4 Best High-Dividend ETFs in Canada (July 2026)
The best high dividend ETFs in Canada include VDY.TO (~0.22% MER), XEI.TO (~0.22%), ZDV.TO (~0.39%), and ZWC.TO (~0.70%). These ETFs focus on high-yield Canadian stocks or covered call strategies, offering strong income potential for TFSA, RRSP, or non-registered investors seeking regular cash flow.
High-dividend ETFs are designed for Canadian investors who want stronger income from their portfolios, often delivering higher yields than traditional dividend funds. ETFs like VDY.TO and XEI.TO focus on Canadian dividend-paying companies, while ZDV.TO offers a broader yield-weighted approach and ZWC.TO enhances income using a covered call strategy.
However, the highest yield doesn’t always mean the best investment. VDY.TO and XEI.TO rely heavily on Canadian banks and energy stocks, while ZWC.TO generates additional income through options, which can limit upside in strong markets. The key is balancing yield with diversification, fees, and long-term total return.
In this guide, we break down the best high-dividend ETFs in Canada, comparing yield strategies, risk levels, and tax considerations so you can choose the right ETF for your TFSA, RRSP, or income-focused portfolio.
At a Glance: Quick Comparison
Side-by-side snapshot of fees, yield, and returns. Data updates daily.
| ETF | MER | AUM | Yield | YTD | 1Y |
|---|---|---|---|---|---|
Top VDY.TO Vanguard FTSE Canadian High Dividend Yield | — | $8.4B | 3.24% | +21.43% | +51.45% |
XEI.TO iShares S&P/TSX Composite High Dividend Index ETF | — | $4.2B | 3.60% | +19.61% | +44.93% |
ZWC.TO BMO Canadian High Dividend Covered Call | 0.65% | $2.4B | 5.66% | +7.70% | +29.34% |
ZDV.TO BMO Canadian Dividend | 0.35% | $1.8B | 2.70% | +16.82% | +41.58% |
What Is an ETF?
A high-dividend ETF in Canada is an exchange-traded fund that focuses on generating above-average income by investing in high-yield dividend-paying companies or using income-enhancing strategies like covered calls. These ETFs are typically concentrated in sectors such as financials, energy, utilities, and telecom, which are known for stable cash flows.
For example, VDY.TO tracks a high-dividend Canadian index with an MER around ~0.22%, while XEI.TO offers broad Canadian dividend exposure (~0.22% MER) with a diversified basket of income-paying stocks. ZDV.TO uses a yield-weighted strategy (~0.39% MER), and ZWC.TO applies a covered call overlay (~0.70% MER) to boost distributions.
High-dividend ETFs are commonly used in TFSAs and non-registered accounts for income generation. Canadian dividends are typically tax-efficient in non-registered accounts, while covered call ETFs like ZWC.TO may generate different types of income, including capital gains and option premiums.
The 4 Best ETFs: Ranked & Reviewed
Detailed breakdown of each pick with live data.
Vanguard FTSE Canadian High Dividend Yield
$75.63
+21.43% YTD
Vanguard FTSE Canadian High Dividend Yield Index ETF seeks to track, to the extent reasonably possible and before fees and expenses, the performance of a broad Canadian equity index that measures the investment return of common stocks of Canadian companies that are characterized by high dividend yield. Currently, this Vanguard ETF seeks to track the FTSE Canada High Dividend Yield Index (or any successor thereto). It invests primarily in common stocks of Canadian companies that pay dividends.
Returns
YTD
+21.43%
1Y
+51.45%
3Y
+28.21%
5Y
+18.26%
iShares S&P/TSX Composite High Dividend Index ETF
$39.00
+19.61% YTD
Seeks long-term capital growth by replicating the performance of the S&P/TSX Composite High Dividend Index, net of expenses.
Returns
YTD
+19.61%
1Y
+44.93%
3Y
+23.26%
5Y
+15.76%
BMO Canadian High Dividend Covered Call
$22.24
+7.70% YTD
NA
Returns
YTD
+7.70%
1Y
+29.34%
3Y
+17.94%
5Y
+11.38%
BMO Canadian Dividend
$32.15
+16.82% YTD
Returns
YTD
+16.82%
1Y
+41.58%
3Y
+24.24%
5Y
+15.83%
Pros & Cons
Pros
- Higher income potential than standard dividend ETFs, especially with covered call strategies like ZWC.TO
- Diversified exposure to Canadian dividend-paying sectors such as banks, energy, and utilities
- Regular monthly distributions from ETFs like VDY.TO, XEI.TO, and ZDV.TO
- Can be tax-efficient in non-registered accounts when holding Canadian dividend-paying stocks
Cons
- Covered call ETFs like ZWC.TO can cap upside during strong market rallies
- High yields may come from sector concentration, especially in financials and energy
- Higher MERs (ZWC.TO ~0.70%) compared to standard index ETFs
- Income can fluctuate and is not guaranteed over time
Compare These ETFs Head-to-Head
Drill into a side-by-side breakdown of performance, AUM, and yield.
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Frequently Asked Questions
What is the best high dividend ETF in Canada?
VDY.TO is one of the most popular high dividend ETFs in Canada due to its low ~0.22% MER and strong exposure to Canadian banks and energy companies. Investors seeking higher income may consider ZWC.TO, which uses a covered call strategy to boost yield, though it may limit upside growth.
What’s the difference between VDY.TO and ZWC.TO?
VDY.TO holds high-dividend Canadian stocks and focuses on long-term income and growth, while ZWC.TO uses a covered call strategy to generate additional income. This typically results in higher yield for ZWC.TO, but can reduce capital appreciation during strong bull markets.
Are high dividend ETFs good for a TFSA?
Yes, high dividend ETFs like VDY.TO and XEI.TO are commonly used in TFSAs because distributions and capital gains are tax-free. However, investors should focus on total return, not just yield, and be aware that covered call ETFs like ZWC.TO may behave differently from traditional dividend funds.