Canadian stocks offering monthly payouts are an attractive option for Tax-Free Savings Account (TFSA) investors to generate consistent income. Notably, the TSX has several high-quality companies that reward shareholders with monthly payouts. Each month, those dividends can supplement your lifestyle or be reinvested to compound returns even further, all without worrying about taxes eroding your gains. Over time, this combination of steady income and tax efficiency can turn your TFSA into a dependable income generator.
Although individual dividend stocks are an option, they are not the only way to achieve a monthly income. Exchange-Traded Funds (ETFs) offer an alternative that combines income potential with built-in diversification. Unlike owning shares of a single company, which can expose investors to company-specific risks, ETFs pool a basket of securities, including stocks, bonds, or other assets, that trade just like individual stocks on an exchange. This structure spreads risk across multiple holdings and helps soften the impact if one company underperforms.
For investors who want consistent monthly income without the added stress of monitoring individual companies, dividend-focused ETFs can be an attractive solution. They provide the benefit of diversification, typically carry lower volatility, and still offer steady payouts. Against this backdrop, here is a dividend ETF that delivers reliable monthly income to add to your TFSA.
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A top dividend ETF with monthly payouts
When it comes to dividend-focused ETFs in Canada, the BMO Canadian Dividend ETF (TSX:ZDV) stands out for its ability to deliver reliable monthly income, a low-cost structure, and potential for long-term growth.
ZDV invests in a diversified basket of dividend-paying Canadian companies that have shown resilience and consistent growth. Its strategy is built on a rules-based approach that screens Canadian companies for dividend strength. The ETF looks at key metrics such as three-year dividend growth rates, current yields, and payout ratios to ensure it captures firms with both resilience and the ability to sustain shareholder returns.
Unsurprisingly, the methodology tilts the fund toward financials and energy, the two sectors that have historically rewarded investors with solid dividends. Moreover, by diversifying across communication services, basic materials, and industrials, it spreads risk more effectively and positions itself for growth across different market cycles.
Currently, it offers a yield of over 3.3% and has over $1.2 billion in assets under management (as of September 13).
Another advantage of ZDV is its low management expense ratio of 0.39%, meaning more of the returns generated by the fund stay in your pocket instead of being eaten up by fees. That efficiency, combined with the steady dividend income, makes it especially attractive for long-term accounts like a TFSA.
Performance of the ETF has also been solid. As of August 31, ZDV was up 16.3%, while it delivered an impressive 21.1% gain over the past year. When paired with its monthly income stream, this performance highlights why ZDV is a go-to choice for investors seeking both monthly income and growth potential in their portfolios.
Overall, for TFSA holders, the BMO Canadian Dividend ETF offers reliable monthly income, diversification, and steady capital gains.
