There are many Canadian dividend funds.
They tend to be weighted towards Canadian banks and utilities which have a history of high dividends and steady growth.
The two below have a U.S. and international focus, which adds diversification and include many well known multinational names. The components of both have good current yields, hold companies with a history of dividend increases and have strong sustainability scores. When conditions changes they are likely to fall least and recover first.
Horizons Active Global Dividend ETF (TSX:HAZ) Closed Friday at $23.52
Background: This actively managed ETF aims to provide regular dividend income and modest long-term capital growth by investing in some of the world’s best dividend paying stocks. It is sub-advised by Guardian Capital.
Guardian looks at three fundamental drivers in making its selection: dividend growth, payout ratio and sustainability of the payout. The fund was launched in 2010, has $185.1 million in assets under management and comes with a management fee of 0.65%.
Performance: The ETF has a current annual yield of 2.19%. The ETF’s total return year-to-date is 19.87%. The 3-year average annual total return is 8.94%. and 5-year 9.51%, according to Morningstar Research.
It has performed well against its peers. Year-to-date it is ranked 31st out of 1,654 similar funds. It had similar ranking top 10% ranking between 2016 and 2018.
Holdings: The holdings are dominated by U.S. companies. Geographically, 77% of the stocks are in the U.S. and 7% are Canadiana. Another 15% are in Europe and 1% are in Australia.
The holdings are widely diversified over 11 sectors, with no one area more than 15%, or less than 5%. The largest sectors are consumer defensive (15%), followed by industrials (14%) and financial services (13%).
The top five holdings are Microsoft, Mastercard, Nestle, McDonald’s and Medical Properties Trust. The Royal Bank is among its top 10.
The ETF offers good capital gain potential as well as a steady stream of income.
iShares Core Dividend Growth ETF (NYSE:DGRO) Closed Tuesday at $40.62 All figures in U.S. dollars
The iShares Core Dividend Growth ETF tracks an index of U.S. companies only. The companies have a history of sustained dividend growth and are broadly diversified. The ETF is designed as a core holding for income seekers.
It was launched in 2014 and has U.S. $9.4 billion in assets and a management fee of 0.08%
Performance: Year-to-date the ETF’s total return is up 25.8%. The ETF’s 3-year average annual total return is 14.96% and 5-year return is 11.97%. The ETF has a trailing 12-month yield of 2.29%.
It has also performed well against its peers. Year-to-date it is ranked 9th of 1,215 similar funds funds. It had a similar ranking between 2016 and 2018.
Holdings: The holdings are more weighted towards banks, financial services and healthcare, rather than consumer defensive and industrials which is the Horizons ETF model.
The top sectors are financial services (21%), healthcare (13%) followed by industrials, technology and consumer defensive at 10% each.
The Top 5 holdings are: Apple, Microsoft, JP Morgan Chase, Johnson & Johnson and Chevron.
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This article appeared in the Dec. 2 edition of the Internet Wealth Builder.
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