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Please tell me you're not relying on dividend stocks to play defence in your portfolio.

With bond and GIC yields at rock bottom levels, many investors have increased their holdings in dividend paying stocks. While the yields are better, the defensive characteristics of dividend stocks are in no way comparable to bonds or GICs. In fact, dividend portfolios may not even outperform the broader stock market.

As a reference for the past 12 months, let's use the iShares S&P/TSX Capped Composite Index ETF (XIC), which is an easy way to track the Canadian stock market. XIC was down 7.99 per cent on a total return basis to May 3. The only dividend ETF on my list that really smoked the index-tracking XIC was the First Asset Active Canadian Dividend ETF (FDV), down 1.02 per cent.

The funds that did worse than XIC included the BMO Canadian Dividend ETF (ZDV), down 9.28 per cent, and the First Trust AlphaDEX Canadian Dividend ETF (FDY), down 9.53 per cent. Six other dividend ETFs lost between 5.9 per cent and 7.7 per cent for the past 12 months.

ZDV's issues come in large part from the fact that 23 per cent of the portfolio is in energy stocks. That's a higher weighting than even XIC, at 19.4 per cent. FDV doesn't even list energy in the portfolio profile on the First Asset website. The top sector is financials, which this case includes several real estate investment trusts, or REITs.

There are three basic types of equity or dividend ETFs – passive index tracker, actively managed and rules-based, which amounts to a pre-set screen for various characteristics. None of these three types distinguished itself in the past year for limiting losses in a dividend portfolio in the past year. FDY is an actively managed fund, but so is the Horizons Active Canadian Dividend ETF (HAL), down 6.6 per cent on a total return basis in the past year. The index-tracking iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ) lost 6.9 per cent. The rules-based RBC Quant Canadian Dividend Leaders ETF (RCD) fell 6.2 per cent.

Don't expect your dividend ETFs to play defence for you. Know what stocks and sectors they hold and base your risk and return expectations on that.