For a lot of first-time investors, dividends serve as a steady marker of progress. They can help you stay grounded when markets are noisy and reinforce the idea that investing is about building habits, not chasing highs. The longer you hold, the more they add up.
Of course, dividend investing isn’t perfect. Stocks that pay regular income can still fall in price. And some income funds are structured in ways that make long-term capital growth a challenge.
But as a way to stay the course and get paid while doing it, monthly dividend funds can be a great tool, especially the Canoe EIT Income Fund (TSX: EIT.UN).
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What is EIT.UN?
EIT.UN is one of the largest closed-end funds (CEFs) in Canada. It trades on the TSX like a regular stock, but instead of tracking an index or issuing new units to meet demand like an ETF, it has a fixed pool of capital. That means it can trade at a premium or discount to its net asset value (NAV), depending on market demand.
Right now, EIT.UN pays a monthly distribution of $0.10 per unit, which works out to a 7.7% annualized yield based on recent prices. That payout hasn’t changed in years and is a big reason why income-focused investors continue to hold it, even when other parts of the market move on to flashier options.
The ex-dividend date, which is the key date on which you need to own the fund to receive that $0.10, is usually in the second-to-last week of each month. Payment typically follows in the middle of the next month, making it a predictable source of cash flow for retirees or anyone building a monthly income stream.
EIT.UN’s portfolio is a 50/50 mix of Canadian and U.S. stocks, with broad exposure across sectors. This includes blue-chip names from both markets, often with a focus on dividend-paying companies in sectors like energy, financials, and industrials.
Unlike most passive dividend ETFs, the fund also uses up to 1.2 times leverage to boost income potential. That means for every $1 of equity, it can borrow up to $0.20 more to invest. This helps maintain the high yield but adds risk during market downturns, as leverage can magnify losses as well as gains.
Is EIT.UN a good investment?
That depends entirely on what you’re trying to do. If you need income now and are actively withdrawing from your portfolio, EIT.UN is about as steady as it gets. The monthly payout rarely changes, and the mix of U.S. and Canadian names adds some diversification without overcomplicating things.
But if you’re reinvesting the distributions, the case gets weaker. The fund charges a 1.1% management fee, which is high compared to low-cost ETFs. If you’re not relying on the income, that fee becomes a meaningful drag on long-term returns, especially since the fund isn’t designed for capital growth.
There’s also the matter of pricing. Since it’s a closed-end fund, EIT.UN can trade at a discount or premium to NAV. Right now it trades at a slight discount, meaning you’re getting the underlying portfolio for less than it’s technically worth. But that can change. Premiums and discounts shift with sentiment, and there’s no guarantee you’ll be able to sell at or above NAV later.
So, if you want a steady monthly income and don’t mind paying for it, EIT.UN fits the bill. If you’re trying to grow your wealth and reinvest over time, it’s worth asking whether a cheaper, growth-focused ETF would do the job better.
