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Of the three ETFs considered here, CDZ is also the one to most overtly stress the inclusion of dividend growth stocks. Thus the portfolio does not include Manitoba Telecom Services, which recently cut a dividend that hadn't been increased since 2004.

The appeal of MTS was a dividend yield that has ranged from 7 to 9 per cent in the past year or two. XDV's underlying index bit on this stock to the extent that it was the seventh-largest holding at mid-month. HAL does not own Manitoba Telecom.

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One of the highest-yielding dividend growth stocks listed on the TSX is BCE Inc., which you won't find in XDV or CDZ. BCE may not have a long record of consistent dividend increases, but it yields about 5.7 per cent and has far outperformed the market this year. The fact that HAL holds this stock shows some benefit to the fact that the fund is actively managed and not a passive mirror of an index.

Sector weightings are another important point of comparison between these three dividend ETFs. Financials make up 60 per cent of XDV, which is a huge amount when you consider how prevalent financials are in other sorts of ETFs, mutual funds and individual stock portfolios. The next largest sectors are traditional dividend territory - telecommunications and utilities.

Banks haven't raised dividends in the past couple of years, so CDZ's exposure to financials is much lower at 34.7 per cent. HAL's manager has made it a point to limit the influence of financials, which have a portfolio weight of 17 per cent.

Curious to know what your fellow investors think of these ETFs? Then check the asset levels and daily trading volumes. XDV is the leader on both counts, but CDZ has clearly gained a following. HAL, a newcomer and a non-traditional one at that, has yet to register with investors if its trading volumes are any indication.

Your needs as an investor will dictate which ETF is best for you, but CDZ stands out here as an ideal choice for the masses. The fees are okay, the yield is attractive, the emphasis on dividend growth makes good sense and there's a decent level of diversification. As an alternative to dividend mutual funds or individual dividend stocks, it's certainly worth a look.



Three financial bloggers were asked for their views on the best Canadian-market dividend ETF. Here are their replies:

Canadian Capitalist: The Claymore S&P/TSX Canadian Dividend ETF (CDZ) is the choice of Ram Balakrishnan, the writer of this blog. He likes its high level of diversification and doesn't mind the fact that fees are slightly higher than the competing iShares Dow Jones Canada Select Dividend ETF (XDV).

Canadian Couch Potato: The writer of this blog on index investing, Dan Bortolotti, chose a mix of CDZ and XDV. He said he likes the index tracked by CDZ because it's based on proven performance, but not the fact that it currently excludes the banks. "By buying both of these ETFs, you'd get the broad exposure of CDZ, plus a healthy allocation to the banks, which are staples of dividend investing."

Million Dollar Journey: Another win for the Claymore fund. "I am a big believer in the dividend growth investment strategy, which CDZ uses," said the author of this blog, who goes by the alias FrugalTrader.

Rob Carrick

Dividend ETF smackdown

Here are the details on three TSX-listed exchange-traded funds that hold Canadian dividend stocks:




Est. After-Fee


Top Three





Fee (%)


($ mill)

Sectors (%)





Yield (%)





Horizons AlphaPro Dividend ETF





Energy - 28

Cash - 10.2

Consumer - 9.3





Claymore S&P/TSX Canadian Dividend ETF





Fin. - 34.7

Energy - 21.3

Utilities - 9.6





iShares Dow Jones Cda Select Dividend Index Fund





Fin.- 60

Telecom - 12.3

Utilities - 10.8





Notes: HAL was launched in February, so it lacks much of a performance history; its energy weighting includes pipeline stocks, which are like utilities. After-fee index/portfolio yield refers to an estimate of the yield of the stocks in the portfolio minus fees paid by unitholders. Returns are to Aug. 18

Source: Globeinvestor.com, ETF company data

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