Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

What do you think of the iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ)? It seems to follow a similar approach to your model Yield Hog Dividend Growth Portfolio.

The idea behind CDZ is a good one: The exchange-traded fund invests in stocks that have raised their dividends for at least five consecutive years, which means it will generally include companies whose revenues and earnings are also growing steadily.

There’s some wiggle room in the methodology, however: According to S&P Dow Jones Indices, which manages the index that CDZ tracks, constituents “can maintain the same dividend for a maximum of two consecutive years within that five year period.”

Story continues below advertisement

That’s not a deal-breaker for me. However, one concern I have is that CDZ weights stocks based on their dividend yields. This means stocks with the highest yields account for the biggest positions in the fund. In the past, this has led to situations where troubled companies with unsustainably high dividend yields – such as Aimia and Corus Entertainment Inc. – have been the ETF’s top holdings, only to cut their dividends.

The weighting methodology – along with CDZ’s relatively high management expense ratio of 0.66 per cent – may help to explain why CDZ’s five-year annualized total return of 5.35 per cent (through Dec. 31) lagged the S&P/TSX Composite Index’s total return of 6.28 per cent. To be fair, several other Canadian dividend ETFs also trailed the S&P/TSX. Those that beat the index included the Horizons Active Canadian Dividend ETF (HAL), with a five-year annualized total return of 7.5 per cent, and the Invesco Canadian Dividend Index ETF (PDC), which returned 6.44 per cent.

Remember that these are backward-looking performance numbers, and it’s possible that ETFs that lagged the pack over the past five years could turn out to be winners over the next five years. Rather than pick a single ETF, you may wish to diversify by spreading your money across a few different funds. Just as important as the ETFs you choose is your behaviour as an investor. If you buy and hold through good times and bad, reinvest your dividends and resist the urge to trade, you’ll very likely be pleased with your results over the long run.


I am looking for an ETF that invests in consumer staples stocks and has a reasonable dividend yield. What do you suggest?

For Canadian stocks, there’s the iShares S&P/TSX Capped Consumer Staples Index ETF (XST). But I’m guessing the trailing 12-month yield of 0.7 per cent doesn’t meet your definition of “reasonable." ETFs that focus on U.S. and international consumer staples stocks generally offer higher yields – typically between 2 and 3 per cent. One example is the U.S.-listed Vanguard Consumer Staples ETF (VDC), which has an attractive MER of 0.1 per cent and yields about 2.4 per cent. VDC’s top holdings include Procter & Gamble Co., Coca-Cola Co., PepsiCo Inc., Walmart Inc. and Colgate-Palmolive Co. Presumably, these companies should hold up better than other sectors in an economic downturn because they sell household goods, personal care items, food and other products that people need in good times and bad.


I’ve held the iShares S&P/TSX Capped REIT Index ETF (XRE) for some time. I’m trying to understand why the monthly distributions were lower for the first 11 months of 2019 (compared with 2018), and then there was a big cash payment at the end of 2019. Can you explain?

Through the first 11 months of 2019, XRE distributed 72.4 cents per unit in cash, which was about 3 per cent lower than the 74.7 cents it distributed in the comparable period of 2018. The drop likely reflected the fact that several REITs in XRE cut their distributions in 2018, including Artis REIT, Cominar REIT and Boardwalk REIT.

Story continues below advertisement

In December, XRE declared an unusually large cash distribution of about 22.78 cents per unit. Normally, some or all of such year-end distributions is reinvested in the fund, but in this case the entire amount was paid in cash. The payment reflected the takeover by Blackstone Group Inc. of Dream Global REIT, one of XRE’s constituents, said Steven Leong, head of product at iShares Canada.

The distribution was paid in cash because “the tax treatment [of the transaction] was not clarified ... until after tax year-end,” Mr. Leong said in an e-mail. How the distribution will be treated for tax purposes “will be communicated at the end of February, as per normal,” he said.

E-mail your questions to jheinzl@globeandmail.com. I’m not able to respond personally to every e-mail but I choose certain questions to answer in my column.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies