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Are there any ETFs that receive Canadian eligible dividends? I'm looking to add an investment to my unregistered account. Thanks!
Canadian eligible dividends from ETFs?
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Sure ... though I suspect you are more interest in the ones that have a large amount of the distribution to be eligible dividends.
The last two years breakdown for BlackRock's XIC of eligible dividends is:
2021 ... 71 cents of the taxable $1.19 paid
2020 ... 72 cents of the taxable 83 cents.
For BMO's ZCN:
2021 ... 65 cents of the taxable 97 cents.
2020 ... 65 cents of the taxable 76 cents.
There are some that focus on dividends.
For BlackRock's XDV:
2021 ... $1.09 of the taxable $1.62
2020 ... $1.15 of the taxable $1.15
For BMO's ZDV:
2021 ... 57 cents of the taxable 78 cents.
2020 ... 71 cents of the taxable 78 cents.
Basically, it can vary by year but over time, those with hold a lot of Canadian companies that pay eligible dividends will pay more eligible dividends.
Cheers
The last two years breakdown for BlackRock's XIC of eligible dividends is:
2021 ... 71 cents of the taxable $1.19 paid
2020 ... 72 cents of the taxable 83 cents.
For BMO's ZCN:
2021 ... 65 cents of the taxable 97 cents.
2020 ... 65 cents of the taxable 76 cents.
There are some that focus on dividends.
For BlackRock's XDV:
2021 ... $1.09 of the taxable $1.62
2020 ... $1.15 of the taxable $1.15
For BMO's ZDV:
2021 ... 57 cents of the taxable 78 cents.
2020 ... 71 cents of the taxable 78 cents.
Basically, it can vary by year but over time, those with hold a lot of Canadian companies that pay eligible dividends will pay more eligible dividends.
Cheers
I went through the exercise of buying dividend paying stocks to relatively high dividend paying low cost ETF. At one stage I had both XEI and VDY. Now I am 100% VDY in my direct investment account.
You can compare ETFs with this tool
Compare these for to start with XEI, VDY
TMX Money
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Yes lots of eligible dividends in Canadian ETFs. XIC was already mentioned. You can also look at XIU. The iShares ETF web site shows the breakdown of distributions for each year (though 2022 data isn't showing yet).
Practically all of XIU's distributions each year are eligible dividends plus capital gains, which are both tax efficient.
I compiled this list 3 years ago when I was searching high dividend ETFs
This list is dated.
HIGH DIVIDEND Canadian
Low MER
VDY 0.23 Vanguard FTSE Canadian High Dividend Yield Index
XDIV 0.10 iShares Core MSCI Canadian Quality Dividend Index
XEI 0.22 iShares S&P/TSX Composite High Dividend Index
Others high dividend
XDV 0.55 iShares Canadian Select Dividend Index
CDZ 0.66 iShares S&P/TSX Canadian Dividend Aristocrats Index
ZDV 0.38 BMO Canadian Dividend
RCD 0.44 RBC Quant Canadian Dividend Leaders
PDC 0.55 Invesco Canadian Dividend Index
This list is dated.
HIGH DIVIDEND Canadian
Low MER
VDY 0.23 Vanguard FTSE Canadian High Dividend Yield Index
XDIV 0.10 iShares Core MSCI Canadian Quality Dividend Index
XEI 0.22 iShares S&P/TSX Composite High Dividend Index
Others high dividend
XDV 0.55 iShares Canadian Select Dividend Index
CDZ 0.66 iShares S&P/TSX Canadian Dividend Aristocrats Index
ZDV 0.38 BMO Canadian Dividend
RCD 0.44 RBC Quant Canadian Dividend Leaders
PDC 0.55 Invesco Canadian Dividend Index
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Thanks everyone for the feedback -- really appreciate it.
In your opinions, am I correct in my assumption that an unregistered personal investment account should be heavy on Canadian eligible dividends because they are taxed preferentially as compared to the cap gains on equities?
Thanks!
In your opinions, am I correct in my assumption that an unregistered personal investment account should be heavy on Canadian eligible dividends because they are taxed preferentially as compared to the cap gains on equities?
Thanks!
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It depends on your individual tax situation. In many cases, yes, eligible dividends have very low tax and are efficient in a taxable account. But that's not true for everyone.
Capital gains are also quite tax efficient, so I wouldn't automatically dismiss those. With CGs you also have the freedom to choose when to incur the tax event, unlike dividends which are uncontrolled and constantly cause taxable events. For example, you can realize CGs at your convenience, perhaps in a year with low taxable income.
Due to strategic use of CGs and tax loss harvesting, I recently realized a significant amount of CGs and will pay no tax on them.
If you have space in a TFSA, you'd still be better off putting Canadian equities (or any equities) into the TFSA. So I would start there. If you don't have any more space in your TFSA, then I agree that eligible Canadian dividends are a good idea for non-reg.
The preferential tax on dividend over capital gains reverses as your income increases. It varies with provinces.
Choose your province from the link below and go down to the combined provincial and federal tax to see where this switch occurs. For 2023 in Ontario this occurs at income over $106.717
TaxTips.ca - 2022 & 2023 Personal Income Tax Rates in Canada
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Thank you, I'll check that out! Cheers
OAS claw back (15 cents on each dollar) for July 2023 to June 2024 kicks in at 81,764
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I would vote for XIU. Top-60 stocks in Canada, decent growth, modest yield, pretty much all eligible dividends over the years for taxable investing if you want a bit of income too.
www.blackrock.com
Also....with support from TaxTips.ca
www.myownadvisor.ca
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Also....with support from TaxTips.ca
Tax treatment of Canadian dividend paying stocks
Tax treatment of Canadian dividend paying stocks This is an updated post, to support answers to more reader questions. Read on and enjoy! I got this email in my inbox recently: “You write abo…
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I totally agree and I understand that eligible dividend details will be send on tax slips at the appropriate time.
But where can I find this info on iShares and other ETFs when making buying decisions?. I waded through Blackrock's 400+ pages on their Canadian website and could not find anything.
It is not critical for me right now but I will be reducing my RIFF income and increasing my taxable income in the next few years. Seems like somewhat important information.
Thanks for all the important and easy to read information you post.
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Tax information on XIU distributions (and distributions from all other Blackrock funds) can be found in this list.
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Google it. It exists.
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Go to the web page for the ETF ... for example, XIU.
Or better yet, if the suggestion is "xiu" then google "blackrock xiu".
The first page google lists is the Blackrock ETF page for XIU which includes lots of good info on performance, holdings etc.
When you want the tax breakdown, scroll down until you see on the left side "Distributions". Click on this.
"Recent" will be autoselected with the dates and amounts, with "Calendar Year" on the right.
When "Calendar Year" is clicked on, it will switch to list a table, by year of per unit tax breakdown.
The first three columns are "Year", "Total Distribution per Unit for Tax Purposes" and "Eligible Dividends". You customize the columns included is you like but it seems the most important ones to you are already displayed.
Cheers
PS
For Vanguard Canada ETFs, once you are on the ETF page (which defaults to the "Performance" link along the top, click on "Price & Distribution".
Scroll or search the page for "Annual Distributions", which has a description of:
This table displays data for the Fund's distributions by year. Eligible dividends, Non-eligible dividends, Other income, Capital gains, Return of capital, Foreign income, Foreign tax paid, and Total distribution per unit are displayed for each year since the fund's inception. Data may be exported using the Export table button.
Though they seem to be updating it for VCN at the moment as when I just checked it, it was blank where usually I see numbers in the columns.
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Very easy to find. Here's a link, check the Prices & Performance or "Distributions" tab for each ETF you are considering. The breakdown will be there. XIU is very tax-efficient.
Financial Planning & Investment Management | BlackRock
BlackRock is a fiduciary that offers the world’s largest institutional investors timely insights and access to deep global investment capabilities.
No need to read through 400 pages.
Cheers.
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Yup, the iShares pages are nicely laid out. Just poke around the Distributions section, you might want to use the Table format to see the breakdown in different categories (eligible etc)Very easy to find. Here's a link, check the Prices & Performance or "Distributions" tab for each ETF you are considering. The breakdown will be there. XIU is very tax-efficient.
I've always liked XIU the best as a tax efficient, high quality Canadian equity fund.
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