Looking to invest in reliable, dividend-paying Canadian stocks?
An ETF like iShares XDV might be something for you to consider.
In this iShares XDV ETF review, let’s see if it’s a good choice for you.
All-Equity Exchange-Traded Fund
BlackRock iShares XDV is an Exchange-Traded Fund (ETF) that provides you with exposure to a basket of Canadian stocks that provide you with regular, monthly dividend income.
- Provides you with diversified exposure to 30 of the highest-yielding Canadian companies
- Allows you to earn regular, monthly dividend income from Canadian stocks
- Portfolio of high-yielding dividend stocks
- High MER
iShares XDV is an exchange-traded fund designed to replicate the performance of the top 30 stocks in the Dow Jones Canada Total Market Index.
It seeks to provide its investors with regular income through high-yield, dividend-paying Canadian companies trading on the Toronto Stock Exchange (TSX).
It was launched in 2005 by BlackRock Canada and, therefore, has a significant performance history that you can track to determine its potential performance moving forward.
iShares XDV is a medium-risk investment opportunity that can cater to investors seeking regular monthly passive income through dividends.
XDV.TO is currently trading at close to $26.7.
XDV Key Facts
As of June 30, 2022:
- Ticker Symbol: XDV.TO
- Exchange: Toronto Stock Exchange
- Assets Under Management: $1.62 Billion
- MER: 0.55%
- 12-Month Trailing Yield: 4.38%
- Currency Traded: CAD
- Registered Accounts Availability: Yes
iShares XDV ETF has a high Management Expense Ratio (MER) of 0.55%, making it a costly product.
However, its MER is significantly lower than any mutual fund product that provides investors with similar features and benefits.
The average mutual fund fee can be 2% or higher. So, ETFs offering a lower MER than mutual funds products—like iShares XDV—is also a crucial reason why many Canadians prefer to invest in ETFs rather than mutual funds in recent years.
iShares XDV’s dividend yield as of July 14, 2022:
- 12-month trailing yield: 4.47%
- Distribution yield: 4.16%
- Dividend schedule: Monthly
Here’s a hypothetical growth of $10,000 since XDV’s inception:
As of June 30, 2022:
| 1y | 3y | 5y | 10y | Incept. | |
|---|---|---|---|---|---|
| Average Annual Return (%) | -4.09 | 8.37 | 7.13 | 7.58 | 6.16 |
| Benchmark (%) | -3.55 | 8.99 | 7.74 | 8.25 | 6.75 |
Go to the Blackrock website for real-time performance numbers of XDV.
iShares XDV is an all-equity ETF that diversifies its asset allocation across several Canadian economic sectors.
iShares XDV is an all-equity ETF. This means that it does not allocate any funds to bonds or other fixed-income securities.
As of July 14, 2022, iShares XDV ETF has allocated 99.25% of its funds to equity securities. It holds the remaining assets in cash.
| Asset Class | Investment (%) |
|---|---|
| Canadian Equity | 99.25 |
| U.S. Equity | 0.00 |
| International Equity | 0.00 |
| Fixed Income | 0.00 |
| Other | 0.00 |
| Cash | 0.75 |
As of July 14, 2022, Canadian Tire Ltd. is its most significant holding at a 7.18% weighting. It is followed closely by the Canadian Imperial Bank of Commerce at a 7.12% weighting.
The Bank of Montreal is its third most significant holding, accounting for 6.42% of its fund allocation.
| Ticker | Name | Weight (%) |
|---|---|---|
| CTC.A | CANADIAN TIRE LTD CLASS A | 7.18 |
| CM | CANADIAN IMPERIAL BANK OF COMMERCE | 7.12 |
| BMO | BANK OF MONTREAL | 6.42 |
| RY | ROYAL BANK OF CANADA | 6.18 |
| BCE | BCE INC | 5.06 |
| TRP | TC ENERGY CORP | 4.97 |
| BNS | BANK OF NOVA SCOTIA | 4.60 |
| NA | NATIONAL BANK OF CANADA | 4.39 |
| TD | TORONTO DOMINION | 4.20 |
| EMA | EMERA INC | 4.03 |
As of July 14, 2022, its most significant asset allocation is towards the Financials sector at 52.87%. Its second most significant sector exposure is towards Utilities at 13.23%. The Communications sector comes in third at a 12.54% weight. On the other hand, its lowest sector weighting is towards Industrials at a 1.79% weighting.
| Type | Fund (%) |
|---|---|
| Financials | 52.87 |
| Utilities | 13.23 |
| Communication | 12.54 |
| Consumer Discretionary | 7.18 |
| Energy | 4.97 |
| Materials | 4.72 |
| Consumer Staples | 1.95 |
| Industrials | 1.79 |
| Cash and/or Derivatives | 0.75 |
XDV is a medium risk ETF:
iShares XIU is an all-equity ETF offered by BlackRock Canada. It diversifies its asset allocation across several sectors of the Canadian economy, similar to iShares XDV ETF.
However, unlike iShares XDV ETF, iShares XIU ETF invests its funds in the top 60 publicly traded Canadian companies based on the companies’ market capitalization. On the other hand, iShares XDV ETF focuses its asset allocation on companies sporting the highest dividend yields.
iShares XIU is also a low-cost ETF that you can consider due to its 0.18% MER, which is significantly different from iShares XDV ETF’s 0.55%.
iShares XIU ETF could be a viable alternative to iShares XDV ETF if you are interested in tracking the top 60 Canadian companies’ performance for long-term capital growth rather than regular passive income through dividends.
Read my full iShares XIU ETF review here to find out more.
iShares XIC is another all-equity ETF offered by BlackRock Canada that tracks equity securities’ performance in Canada.
iShares XIC ETF is one of the oldest ETFs in existence, and it sets the pace for other ETFs to follow. It allocates its funds to Canadian companies based on their market capitalization. It also provides you with a much broader exposure to the Canadian equity security market than iShares XDV ETF.
iShares XIC ETF provides you with more diversification to your portfolio than iShares XDV ETF because it invests in 219 companies compared to iShares XDV ETF’s 30 companies.
iShares XIC ETF is also an incredibly low-cost investment to consider for your portfolio due to its 0.06% MER, which is substantially lower than the 0.55% MER for iShares XDV ETF.
iShares XIC ETF could be a viable alternative to iShares XDV ETF if you want low-cost exposure to the entire Canadian stock market instead of dividend income.
Read my full iShares XIC ETF review here to find out more.
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If you’re looking to invest in dividend stocks but don’t want to manage your own portfolio, XDV is an ok choice for you.
The MER might be a tad too high, though.
If you’re looking for other dividend ETF options, check out this list.
