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Last week we looked at the Claymore S&P/TSX Canadian Dividend ETF , an exchange-traded fund that tracks an index of companies that have raised their dividends for at least five years. This week, we'll look at a dividend ETF that employs an active management strategy, Horizons AlphaPro Dividend ETF

You'll find some overlap in these two ETFs, including a healthy dollop of pipelines, telecoms and utilities – the cornerstone of most dividend portfolios. But there are also some key differences.

For starters, the Horizons AlphaPro Dividend ETF charges a management expense ratio of 0.99 per cent compared with 0.64 per cent for the Claymore ETF. A higher MER is to be expected, because AlphaPro has to pay a manager to pick stocks, whereas Claymore's ETF passively tracks an index.

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Another difference is the dividend yield. Claymore's ETF yields 4 per cent – higher than the AlphaPro ETF's annualized yield of about 2.3 per cent. The difference is partly because AlphaPro's higher MER reduces the investor's net yield, but it also reflects AlphaPro's strategy of choosing lower-yielding companies when it sees strong dividend growth prospects.

"Dividend investing is as much about the growth of future dividends as it is about the level of current yield. In our experience companies that can consistently grow their dividends are those that produce the best total returns," says Lyle Stein, lead portfolio manager for the AlphaPro ETF.

As an active manager, Mr. Stein also has the flexibility to hold on to companies even if they temporarily halt dividend increases. He owns Bank of Nova Scotia, for instance, a company that the Claymore ETF dropped because it failed to raise its dividend last year.

"We are not beholden to a rigid, automatic style," he says.

The fund does have some guidelines, however. To stay diversified, it limits its exposure in any one sector to 20 per cent. It also aims to keep individual holdings to 5 per cent or less of the portfolio, although there is some wiggle room.

Here's a look at some of the AlphaPro Dividend ETF's top holdings:

TransCanada Corp. (TRP-TSX)

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Yield: 4.3 per cent

Shares of TransCanada haven't run up as much as some dividend stocks have, which is one reason Mr. Stein likes it and recently added to his position.

The pipeline operator and power generator "fits our mould of good, solid consistent ability to return money to shareholders. We're not buying them for the sexy story; we're buying them for the non-sexy business, which makes it so attractive."

Cenovus Energy (CVE-TSX)

Yield: 2.5 per cent

Cenovus's yield isn't going to make anyone rich, but Mr. Stein expects the dividend to grow – especially if the price of oil remains high. And he thinks it will, given strong global energy demand and the "quasi-currency aspect of oil" as a hedge against a falling U.S. dollar.

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What's more, Cenovus – which was split off from Encana – "has a good plan in place with respect to what they're doing in the oil sands to put capital to work."

BCE Inc. (BCE-TSX)

Yield: 5.6 per cent

The bad news is that Mr. Stein doesn't expect BCE to continue raising its dividend two or three times a year, as it's been doing lately. The good news? He still sees the dividend growing at 5- to 10-per-cent annually.

As for new wireless competition, he says BCE will hold its own. "That's noise," he says. "In a world where price competition is running rampant, the one advantage BCE has over everybody is their low cost of capital."

Bank of Montreal (BMO-TSX)

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Yield: 4.7 per cent

You can probably forget about dividend increases for now, given BMO's recent $4.1-billion (U.S.) purchase of U.S. bank Marshall & Ilsley Corp. But while the deal caused BMO's stock to sell off, Mr. Stein likes it.

"The way I look at it, they are buying something that everybody knows has warts on it, they didn't pay a lot for it, and they're getting a great retail deposit base at a very attractive price," he says. BMO's yield is the highest of the Big Five, and the divvy "is as safe as any bank dividend."

Thomson Reuters (TRI-TSX)

Yield: 3 per cent

Thomson , the publisher of legal, financial, health care and other information, has a "quasi-monopoly" in certain markets, which is one of the characteristics Mr. Stein looks for.

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"They've gone through periods of time where they've invested in those franchises and now they have the opportunity to generate cash," he says. "It's the kind of company where free cash flow is going to rise faster than earnings, and dividends get paid out of free cash flow."

Goldcorp (G-TSX)

Yield: 0.9 per cent

Goldcorp , a gold mining company yielding a puny 0.9 per cent may not fit everyone's idea of a great dividend stock, and Mr. Stein admits there are risks with this one.

"The price of gold could fall … but it could also rocket up," he says. Gold is "a hedge, it's an insurance policy aspect against inflation and a collapse of the U.S. currency." As for the dividend, Goldcorp doubled its payment recently and Mr. Stein says further increases are possible.

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