Comparing XDV, VDY, CDZ, and other top TSX dividend ETFs by yield, MER, and return.
TFSA and RRSP Tax Considerations
When holding Canadian dividend ETFs, tax efficiency depends heavily on the account type:
- TFSA (Tax-Free Savings Account): All dividends paid by Canadian ETFs are completely tax-free. You pay no tax on the income received, making this an ideal account for high-yield ETFs like VDY or XDV.
- RRSP (Registered Retirement Savings Plan): Dividends are tax-sheltered as long as they remain in the account. You will only pay tax when you eventually withdraw the funds in retirement.
- Non-Registered Accounts: Canadian dividends are eligible for the Dividend Tax Credit, which can provide a favorable tax rate compared to interest income or foreign dividends.
Methodology
Data was gathered using the yahoo-finance2 API. Total returns are calculated over the preceding 5-year period. Management Expense Ratios (MER) and dividend yields are current as of the time of data collection. This page does not constitute financial advice. Data may be delayed or subject to revisions by the exchange.
What is the best dividend ETF in Canada 2026?
The "best" dividend ETF depends on your goals. VDY typically offers high yield through Canadian bank stocks, while CDZ focuses on dividend aristocrats and dividend growth. Compare MERs and top holdings to align with your strategy.
Which is better XDV vs VDY?
VDY generally has a lower Management Expense Ratio (MER) and broader exposure, while XDV holds fewer stocks and has a higher MER. VDY is heavily weighted towards Canadian financials.
Are Canadian dividend ETFs tax-free in a TFSA?
Yes, dividends paid by Canadian ETFs held within a Tax-Free Savings Account (TFSA) are completely tax-free. They are also tax-sheltered in an RRSP.
What is the highest yield ETF in Canada?
High yield ETFs often change rank, but covered call ETFs (like ZWC) or highly concentrated dividend ETFs often provide the highest raw yield, though they may trail in total return compared to VDY or XDV.
Do Canadian dividend ETFs pay monthly?
Many popular Canadian dividend ETFs, including VDY, XDV, and CDZ, pay distributions on a monthly basis, making them popular for income-seeking investors.