In 2025, many income-oriented investors will turn to Canadian dividend ETFs to balance yield and diversification without the hassle of picking individual stocks. Here I highlight five Canadian dividend ETFs that stand out this year, explain their strengths and trade-offs, and show how Avantis can help you go deeper than surface numbers.
When investors compare dividend ETFs, certain criteria should carry more weight than others:
With those in mind, here are five ETFs worth watching in 2025.
This ETF emphasizes quality among dividend payers. It selects Canadian stocks that combine above-average yields with strong financial fundamentals. Its low cost is a compelling feature. BlackRock Because it filters for quality, it may avoid some of the “yield traps” found in more aggressive high-yield funds.
VDY is often cited for balancing yield and cost. It tracks Canadian stocks with above average yields. It delivers monthly distributions and leans heavily into financials and energy sectors, reflecting Canada’s market composition. The Motley Fool Canada For investors who want a straightforward high-yield Canadian equity basket, this is a go-to option.
XDV seeks exposure to 30 of Canada’s highest yielding companies, chosen via rules based on yield, dividend growth, and payout ratios. It distributes income monthly. BlackRock The trade-off is that it tends to have higher concentration in financials and sensitivity in downturns.
ZDV takes a more balanced approach. It screens stocks by yield, three-year dividend growth, and payout ratio. It seeks to balance income and risk rather than purely chasing yield. For investors who want dividend exposure with a moderating tilt, ZDV may be a good middle ground.
CDZ focuses on companies that have increased dividends for at least five consecutive years. That gives it a tilt toward stability and dividend growth. But its yield is lower compared to pure high-yield ETFs, and its fees are higher. For investors willing to sacrifice yield for consistency and dividend growth discipline, CDZ is a contender.
Each of these ETFs brings different strengths and risks. It’s rarely best to hold only one. If yield is your priority, say you depend on dividends for cash flow, VDY or XDV might make sense. But be alert for sectors getting too concentrated or for dividend cuts. If you prefer a more resilient portfolio, CDZ or XDIV may help smooth volatility and reduce exposure to marginal dividend payers. ZDV may serve as a balanced core that bridges yield and stability. Because interest rates, commodity cycles, and macro factors affect Canadian sectors heavily, combining more than one ETF can reduce risk. For example, pairing a yield-tilted ETF with a quality tilt can help buffer periods when high yield gets punished. Also consider which account holds these ETFs. In non-registered accounts, understanding Canadian dividend tax treatment is essential. In registered accounts (TFSA, RRSP), after-tax yield differences matter less.
Looking at yield, fees, and holdings is necessary, but not sufficient. What happens behind the scenes company changes, regulatory shifts, unexpected filings, can change the prospects for dividend sustainability. That’s where intelligence and signal monitoring come into play. This is exactly where Avantis adds value. Avantis analyzes corporate disclosures, regulatory filings, SEDAR and SEC documents, and other developments to help you spot material changes before they show up in the headline metrics. Since ETFs are built from stacks of companies, keeping track of developments at the constituent level can give you early warning signs of dividend risk or upside surprises.
By layering ETF-level yield and structure analysis with company-level signals, you gain more than just passive income exposure, you gain insight and agility.
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