4 Best Monthly Dividend ETFs in Canada (July 2026)
The best monthly dividend ETFs in Canada include XEI.TO (~0.22% MER), VDY.TO (~0.22%), ZWC.TO (~0.70%), and FIE.TO (~0.85%). These ETFs provide consistent monthly income through dividends, interest, or covered call strategies, making them ideal for TFSA, RRSP, or non-registered investors seeking regular cash flow.
Monthly dividend ETFs are popular among Canadian investors who want consistent cash flow from their portfolios, especially for income planning or reinvestment. ETFs like XEI.TO and VDY.TO provide exposure to Canadian dividend-paying stocks, while ZWC.TO enhances income using covered calls and FIE.TO adds a mix of bonds, preferred shares, and equities for diversified monthly payouts.
However, not all monthly dividend ETFs generate income the same way. XEI.TO and VDY.TO rely on traditional dividend-paying companies, while ZWC.TO boosts yield through options strategies that can limit upside. FIE.TO takes a multi-asset approach, combining income sources but with slightly higher fees.
In this guide, we break down the best monthly dividend ETFs in Canada, comparing yield consistency, diversification, fees, 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 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% |
VDY.TO Vanguard FTSE Canadian High Dividend Yield | — | $8.4B | 3.24% | +21.43% | +51.45% |
FIE.TO iShares Canadian Financial Monthly Income Common Class | — | $1.4B | 4.50% | +13.01% | +35.00% |
What Is an ETF?
A monthly dividend ETF in Canada is an exchange-traded fund that distributes income to investors on a monthly basis rather than quarterly. These ETFs generate cash flow from dividends, interest income, or option strategies, making them attractive for investors seeking regular income.
For example, XEI.TO (~0.22% MER) holds a broad basket of Canadian dividend-paying stocks and pays monthly distributions, while VDY.TO (~0.22% MER) focuses on high-yield Canadian companies with strong dividend histories. ZWC.TO (~0.70% MER) uses a covered call strategy to increase monthly income, and FIE.TO (~0.85% MER) combines bonds, preferred shares, and dividend stocks to deliver diversified monthly cash flow.
Monthly dividend ETFs are commonly used in TFSAs and non-registered accounts for income generation. Canadian dividend income is generally tax-efficient in non-registered accounts, while funds like FIE.TO may generate a mix of income types including interest and capital gains.
The 4 Best ETFs: Ranked & Reviewed
Detailed breakdown of each pick with live data.
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%
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 Canadian Financial Monthly Income Common Class
$11.29
+13.01% YTD
Returns
YTD
+13.01%
1Y
+35.00%
3Y
+26.11%
5Y
+13.62%
Pros & Cons
Pros
- Consistent monthly cash flow from ETFs like XEI.TO, VDY.TO, and ZWC.TO
- Diversified income exposure across dividend stocks, bonds, and option strategies
- Suitable for income-focused investors or those reinvesting distributions
- Can be tax-efficient in non-registered accounts when holding Canadian dividend ETFs
Cons
- Covered call ETFs like ZWC.TO can limit capital growth during strong markets
- Higher MERs for multi-asset or covered call ETFs (ZWC.TO ~0.70%, FIE.TO ~0.85%)
- Some ETFs like FIE.TO include bonds, which can reduce long-term returns
- Monthly distributions are not guaranteed and can fluctuate over time
Compare These ETFs Head-to-Head
Drill into a side-by-side breakdown of performance, AUM, and yield.
Best next ETF step
Keep comparing ETFs
These are good next reads if you want a broader shortlist, Canadian index exposure, or a faster way to compare funds.
ETF category
See more guides in this cluster
Stay inside the same ETF category and compare more funds with similar investor intent.
Popular guide
30 Best ETFs in Canada
A broad starting point if you want a shortlist across the main ETF categories.
Core ETF guide
Best TSX Index ETFs
A simple place to start if you want Canadian equity exposure through index funds.
Sector ETF guide
Best Canadian Oil ETFs
A useful next read if you want energy exposure without picking individual oil stocks.
Frequently Asked Questions
What is the best monthly dividend ETF in Canada?
XEI.TO is one of the most popular monthly dividend ETFs in Canada due to its low ~0.22% MER and broad exposure to Canadian dividend-paying stocks. Investors seeking higher income may consider ZWC.TO, which uses a covered call strategy to increase yield, though it may limit long-term growth.
What’s the difference between XEI.TO and FIE.TO?
XEI.TO focuses on Canadian dividend-paying stocks, while FIE.TO combines bonds, preferred shares, and equities to generate income. This makes FIE.TO more diversified but also introduces interest-rate sensitivity, whereas XEI.TO is more equity-focused and growth-oriented.
Are monthly dividend ETFs good for a TFSA?
Yes, monthly dividend ETFs like XEI.TO and VDY.TO are commonly used in TFSAs because distributions and capital gains are tax-free. However, investors should consider total return and not just income, especially for higher-yield ETFs that may sacrifice long-term growth.