I’ve never really understood the obsession many investors have with high dividend yields. Outside of a registered account, every dividend payment is a taxable event, which creates an immediate drag on returns.
More importantly, when a company pays out a very high dividend, it is often implicitly admitting that it no longer has attractive opportunities to reinvest returns above its cost of capital. In other words, growth has slowed, so cash is being handed back to shareholders instead. If you’re going to focus on dividend investing at all, I think a more sensible approach is dividend growth.
Companies that consistently raise their dividends year after year, ideally faster than inflation, tend to be higher-quality businesses with durable cash flows. That discipline often signals strong management, resilient margins, and balance sheets that can withstand economic stress. Over the long run, this quality factor has been a powerful driver of stock returns.
With that in mind, here are two dividend growth exchange-traded funds (ETFs) I’m watching closely, both of which are relatively low cost.
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Canadian dividend champions
The first ETF I’m tracking is the Hamilton CHAMPIONS Canadian Dividend Index ETF (TSX: CMVP). This fund holds an equal-weight portfolio of Canadian blue-chip companies that have increased their dividends for at least 6 consecutive years without a cut.
According to Hamilton, the portfolio has delivered an average dividend growth rate of about 10% annually, and it skews toward large-cap companies with an average market capitalization of roughly $88B.
What stands out is the portfolio construction. While financials still play a major role, as they do across most Canadian equity strategies, the fund is less concentrated in energy and has higher exposure to materials and industrials.
This ETF pays monthly distributions, and as of December 18, the annualized yield is about 2.5%. The management fee is 0.19%, but it is currently waived to 0% through January 31, 2026.
U.S. dividend champions
To complement the Canadian exposure, there is the Hamilton CHAMPIONS U.S. Dividend Index ETF (TSX: SMVP). This ETF applies a similar equal-weight methodology but with much stricter dividend growth requirements.
Instead of 6 years, U.S. holdings must have increased dividends for at least 25 consecutive years. As a result, the portfolio skews toward mega-cap companies, with an average market capitalization of around $205 billion.
Compared with the S&P 500, this ETF has significantly less exposure to technology. Instead, it tilts toward consumer staples, healthcare, and industrials, sectors known for stability and long histories of dividend growth.
The yield is lower at about 1.7% annually, but that’s consistent with the fund’s focus on reliability and growth rather than headline income. Distributions are paid monthly, and the management fee is 0.19%, also reduced to 0% through January 31, 2026.
