# Best U.S. Dividend ETF



## My Own Advisor (Sep 24, 2012)

I'm not a huge fan of some Canadian dividend ETFs, such as VDY, because I believe you can unbundle it over time. Holds about 60% financials. Add in a few telcos and that's 70% of this fund.
https://www.vanguardcanada.ca/advisors/mvc/detail/etf/overview?portId=9560##overview

Other Canadian dividend ETFs are more appealing.

Anyhow, I was looking to help out my mother-in-law, and was looking at various U.S. dividend ETFs to invest in. 

Curious what the forum thinks! What is the best U.S. dividend ETF and why?


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## james4beach (Nov 15, 2012)

The best one I'm aware of is SCHD which is from a fund family that I invest in. It has $4.4 billion in assets and 0.07% fee. I think it's good because of the fundamental screens it applies, and the good quality top holdings: http://www.morningstar.com/etfs/ARCX/SCHD/quote.html

Can you talk a bit about your goal (or what her goal is)? Obviously it's not total return otherwise you'd just go with the S&P 500 index. Are you looking for something with a large distributions, to provide retirement income?


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## james4beach (Nov 15, 2012)

Vanguard's VYM appears to be another good option. It has 3% dividend yield and has performed similarly to the S&P 500 over the years. That's 15% higher div payout than the S&P 500 with about identical performance.

http://www.morningstar.com/etfs/ARCX/VYM/quote.html

Make sure your mother in law understands that these are effectively the same as any stock index exposure and as such, could potentially decline 50% in value during a serious bear market. Again I am curious what her goal is; what does she think a dividend ETF will do for her?


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## My Own Advisor (Sep 24, 2012)

She's looking for income, getting older, not growth per se. ZDY seems interesting.

Non-hedged product, no currency conversion issues to worry about.


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## gibor365 (Apr 1, 2011)

My Own Advisor said:


> She's looking for income, getting older, not growth per se. ZDY seems interesting.
> 
> Non-hedged product, no currency conversion issues to worry about.


Check out SPHD (The PowerShares S&P 500 High Dividend Low Volatility ETF). it selects 50 stocks from the S&P 500 that have historically provided a high dividend yield and low volatility."
Yield is 3.53%. probably the highest from S&P500 derived dividends ETFs. Also SPHD outperforming another popular ETF SDY.

SPHD also pays dividends monthly, that can be convenient for seniors


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## Koogie (Dec 15, 2014)

gibor365 said:


> Check out SPHD (The PowerShares S&P 500 High Dividend Low Volatility ETF). it selects 50 stocks from the S&P 500 that have historically provided a high dividend yield and low volatility."
> Yield is 3.53%. probably the highest from S&P500 derived dividends ETFs. Also SPHD outperforming another popular ETF SDY.
> SPHD also pays dividends monthly, that can be convenient for seniors


A question. That 3.53% is presumably expressed in USD as well ? (for a US listed ETF) So, this lady would be receiving that 3.53% dividend and using it for income and converting to CAD to spend in Canada. Thus making her return even higher in her local currency. Effectively a CAD 4.66% return using the average exchange so far this year. Which obviously will vary but may be a nice bump most years.


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## gibor365 (Apr 1, 2011)

Yes, those dividends in US$, but you cannot calculate like this, because you are buying it in US$ also  ... Thus, if CAD$ will go down comparing to US$ (that is very possible considering fact that US will rise interest rates much more agressivly than Canada), you will earn more in dividends and vice versa.
From what I see in my portfolio, US$ holdings provide some kind of hedge .... if commodities are down, CAD$ and TSX usually are down too , but your losses less because of US$ holdings


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## My Own Advisor (Sep 24, 2012)

I think, although I need to talk to her, putting assets into any US-listed ETFs will confuse things for her. For people that know what they are doing, re: USD $$ RRSPs - owning US listed ETFs is a smart move long-term until retirement and you need the income. There are also currency conversion issues here, CDN <> USD <> CDN later on. 

I think a CDN-listed ETF, that holds US stocks, is better for simplicity. That said, sometimes simplicity comes with a cost.

I have this list so far to consider, thoughts?

1. ZDY

OR

2. XHD (although a hedged product)


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## gibor365 (Apr 1, 2011)

MOA, I don't really see what can be confusing... any ETF (US or CAD) gonna have different distribution amount any payment anyway... Some discount brokerages like CIBC IE exchange US$ to CAD$ as per BoC FX rate (in registered account)... IMHO, it will be cheaper to hold US ETF for S&P 500 than a Canadian equivalent


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## Nerd Investor (Nov 3, 2015)

One company I personally find interesting that you may want to check out is First Asset Management. They have a group of what you would call "smart beta" funds that replicate certain Morningstar indexes. What I like about them is that they follow a transparent set of rules for stock selection (which aligns nicely with my own beliefs about stock selection). Currently I hold their Canadian momentum fund. 

Their US Core dividend fund is UXM (or UXM.B for un-hedged). Checking out their fund profile, they hold 50 US stocks, rebalance quarterly, and use the following weights to rank: 33% expected dividend yield, 20% cashflow to debt, 13% EPS growth, 20% ROE, 13% EPS estimate revision.


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## My Own Advisor (Sep 24, 2012)

gibor365 said:


> MOA, I don't really see what can be confusing... any ETF (US or CAD) gonna have different distribution amount any payment anyway... Some discount brokerages like CIBC IE exchange US$ to CAD$ as per BoC FX rate (in registered account)... IMHO, it will be cheaper to hold US ETF for S&P 500 than a Canadian equivalent


Fair, I just think for newbies, unlike savvy folks like you(!)  - a Canadian listed ETF that holds US stocks might be easier to understand.

I agree it would be cheaper to hold a US listed ETF for US stocks, you're preaching to the converted


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## My Own Advisor (Sep 24, 2012)

Thanks Nerd. I know the folks at First Asset Management. I might write a post about best dividend U.S. ETFs and include that one, I forgot about UXM.B. Unhedged is better I believe.


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## Nerd Investor (Nov 3, 2015)

My Own Advisor said:


> Thanks Nerd. I know the folks at First Asset Management. I might write a post about best dividend U.S. ETFs and include that one, I forgot about UXM.B. Unhedged is better I believe.


Looking forward to reading it when you do!


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## gibor365 (Apr 1, 2011)

Nerd Investor said:


> Their US Core dividend fund is UXM (or UXM.B for un-hedged). Checking out their fund profile, they hold 50 US stocks, rebalance quarterly, and use the following weights to rank: 33% expected dividend yield, 20% cashflow to debt, 13% EPS growth, 20% ROE, 13% EPS estimate revision.


Similar to SPHD approach, but SPHD has better yield and much more liquid


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