Diversification by Dividend index.
XDV is comprised of 30 of the highest yielding, dividend-paying companies in the Dow Jones Canada Total Market Index. Stocks are selected based on an analysis of dividend growth, yield and average payout ratio.
The Claymore Investments S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ) is constructed using slightly different criteria that incorporate concentration limits to prevent any stock from being more than 8%, any income trust from being more than 5% and income trusts from exceeding 30% of the Index weight.
Using both XDV and CDZ will give investors some duplication but the extra breadth and exposures of CDZ appear to be a good complement to XDV (despite the smaller volume and slightly higher MER of CDZ).
|iShares.ca Dow Jones Canada Dividend index ETF(XDV) MER 0.55%||ClaymoreInvestments.ca S&P/TSX Canadian Dividend ETF (CDZ) MER 0.64%|
|CIBC||6.57%||ENBRIDGE INCOME FUND||5.42 %|
|BONTERRA ENERGY||5.80%||AGF MGMT LTD CL B||4.97 %|
|BANK OF MONTREAL||5.16%||NORTH WEST CO. INC.||4.94 %|
|TD BANK||4.82%||KEYERA||4.91 %|
|NATIONAL BANK||4.80%||BIRD CONSTRUCTION||4.84 %|
|AG GROWTH INT’L||4.74%||TELUS||4.52 %|
|TELUS CORP.||4.32%||CANADIAN REIT||4.21 %|
|IGM FINANCIAL||3.92%||SHAW COMMS||4.10 %|
|ROYAL BANK||3.92%||TRANSCANADA CORP||3.86 %|
|BANK OF NOVA SCOTIA||3.85%||ROGERS COMMS B||3.64 %|
U.S. market diversification.
Doug Cronk, CFA is Manager, Investments for a Canadian Pension fund.