Investing · ETF deep dive
VDY Vanguard FTSE Canadian High Dividend Yield Index ETF
The biggest Canadian dividend ETF — a market-cap-weighted bet on banks and pipelines that makes no apology for it.
Best for: Income investors who want maximum scale and accept that "Canadian dividends" mostly means financials and energy
Pros
- The category giant: $8B, deep liquidity, monthly distributions
- 3.45% distribution yield (3.24% trailing) at a fair 0.22% MER
- Simple, transparent rule: rank by forecast yield, weight by size
Cons
- 86% in two sectors, and Royal Bank alone is ~14% — the most single-name-concentrated of the six
- No cap on weights — concentration grows with the banks
- Yield-ranked screens never ask whether the dividend is safe
What's inside VDY
| Underlying fund | Weight |
|---|---|
| Royal Bank of CanadaRY | 14.4% |
| Toronto-Dominion BankTD | 10.4% |
| EnbridgeENB | 6.9% |
| Bank of MontrealBMO | 6.2% |
| CIBCCM | 6.0% |
Financials 56.0% · Energy 30.2% — 86% in two sectors (Provider sector table (ICB), Apr 30, 2026) · holdings as of April 30, 2026 (61 holdings; top 10 = 67.5%)
The deep dive
VDY is the purest expression of what a cap-weighted, yield-ranked Canadian dividend fund must become: 56% financials, 30% energy, with Royal Bank at 14.4% — because that is what high-yielding corporate Canada looks like. The FTSE index ranks the market by forecast dividend yield and weights survivors by market cap, with no caps to interfere.
Whether that’s a bug or the point depends on you. Buyers get the most liquid, cheapest-to-trade dividend fund in the country and an income stream anchored to the most entrenched oligopoly in Canadian business. Skeptics will note a single bad year for banks is a bad year for VDY — diversification is precisely what you traded away. For the income mechanics (eligible-dividend tax credit, account placement) see the dividend income calculator.
The rest of the field
The rest of the field, one line each:
- XEI — yield slice of the Composite, more balanced
- XDIV — quality screen, 0.11% MER, 21 stocks
- CDZ — dividend-growth Aristocrats, 96 names
- XDV — 30-stock concentrate, bank-heavy
- ZDV — BMO rules-based blend
Frequently asked questions
What does VDY hold?
VDY holds 61 Canadian high-yield stocks, cap-weighted — led by Royal Bank of Canada (RY) at 14.4%, Toronto-Dominion Bank (TD) at 10.4%, Enbridge (ENB) at 6.9% (as of April 30, 2026 (61 holdings; top 10 = 67.5%)). Sector mix: Financials 56.0% · Energy 30.2% — 86% in two sectors (provider sector table (icb), apr 30, 2026). Weights drift between rebalances — ftse canada high dividend yield index — ranked by forecast 12-month yield, market-cap weighted, uncapped.
What does VDY cost?
Currently 0.20% management fee; 0.22% published MER (MER as of Dec 31, 2025 (fact sheet)). The Canadian dividend-ETF field spans a six-fold fee range (0.11% to 0.66%) — see the full comparison, and what fee gaps compound into with the MER calculator.
How is VDY's yield taxed, and which account should hold it?
Distributions from Canadian dividend payers are largely eligible dividends, which benefit from the dividend tax credit in non-registered accounts — the dividend income calculator shows your after-tax yield by province. In a TFSA the income is simply tax-free; in an RRSP it's deferred. One caution: a fund's distribution can include other income types — each provider publishes the annual tax character. Compare the field on our dividend ETF guide.
The bottom line
The default pick for scale and simplicity — as long as you read “Canadian dividend fund” as “banks-and-pipelines fund,” which is what it is. Want the same idea more balanced? XEI. Want actual diversification? CDZ.
This page is for educational purposes only and is not investment advice. Fund facts were verified at Vanguard Canada's published fact sheets and product pages on June 10, 2026; holdings and weights are point-in-time and drift between rebalances; published MERs may lag recent fee changes (MER as of Dec 31, 2025 (fact sheet)). We deliberately do not compare or project returns. Read the fund facts document before buying. See our methodology.