A lot of people think $100 isn’t enough to matter. That’s the wrong mindset. What matters isn’t the size of the first contribution. It’s the habit. If you consistently invest, reinvest your dividends, and use registered accounts like a Tax-Free Savings Account (TFSA) to shelter growth, even small amounts can compound into something meaningful over time.
If you’ve got $100 sitting around and want to put it to work on the TSX, here are three solid Canadian exchange-traded funds (ETFs) to consider — starting with dividend income and working backward to broad market exposure.
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Canadian dividends
If your priority is income, the Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY) is a strong starting point that doesn’t entirely sacrifice diversification.
VDY screens the Canadian market and selects stocks ranking in roughly the top 55% by dividend yield. The result is a focused portfolio of 56 companies, with heavy exposure to banks, energy firms, and other established dividend payers.
The trailing 12-month yield is 3.8%, which is meaningfully higher than broad-market ETFs. That income can be reinvested automatically inside a TFSA to buy more shares and generate even more dividends over time.
The trade-off is concentration. Two banks alone account for roughly a quarter of the fund. And the expense ratio is higher than that of the broad index options at 0.22%. Yet, it is still low by most standards, but higher than plain-vanilla funds.
Canadian blue chips
If you prefer something more diversified than a dividend strategy but want to avoid the extra volatility of smaller companies, the Vanguard FTSE Canada Index ETF (TSX:VCE) is worth a look.
VCE holds 80 large-cap Canadian stocks. It excludes most mid- and small-cap names, making it more concentrated but also more stable than an all-cap fund.
Because it’s market-cap weighted, the largest positions are still Canada’s biggest banks, pipelines, railways, and energy companies. Sector exposure leans heavily toward financials and energy, reflecting the structure of our market.
Fees are extremely low at 0.06%, and the trailing 12-month yield sits at 2.4%. For investors who want blue-chip exposure with minimal cost, this is a straightforward option.
Broad Canadian stocks
If you want full exposure to the Canadian stock market, the Vanguard FTSE Canada All Cap Index ETF (TSX:VCN) offers the broadest coverage of the three ETFs mentioned.
VCN holds 207 stocks across large-, mid-, and small-cap companies. It represents what is generally considered the investable Canadian equity market. This is the “buy the haystack” option.
It’s still market-cap weighted, so large companies dominate, but you get added diversification from smaller firms that aren’t included in VCE. Over long periods, that broader exposure can help capture more of the market’s total return.
The expense ratio is just 0.06%. On a $10,000 investment, that works out to roughly $6 per year in fees. The trailing 12-month yield is 2.3%, and most of it comes from eligible Canadian dividends, which are relatively tax-efficient outside registered accounts.
