3 Top Canadian ETFs to Buy for Instant Diversification

These three funds are reliable and well-managed, making them three of the best Canadian ETFs to buy now for conservative investors.

Daniel Da Costa

Author Bio Daniel joined The Motley Fool Canada in 2019 and brings experience in banking, investing, and financial analysis. Growing up as the son of a proprietary stock trader and educator, he developed an early interest in financial markets and a passion for helping Canadians improve their financial well-being. His work spans investment research, economic analysis, and econometric modelling, with a focus on understanding the broader forces that influence businesses, markets, and the economy. As an investor, Daniel looks for high-quality businesses with long-term growth potential, reliable income, and attractive valuations. Outside of finance, Daniel enjoys spending time with his family, playing hockey, running, and sailing. Areas of Expertise Investment research, economic analysis, econometric modelling, banking, financial analysis, business fundamentals, long-term investing, dividend investing, and company valuation. Favorite Investment Quote "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." — Warren Buffett

Published June 25, 2025 4:20 pm EDT

When it comes to investing, there are several key factors to consider that can help mitigate risk and set you up for long-term success. You want to take a long-term approach. You want to invest in businesses you understand. And just as importantly, you want to make sure your portfolio is well-diversified, which is why top Canadian exchange-traded funds (ETFs) are some of the best investments to buy and hold for the long haul.

ETFs are ideal because they give investors exposure to dozens, or in some cases, hundreds of stocks. You can buy sector-specific ETFs, such as those focused on utilities or telecom stocks. You can buy regional ETFs that include all Canadian stocks. Alternatively, you could target a specific type of investment, like dividend-paying stocks, all within a single fund.

Not only do ETFs offer instant diversification, but most are also regularly rebalanced to stay aligned with their mandates. On top of that, management fees are typically very low.

So, if you’ve got cash to put to work and want to reduce as much risk as possible while staying invested, here are three of the top ETFs that Canadian investors can buy today.

exchange traded funds — Image source: Getty Images

One of the top Canadian ETFs to buy now

When it comes to buying high-quality Canadian ETFs, one of the first investments many investors make is in a fund that holds the top stocks across the country, such as iShares S&P/TSX 60 Index ETF (TSX: XIU).

The XIU ETF is a core building block for any long-term Canadian portfolio. It tracks 60 of the largest and most established companies in Canada, making it essentially the blue-chip index of Canadian stocks.

So, if you want instant exposure to the top tier of the Canadian market without having to research or buy individual stocks, this ETF is about as efficient as it gets.

What makes XIU such a great choice is its simplicity. The fund owns the kinds of companies that have scale, competitive advantages, and strong market positions.

Furthermore, most of them pay dividends, many have pricing power, and they’re generally the first to recover in any market rebound. It’s a reliable way to stay exposed to the Canadian economy while minimizing risk through diversification.

Another big advantage is that XIU is one of the most liquid and longest-standing ETFs on the TSX. That means it’s the perfect set-it-and-forget-it type of ETF that you can build a portfolio around.

The XIU might not have the same ultra-high yield as a pure dividend ETF, but it offers strong total return potential through a mix of dividends and long-term capital appreciation. At the time of writing, the XIU ETF offers a yield of roughly 2.8%.

Two of the best ETFs for dividend investors

Although the XIU owns some of the highest-quality stocks in Canada, most of which pay dividends, it’s not specifically made for dividend investors, and you can find much higher and more attractive yields elsewhere.

For example, two of the top Canadian ETFs that dividend investors can buy now are iShares S&P/TSX Composite High Dividend Index ETF (TSX: XEI) and BMO Covered Call Canadian High Dividend ETF (TSX: ZWC).

The XEI is one of the best ETFs for Canadian investors who are focused on long-term income and stability. It holds a broad basket of high-yield dividend stocks from across the TSX, which gives you instant exposure to some of the most reliable, cash-generating businesses in the country.

And right now, the ETF offers investors a yield of 5.4%, making it one of the top investments Canadians can consider today.

Meanwhile, the ZWC ETF is another top choice if you’re looking to boost your passive income. It holds many of the same large-cap dividend-paying stocks you’d find in other ETFs, but it also employs a covered call strategy, which means it generates extra cash flow by selling options on the stocks it holds. That creates an additional layer of income that gets paid out to investors.

And today, ZWC ETF offers a yield of roughly 6.5%. So, if you’re looking to generate as much passive income as possible and are willing to sacrifice some capital gains potential, ZWC is easily one of the top Canadian ETFs to buy now.