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Diversification by Dividend index.


To offset and complement the iShares XDV use the Claymore CDZ.

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 %

Next time?

U.S. market diversification.

Doug Cronk, CFA is Manager, Investments for a Canadian Pension fund.

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