Among a handful of ETFs that Claymore Investments recently introduced is a dividend ETF: Claymore CDN Dividend and Income Achievers ETF (CDZ) that seeks to replicate Mergent’s Canadian Dividend and Income Achievers Index. Another dividend ETF that traded already on the TSX – iShares CDN Dividend Index Fund (XDV) – is based on the Dow Jones Canada Select Dividend Index.
I think that CDZ has a slight edge over XDV despite the fact that the MER is slightly higher and trading volume is lower. Both funds have almost half the portfolio in financials, but CDZ is better diversified with higher exposure to Industrials, Consumer Staples, Utilities and Energy and includes some income trusts and REITs.
The index methodology is also slightly different. The Dow Jones index is composed of stocks that have “consistently paid dividends” and the weights in the index is based on their proportionate dividend-per-share. The Mergent index, on the other hand, is made of stocks that have “consistently increased their annual dividends” and weighted based on yield. I think the Mergent version is slightly superior due to the emphasis on dividend growth.
| iShares CDN Dividend Index Fund | Claymore CDN Dividend and Income Achievers ETF | |
|---|---|---|
| Ticker | XDV | CDZ |
| Approx. Yield | 3.9% | 4.9% |
| Number of Securities | 30 | 57 |
| MER | 0.50% | 0.60% |
| Average Volume | 48,000 | 6,900 |
| Top Holdings | MBT, CM, RY, BMO, TD | ROC, EMA, CM, BMO, BNS |
