2026, almost level with VDY’s 3.11% as of September 30.
The record is short and mixed. Over five years to September 30, 2026, XDIV returned 19.01% a year against VDY’s 18.28%, about 0.7 percentage points a year ahead. Over three years VDY led (28.99% against 28.44%), and over one year the two were close (34.37% and 35.25%). A fund with only 20 stocks can swing further from the market in either direction, so the past five years say more about which sectors did well than about the fee.
XDIV fits if the lowest fee matters most to you and a 20-stock portfolio doesn’t bother you. VDY or XEI fits if you’d rather spread the same dividend exposure across 60 or 75 companies for about $11 more a year per $10,000.
Is CDZ worth its higher fee?
CDZ is worth its 0.66% MER only if you specifically want a dividend-growth screen and the broadest spread of holdings; on cost, yield and returns it trails VDY and XEI.
CDZ (iShares S&P/TSX Canadian Dividend Aristocrats Index ETF) tracks the S&P/TSX Canadian Dividend Aristocrats Index. iShares says the index generally picks large, established Canadian companies that raised their ordinary cash dividend every year for at least five consecutive years. That rule changes the mix:
- 93 holdings, the most of the seven, with the largest (South Bow) at about 3.3%
- The top 10 add up to about 25%
- Energy about 22%, financials about 19% and industrials about 17%, a far less bank-heavy fund than VDY
The cost is real. CDZ’s management fee alone is 0.60%, and the full MER costs about $44 a year more than VDY or XEI per $10,000 invested. Its trailing yield was 3.05%, the lowest of the 12-month figures here, and it returned 10.18% a year over the ten years to September 30, 2026, against 14.11% for VDY.
CDZ makes sense as a deliberate choice for an investor who wants income spread across many mid-sized companies and accepts the higher fee for it. It is not the cheapest way to collect Canadian dividends.
Is ZDV a good Canadian dividend ETF?
ZDV is a reasonable middle option: its 0.39% MER sits between VDY and XEI’s 0.22% and CDZ’s 0.66%, and its returns have tracked close to XEI’s.
ZDV (BMO Canadian Dividend ETF) picks stocks with what BMO describes as a rules-based approach that considers dividend growth, yield, payout levels and liquidity, and it rebalances monthly. Its maximum annual management fee is 0.35%, it holds $1.9 billion and it launched on October 21, 2011. BMO’s fund page and holdings file for October 7, 2026 show:
- 57 stocks, with Royal Bank the largest at 8.55%
- The top 10 add up to about 44%, close to XEI
- Financials 37.90%, energy 21.49% and materials 12.80%, including the miners Agnico Eagle and Barrick
So ZDV sits between VDY and XEI on bank concentration and has a bigger materials slice than either. Over ten years to September 30, 2026 it returned 11.79% a year, close to XEI’s 11.82%, and over five years 15.74% against XEI’s 15.53% over the same periods. BMO lists its yield as an annualized distribution yield of 2.76% on October 7, 2026: the latest monthly payment annualized and divided by the fund’s net asset value, which is not the same measure as the 12-month trailing yields above. The case against ZDV is cost. It charges about $17 a year more per $10,000 than VDY or XEI for broadly similar results.
How is XDV different from XEI and VDY?
XDV holds just 30 stocks chosen by a dividend screen, charges 0.55%, and is almost as financials-heavy as VDY.
XDV (iShares Canadian Select Dividend Index ETF) tracks the Dow Jones Canada Select Dividend Index and is the oldest fund here, launched on December 19, 2005. iShares’ holdings file for October 6, 2026 shows:
- Royal Bank is the largest holding at about 8.6%, and the five big banks (Royal Bank, BMO, Scotiabank, TD and CIBC) add up to about 34%.
- Financials are about 54% of the fund, with consumer discretionary (led by Canadian Tire), energy and utilities each around a tenth.
- The top 10 add up to about 58%.
Its 12-month trailing yield was 3.40% on October 6, 2026, a little below XEI’s 3.51%. Over ten years to September 30, 2026, XDV returned 12.28% a year, a little ahead of XEI’s 11.82%, but over five years it trailed (14.90% against 15.53%). With a management fee of 0.50%, XDV costs about $33 a year more per $10,000 than XEI for a similar yield and fewer holdings. Its clearest edge is the longest record of the seven, going back to 2005.
Are covered-call dividend ETFs like ZWC worth it?
A covered-call ETF like ZWC pays noticeably more cash each month, but it gives up part of the gain in rising markets and charges 0.72% for it.
ZWC (BMO Canadian High Dividend Covered Call ETF) holds dividend-paying Canadian stocks picked with a rules-based screen similar to ZDV’s, and BMO says the fund writes covered call options on its dividend stocks. Selling call options brings in premiums on top of the dividends, which is why BMO’s annualized distribution yield for ZWC was 6.50% on October 7, 2026. On $10,000, that rate works out to about $650 a year, if the current monthly payment holds. BMO also says the option premiums provide some downside protection.
The cost shows up in returns. When a stock rises past the option’s strike price, the fund’s gain on it is capped. Over five years to September 30, 2026, ZWC returned 11.23% a year, against 15.74% for BMO’s plain ZDV, a gap of about 4.5 percentage points a year. Over one and three years the figures were 19.26% and 18.69% a year. Those years were a strong market, which is exactly when covered calls give up the most.
Two more points. BMO notes that its distributions can include return of capital, which is not taxed when paid but lowers your adjusted cost base. And ZWC is still bank-heavy: of the 74 holdings in BMO’s count, Royal Bank is 7.77% and financials are 39.55% of the fund. ZWC fits someone who wants maximum monthly cash from Canadian stocks and accepts slower growth; it is a poor fit for someone reinvesting every distribution for decades.
How have Canadian dividend ETFs performed?
Over the five years to September 30, 2026, XDIV returned 19.01% a year and VDY 18.28%, while covered-call ZWC was last at 11.23%.
| Feature | 1 year | 3 years | 5 years | 10 years |
|---|---|---|---|---|
| XDIV | 35.25% (better on this row) | 28.44% | 19.01% (better on this row) | Launched 2017 |
| VDY | 34.37% | 28.99% (better on this row) | 18.28% | 14.11% (better on this row) |
| XEI | 29.21% | 24.24% | 15.53% | 11.82% |
| ZDV | 29.15% | 25.79% | 15.74% | 11.79% |
| XDV | 34.10% | 27.58% | 14.90% | 12.28% |
| CDZ | 15.82% | 20.82% | 11.60% | 10.18% |
| ZWC | 19.26% | 18.69% | 11.23% | Launched 2017 |
VDY: NAV returns from Vanguard Canada's product page, as at September 30, 2026. XDIV, XEI, XDV and CDZ: average annual total returns from iShares Canada, as of September 30, 2026. ZDV and ZWC: annualized NAV returns from BMO's fund pages, as at September 30, 2026. Returns include reinvested distributions and are after fund fees. Past performance does not predict future returns.
The past year, to September 30, 2026, was strong for all seven: XDIV returned 35.25%, VDY 34.37%, XDV 34.10%, XEI 29.21%, ZDV 29.15%, ZWC 19.26% and CDZ 15.82%. Over three years the leaders were VDY at 28.99% and XDIV at 28.44% a year, with XDV at 27.58%, ZDV 25.79%, XEI 24.24%, CDZ 20.82% and ZWC 18.69%. For context, the global all-in-one XEQT returned 13.94% a year over five years, so VDY beat it by about 4.3 percentage points a year. That gap came during a strong stretch for the two sectors that make up most of VDY, and it isn’t a rule. The same concentration that helped VDY and XDIV recently would hurt them in a bad stretch for banks and energy.
How much income do these dividend ETFs pay?
At their latest 12-month trailing yields, $10,000 in XEI paid about $351 a year, XDV about $340, XDIV about $315, VDY about $311 and CDZ about $305, before tax.
ZDV and ZWC are left out of these examples because BMO publishes an annualized distribution yield rather than a 12-month trailing one; ZWC’s rate, covered above, is roughly double the others because it includes option premiums. A worked example makes the trade-offs concrete. Using the same trailing yields:
- Income of $1,000 a month (so $12,000 a year) takes about $342,000 in XEI, about $353,000 in XDV, about $381,000 in XDIV, about $386,000 in VDY or about $393,000 in CDZ.
- One year of TFSA room ($7,000 in 2026) in XEI pays about $246 a year, tax-free.
- A TFSA holding the full cumulative room of $109,000 in XEI pays about $3,826 a year, or about $319 a month.
Two cautions. First, a trailing yield looks backward: it is the last 12 months of distributions divided by today’s price, and next year’s payouts can be higher or lower. Second, yields shrink when prices jump. VDY’s eligible dividends rose from $2.16 a unit in 2024 to $2.20 in 2025, about 2% more, while the fund returned 34.37% over the past year. Payouts grew, but the price grew much faster, so the yield shrank. A yield quoted a year or more ago was measured against a lower price, so compare yields taken on similar dates.
To project income over time with regular contributions, run your numbers through the TFSA calculator, or the compound interest calculator for a taxable account.
Should you hold a Canadian dividend ETF in a TFSA?
Yes, a TFSA is usually the best first home for a Canadian dividend ETF: distributions and growth are tax-free, and no foreign tax is withheld on Canadian dividends.
That last point is where Canadian dividend ETFs beat US ones inside a TFSA. VDY’s 2025 distributions show no foreign income at all. US dividends paid to a TFSA, by contrast, could be subject to foreign withholding tax, per the CRA's TFSA guide; under the Canada–US tax treaty that US tax can be up to 15%, and a TFSA has no way to recover it.
The one thing a TFSA gives up is the dividend tax credit, which only reduces tax in a taxable account. For most people that’s a fair trade, because a TFSA shelters the growth as well as the income. The 2026 TFSA dollar limit is $7,000, and someone who has been eligible since 2009 has $109,000 of total room. Our Wealthsimple TFSA guide covers opening one and moving an existing TFSA over, and the TFSA contribution limit guide shows how your own room is calculated.
Where should dividend ETFs go once your TFSA is full?
Once your TFSA is full, a non-registered account is usually the next home for Canadian dividend ETFs, because eligible dividends qualify for the dividend tax credit there.
Non-registered (taxable) account. Eligible Canadian dividends are grossed up and then reduced by federal and provincial dividend tax credits, which usually leaves them taxed more lightly than interest. Distributions keep their tax character: VDY’s 2025 distributions were $2.96 per unit — $2.20 of eligible Canadian dividends, a $0.76 capital gains distribution and a fraction of a cent of return of capital, with no foreign income. Watch for year-end capital gains distributions paid in units rather than cash. VDY’s December 2025 one was $0.76 per unit, paid in reinvested units rather than cash (ex-date December 30, 2025). You owe tax on it even though no cash arrived, and it raises your adjusted cost base, so record it or your brokerage’s T3 slip and your own records won’t match when you sell. With ZWC, any return of capital does the opposite: it lowers your adjusted cost base.
RRSP. A Canadian dividend ETF grows tax-deferred in an RRSP, but the dividend tax credit is lost and every withdrawal is taxed as ordinary income. Many investors keep RRSP room for US-listed stocks and ETFs instead, because US dividends paid to an RRSP are exempt from US tax, as long as the plan is operated exclusively to provide pension, retirement or employee benefits. Holding VDY or XEI in an RRSP isn’t wrong; it just doesn’t use their main tax advantage. The TFSA vs RRSP guide covers how to split contributions between the two.
FHSA. Tax treatment is similar to a TFSA for a qualifying home purchase, but if you plan to buy within a few years, a stock fund of any kind may be the wrong holding for money you can’t afford to see fall.
How to buy these dividend ETFs
All seven funds trade on the Toronto Stock Exchange in Canadian dollars, so you can buy them in a CAD account without converting currency. The steps are the same at most online brokerages, and our guide to how to buy ETFs in Canada covers them in more detail:
- Open the account you want — a TFSA first for most people, then a non-registered account. Wealthsimple’s self-directed accounts include TFSA, RRSP, FHSA, RESP, LIRA, RRIF, non-registered (cash and margin), and corporate accounts. Account minimum: none.
- Fund it from your bank account.
- Search the ticker (XDIV, VDY, XEI, ZDV, XDV, CDZ or ZWC) and confirm it’s the Toronto Stock Exchange listing in CAD.
- Place the order. A limit order at or near the current price avoids paying more than you meant to. Fractional shares at Wealthsimple: yes — thousands of Canadian and US stocks and ETFs. If the fund you want is eligible, a $100 contribution buys $100 of it even when one unit costs more; otherwise you buy whole units.
- Decide what happens to distributions. Vanguard and iShares both run dividend reinvestment (DRIP) programs for their funds, but whether distributions reinvest automatically depends on your brokerage. Check its settings before your first payment.
At Wealthsimple, buying and selling Canadian-listed ETFs costs $0 in commission, and its investment accounts hold securities eligible for CIPF coverage up to $1M per defined account.
Wealthsimple isn’t the only low-cost option, and it isn’t always the right one. Questrade charges $0 to buy and sell Canadian and U.S.-listed stocks and ETFs, and its Questrade Pro trading platform is free for all Questrade customers; see Questrade's current pricing . Qtrade lists $0 on stock, ETF and mutual fund trades and names dividend reinvestment plans among its free services, which matters if automatic DRIPs are a priority. BMO InvestorLine lists $0 per stock or ETF trade on Canadian and US exchanges, online or agent-assisted, handy if you already bank with BMO. If you already hold an account at any of these, there’s no cost reason to move just to buy a dividend ETF. The Wealthsimple vs Questrade comparison covers the account-by-account differences, the best brokerage for a TFSA guide compares more platforms, and our complete Wealthsimple guide covers the rest of the platform.
Who should (and shouldn’t) buy a Canadian dividend ETF
A Canadian dividend ETF fits you if:
- You want monthly income from a low-cost, diversified basket of Canadian companies, for example in or near retirement
- You’re filling a TFSA and want income that comes with no foreign withholding tax
- You hold a non-registered account and value the dividend tax credit on eligible dividends
- You want a deliberate Canadian income tilt next to a global fund
Look elsewhere if:
- You’re decades from retirement and want maximum diversification. A global all-in-one fund such as XEQT holds 8,296 stocks worldwide; VDY holds 60, mostly in two sectors. Our XEQT review and VFV vs XEQT comparison cover that route.
- You already own a broad Canadian index fund and would mostly be buying the same banks again; the XIC review covers that broad-market alternative
- You need the money within a few years; dividend ETFs are still stock funds and can fall sharply
- You’d hold them in a taxable account and don’t need the income, since distributions are taxed every year whether you spend them or not
Other Canadian dividend ETFs exist beyond these seven, including funds from other issuers and more covered-call versions that sell options for extra income and give up some upside in return. Check each fund’s own page for its current fee, yield and holdings before comparing it with the funds here. For picking individual dividend stocks instead of a fund, see high-dividend stocks in Canada.
The verdict: best Canadian dividend ETFs for 2026
Of the seven funds compared here, the lowest-cost choices are XDIV, VDY and XEI, and which one fits depends on how much concentration you accept. XDIV is the cheapest at 0.11% and had the best five-year record (19.01% a year), but with only 20 stocks. XEI is the most balanced of the three, with the highest trailing yield (3.51%) and no single stock much above about 5.2%. VDY is the largest fund and has the strongest 10-year record, in exchange for being 59.0% financials.
CDZ is for investors who specifically want a dividend-growth screen and the widest spread of holdings, and who accept a 0.66% MER for it. ZDV is a middle ground: less bank-heavy than VDY, with returns close to XEI’s, but at 0.39% it costs more than either. XDV has the longest history but charges 0.55% for a narrow, bank-heavy portfolio. ZWC is for maximum monthly cash, at the cost of a 0.72% MER and slower growth.
Whichever fund fits, a TFSA is usually its simplest first home, a commission-free brokerage keeps small monthly purchases cheap, and the yield is an estimate rather than a promise. This guide is general education, not personal financial advice; the right mix depends on your timeline, other holdings and tax situation.
Read next
- Best Canadian ETFs for 2026, including broad index and all-in-one funds
- VDY review: Vanguard’s Canadian high dividend ETF
- XIC vs XIU: Canada’s two biggest broad-market ETFs compared
- Best TFSA account in Canada for where to hold these funds
- TFSA vs RRSP for which account to fill first
- Wealthsimple Canada: complete independent guide