VDY (Vanguard FTSE Canadian High Dividend Yield Index ETF) is the largest of the Canadian dividend ETFs compared on this page, with $9.0 billion in assets and a 12-month trailing yield of 3.11% paid monthly. This review covers what VDY holds, what it costs, how it has performed, how its distributions are taxed and which kinds of investors it fits. The VDY figures come from Vanguard Canada’s VDY page and factsheet and from the Canada Revenue Agency, checked by YieldMaple on October 6, 2026; the Vanguard figures were re-checked on October 8, 2026. It is general education, not financial advice.
For a side-by-side look at the category, see the Canadian dividend ETF comparison (VDY, XEI, ZDV, CDZ), or the guide to Canadian ETFs for the wider market. Readers who are new to ETFs can start with Canadian investing for beginners.
VDY at a glance
| Item | Current figure | Source |
|---|---|---|
| VDY management expense ratio | 0.22% | vanguard.ca Verified October 8, 2026 |
| VDY management fee | 0.20% | vanguard.ca Verified October 8, 2026 |
| VDY 12-month trailing yield (Sep 30, 2026) | 3.11% | vanguard.ca Verified October 8, 2026 |
| VDY distribution yield (Sep 30, 2026), a separate figure from the 12-month trailing yield | 2.97% | vanguard.ca Verified October 8, 2026 |
| VDY number of stocks (Aug 31, 2026) | 60 | vanguard.ca Verified October 8, 2026 |
| VDY top 10 holdings combined weight (Aug 31, 2026 factsheet) | 68.9% | fund-docs.vanguard.com Verified October 8, 2026 |
| VDY financials sector weight (Aug 31, 2026 factsheet) | 59.0% | fund-docs.vanguard.com Verified October 8, 2026 |
| VDY energy sector weight (Aug 31, 2026 factsheet) | 28.5% | fund-docs.vanguard.com Verified October 8, 2026 |
| VDY total assets (Vanguard product page, Oct 8, 2026) | $9.0 billion | vanguard.ca Verified October 8, 2026 |
| VDY inception date | November 2, 2012 | vanguard.ca Verified October 8, 2026 |
| VDY 5-year annualized NAV return to Sep 30, 2026 | 18.28% | vanguard.ca Verified October 8, 2026 |
| Accounts VDY is eligible for (Vanguard factsheet) | RRSP, RRIF, RESP, TFSA, DPSP, RDSP, FHSA and non-registered accounts | fund-docs.vanguard.com Verified October 8, 2026 |
In sentences: VDY’s MER is 0.22% and its management fee is 0.20%. Its 12-month trailing yield was 3.11% at September 30, 2026, and distributions are paid monthly. The fund held 60 stocks, with 68.9% of assets in the top 10, 59.0% in financials and 28.5% in energy. It launched on November 2, 2012, trades in Canadian dollars on the Toronto Stock Exchange, and is managed by Vanguard Investments Canada Inc.
What does VDY hold?
VDY holds 60 Canadian stocks, and its top 10 holdings make up 68.9% of the fund. It tracks the FTSE Canada High Dividend Yield Index, which Vanguard’s factsheet describes as a market-capitalization-weighted index focused on dividend income. That detail matters: the index picks higher-yielding companies, then weights them by size, not by yield. The largest dividend payers in Canada are the big banks, so they end up on top.
Top 10 holdings at August 31, 2026, per Vanguard Canada, in order of weight:
- Royal Bank of Canada (about 15.7%)
- Toronto-Dominion Bank (about 11.1%)
- Bank of Montreal
- Bank of Nova Scotia
- Enbridge
- Canadian Imperial Bank of Commerce
- Canadian Natural Resources
- Suncor Energy
- Manulife Financial
- TC Energy
By sector, the factsheet shows financials at 59.0%, energy at 28.5%, utilities at 4.2% and telecommunications at 2.5%. Financials and energy together are 87.5% of the fund. Vanguard’s country table shows 100% Canada, so there are no U.S. or international stocks.
This is the core trade-off. VDY is a cheap, simple way to own Canada’s largest dividend payers, and it is also a large bet on Canadian banks and energy companies. Two holdings, Royal Bank and TD, are about 26.8% of the fund between them.
What is VDY’s dividend yield in 2026?
VDY’s 12-month trailing yield was 3.11% at September 30, 2026, per Vanguard Canada. Vanguard also publishes a distribution yield, a separate measure, which was 2.97% on the same date. Yield is the payout divided by the unit price, so a rising price pulls the yield down even when the payments hold steady. VDY’s one-year return to September 30, 2026 was 34.37%, which is why a yield quoted in an older article can be well out of date. The dividend calculator turns a yield and an amount invested into yearly and monthly income.
Distributions are paid monthly, and the amount varies. The September 2026 distribution was $0.18622 per unit, with an ex-dividend date of September 18, 2026 and payment on September 25, 2026. Across January to September 2026, the monthly cash distributions were between about $0.17 and $0.21 per unit each month.
In dollar terms, on $10,000 of VDY the trailing yield works out to about $311 a year, or about $26 a month, before tax. That is an illustration from the trailing figure, not a forecast: future distributions depend on what the underlying companies pay.
For context, the same trailing-yield measure was 0.84% for VFV (per Vanguard, September 30, 2026) and 1.56% for XEQT (per iShares, October 6, 2026). VDY pays out more of its return as cash than either broad fund does.
How has VDY performed?
VDY’s annualized NAV return to September 30, 2026 was 18.28% over five years and 14.11% over ten years, per Vanguard Canada’s VDY page. Over one year it was 34.37%, and over three years 28.99% a year. These figures include reinvested distributions and are after fund expenses.
Calendar-year returns show how uneven the ride has been: 36.73% in 2021, -0.19% in 2022, 8.36% in 2023, 21.40% in 2024 and 30.92% in 2025. Vanguard’s VDY page reports a standard deviation of 10.07% as at August 31, 2026.
Compared with the broad funds many Canadians hold:
| Feature | 5 years | 10 years |
|---|---|---|
| VDY (Canadian high dividend) | 18.28% (better on this row) | 14.11% |
| VFV (S&P 500, in CAD) | 16.14% | 15.89% (better on this row) |
| XEQT (global all-equity) | 13.94% | Launched in 2019 |
Sources: Vanguard Canada (VDY, VFV) and iShares Canada (XEQT). NAV or total returns, after expenses. Past performance may not be repeated.
Over five years, VDY’s 18.28% a year was ahead of VFV’s 16.14% and XEQT’s 13.94%. Over ten years, VFV’s 15.89% a year was ahead of VDY’s 14.11%. VDY’s results come from a fund that is 59.0% financials and 28.5% energy, so they say more about those two sectors than about dividend investing in general. The same concentration can work in the other direction, and past returns are not a guide to future ones.
VDY vs XEI, ZDV, CDZ and XDIV
| Feature | MER | Yield | 5-year return | 10-year return |
|---|---|---|---|---|
| VDY (Vanguard) | 0.22% | 3.11% | 18.28% | 14.11% (better on this row) |
| XEI (iShares) | 0.22% | 3.51% (better on this row) | 15.53% | 11.82% |
| ZDV (BMO) | 0.39% | 2.76% (annualized distribution yield) | 15.74% | 11.79% |
| CDZ (iShares) | 0.66% | 3.05% | 11.60% | 10.18% |
| XDIV (iShares) | 0.11% (better on this row) | 3.15% | 19.01% (better on this row) | Launched in 2017 |
Sources: Vanguard Canada, iShares Canada and BMO Global Asset Management, September and October 2026. Returns are annualized to September 30, 2026. ZDV's yield is BMO's annualized distribution yield, a different measure from the 12-month trailing yield shown for the others.
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VDY vs XEI
XEI (iShares S&P/TSX Composite High Dividend Index ETF) is the closest match. Both charge 0.22% and both pay monthly. The difference is spread: XEI holds 75 stocks and its largest position, Toronto-Dominion Bank, is about 5.2% of the fund, while VDY’s largest position is about 15.7%. XEI’s trailing yield was higher at 3.51%. VDY’s returns were higher over both five years (18.28% against 15.53%) and ten years (14.11% against 11.82%), both to September 30, 2026.
VDY vs ZDV
ZDV (BMO Canadian Dividend ETF) costs more, with an MER of 0.39%. It is less bank-heavy: BMO lists financials at 37.90% and energy at 21.49%, against 59.0% and 28.5% for VDY. ZDV’s ten-year annualized return was 11.79%.
VDY vs CDZ
CDZ (iShares S&P/TSX Canadian Dividend Aristocrats Index ETF) screens for large, established Canadian companies that raised their ordinary cash dividend every year for at least five consecutive years. Its MER is 0.66%, three times VDY’s, and it spreads its money across 93 holdings with the largest at about 3.3%. Its ten-year annualized return to September 30, 2026 was 10.18%.
VDY vs XDIV
XDIV (iShares Core MSCI Canadian Quality Dividend Index ETF) is the cheapest of the group at 0.11%, and it is even more concentrated by count, with 20 holdings. Its trailing yield of 3.15% is close to VDY’s.
VDY vs owning the bank stocks directly
Buying the big banks and pipelines one by one removes the MER. On $50,000, VDY’s MER works out to about $110 a year. In exchange, the fund tracks the index, collects dividends from 60 companies and turns them into one monthly payment. An investor holding the stocks directly does that work by hand and decides when to rebalance.
How are VDY distributions taxed?
In a non-registered account, VDY’s distributions are mostly eligible Canadian dividends, which are grossed up and then qualify for the federal dividend tax credit. In a TFSA they are not taxed, and in an RRSP tax is deferred until withdrawal.
Per Vanguard Canada, 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. Two things follow for a taxable account.
The dividend portion gets the dividend tax credit. CRA says the federal credit applies to dividends from taxable Canadian corporations that you report on your tax return; foreign dividends do not qualify. The taxable amount of an eligible dividend is 138% of the amount actually received, and the credit then reduces the tax on that grossed-up amount. For an ETF, the figures arrive on a T3 slip: CRA points to boxes 39 and 51 of the T3 slip. The provincial credit varies with the province or territory where you lived at the end of the year, so the after-tax result differs across Canada.
A worked example of the gross-up, using the same $10,000 holding as above: if its roughly $311 of yearly distributions were all eligible dividends, they would be reported as about $429 of taxable income. The federal and provincial dividend tax credits are then subtracted from the tax owing. Interest income gets no such credit. The gross-up also raises net income on the return, which can matter for income-tested benefits.
The capital gains portion was not paid in cash. VDY’s December 2025 capital gains distribution was $0.76 per unit, paid in reinvested units rather than cash (ex-date December 30, 2025). In a non-registered account that amount is still reported on the T3 for the year. Reinvested distributions are added to the adjusted cost base of the units, so good records prevent paying tax on the same gain twice at sale.
Because VDY’s holdings are all Canadian, there was no foreign income in 2025 and no foreign withholding tax to think about. The site’s guide to high-dividend Canadian stocks covers how the same credit works for shares held directly.
Which account types can hold VDY?
VDY can be held in an RRSP, RRIF, RESP, TFSA, DPSP, RDSP, FHSA and non-registered accounts, per Vanguard’s factsheet.
| Account type | How VDY’s distributions are treated |
|---|---|
| TFSA | Distributions and growth are not taxed, and withdrawals are tax-free |
| RRSP / RRIF | Tax is deferred; withdrawals are taxed as ordinary income, so the dividend tax credit is not used |
| FHSA | Not taxed while in the plan; qualifying withdrawals for a first home are tax-free |
| RESP | Tax is deferred while the money stays in the plan |
| Non-registered | Eligible dividends are grossed up and get the dividend tax credit; capital gains distributions are taxable in the year |
The dividend tax credit only has value in a non-registered account. That is the reason some investors with full registered accounts place Canadian dividend funds like VDY in a taxable account and keep foreign or interest-paying holdings sheltered. It is a general pattern, not a rule, and the outcome depends on income, province and available contribution room.
Whichever account is used, VDY trades like a stock. Wealthsimple charges $0 commission on listed Canadian stocks and ETFs, and Questrade charges $0 to buy and sell Canadian and U.S.-listed stocks and ETFs. The step-by-step guide to buying ETFs in Canada walks through placing the order, and our complete Wealthsimple guide covers the platform itself. Readers who decide Wealthsimple fits can open a Wealthsimple self-directed account .
Common VDY misunderstandings
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“The yield in an old article is today’s yield.” Vanguard’s trailing figure at September 30, 2026 was 3.11%. Yield changes with the unit price, so the current number on Vanguard’s page is the one that counts.
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“VDY is weighted by dividend yield.” Vanguard describes the index as a market-capitalization-weighted index focused on dividend income. The biggest companies get the biggest weights, which is why Royal Bank is about 15.7% of the fund.
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“Owning VDY plus the big banks is diversification.” Five of VDY’s top six holdings are banks. Adding Royal Bank or TD shares on top increases the same exposure.
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“Dividends are extra return.” A distribution is part of total return, not an addition to it. VDY’s 18.28% five-year figure already includes reinvested distributions. Cash that is paid out and left idle does not compound.
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“Monthly payments are fixed.” In 2026 the monthly amount ranged between about $0.17 and $0.21 per unit each month.
Who VDY fits, and who it doesn’t
VDY tends to fit investors who:
- want monthly cash distributions from large Canadian companies in one low-cost fund
- hold it in a non-registered account and value the eligible-dividend treatment
- already own global funds and want an added Canadian income tilt
- accept that 59.0% of the fund is in financials
VDY is a weaker fit for investors who:
- want one fund to be the whole portfolio, since VDY is 100% Canada
- already hold large positions in Canadian bank stocks
- want less exposure to energy, which is 28.5% of the fund
- are focused on total return and do not need cash paid out
The summary: VDY is cheap at 0.22%, simple and tax-friendly for Canadian dividend income, and it is a concentrated fund. Its strong returns to September 30, 2026 came from the same bank and energy weighting that makes it risky as a sole holding.
Read next
- Canadian dividend ETFs compared: VDY, XEI, ZDV and CDZ side by side
- High-dividend Canadian stocks: the individual-stock route
- VFV review: U.S. large-cap exposure
- XEQT review: a global all-equity fund
- How to buy ETFs in Canada: placing the order