You can absolutely earn some decent passive income from Canadian banks.
These are some of the most profitable and stable companies in the country, and many investors hold them specifically for their dividends. One of the easiest ways to access that income stream is through an exchange-traded fund (ETF) that bundles the banks together.
There is also a small convenience factor. Canadian bank dividends are normally paid quarterly, but when packaged inside an ETF, those payments can be distributed to investors monthly instead.
The trade-off is yield. Most traditional Canadian bank ETFs usually fall in the range of about 3% to 5%. If you want to push that income higher, it is possible, but it comes with trade-offs.
Strategies like covered calls and leverage can boost the yield, though they also cap upside and increase risk. Today we are looking at two ETFs from Global X Canada that do exactly that.
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Covered call Canadian Banks
The Global X Equal Weight Canadian Bank Covered Call ETF (TSX:BKCC) owns the six major Canadian banks in equal proportions. The ETF holds these either directly or through an allocation to another Global X ETF.
The key strategy used here is covered calls. A covered call involves selling options on stocks already held in the portfolio. In exchange for giving up some future price appreciation, the ETF receives an immediate cash premium.
Those premiums become part of the ETF’s income stream and are distributed to investors. Because of this strategy, the share price of the ETF typically does not move as much as a regular bank ETF. Instead, a larger portion of the return shows up as income.
As of March 11, 2026, the ETF offers an annualized distribution yield of about 10.4%. The fund charges a 0.50% management expense ratio along with a 0.21% trading expense ratio.
Leverage and covered call banks
For investors seeking even higher income, there is the Global X Enhanced Equal Weight Canadian Banks Covered Call ETF (TSX:BKCL).
This ETF essentially builds on the strategy used by the previous fund. Instead of holding the banks directly, it primarily holds the covered call ETF mentioned earlier. However, it increases its exposure by applying leverage.
Specifically, the ETF invests about 125% of its portfolio in NKCC. For every $100 invested, it effectively borrows another $25 to increase its exposure. The result is a leveraged version of the same income strategy.
Because the underlying ETF already caps upside through covered calls, this leveraged approach mainly increases the income stream rather than improving long-term price growth. However, leverage also amplifies downside risk during market declines.
Even with those risks, the income potential is substantial. As of March 11, 2026, the ETF offers a distribution yield of about 12.8%. The trade-off is cost. The ETF charges a management expense ratio of about 1.7% along with a 0.27% trading expense ratio.
