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The Canadian universe of quality dividend paying stocks is relatively small. One very good passive strategy is iUnits Dividend Index Fund (XDV). The screening is done for you, the costs are very low, and you get excellent diversification. Other alternatives include iUnits S&P/TSX Financial E.T.F. (XFN) which provides diversification across the financial sector, Utility Corp. (UTC.C) which provides diversification across the utilities sector, NewGrowth Corp (NEW.PR.B) and (NEW.A) which provides diversification across the banking and utility sectors. Sixty Split Corp (SXT.PR.A) and (SXT) is diversified across the companies that make up the S&P/TSX 60 Index. Each of these options should be examined closely so that their characteristics are understood.

If you choose an active strategy, the ways to screen for candidates to are somewhat limited. The best screening tool requires you to be a client of TD Waterhouse. The Globe and Mail provides a screen on yield but then you must have access to additional data to assess the stocks identified by that screen.