When it comes to the investing environment in 2026 and picking the top Canadian stocks and exchange-traded funds (ETFs) for your portfolio, the situation looks much different than what many investors were expecting just a few months ago.
At the start of the year, there were hopes that interest rates would continue to decline steadily, inflation would continue to cool, and markets could push higher.
Instead, we now have geopolitical tensions in the Middle East, adding another layer of uncertainty to the global economy, which will almost certainly increase inflation again and potentially delay interest rate cuts for the rest of the year.
That uncertainty is significant for investors because in environments like this, where growth may be more muted and volatility is higher, focusing purely on capital gains becomes a lot less reliable.
That’s why this year I’ve been more focused on increasing the income my portfolio generates. And while there are plenty of high-quality Canadian stocks to buy and hold for the long haul, some of the top picks for income that I’m strongly considering for 2026 are covered call ETFs.
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What is a covered call ETF?
A covered call ETF is a fund that buys and holds stocks (often, but not always, dividend-paying stocks) and boosts its yield by using a covered call strategy.
In addition to generating dividends for investors from the stocks they own, they also sell call options on a portion of those holdings.
The dividend gets boosted because the fund collects extra income (called premiums) when they sell the call options. However, in exchange, investors in the fund give up some upside if those underlying stocks rally significantly.
That’s why these Canadian ETFs are top picks for investors looking to boost their income. You trade in a bit of growth potential for higher, more consistent income.
And in a market where growth may be harder to come by in 2026, these Canadian ETFs are certainly among the top picks to consider.
Two high-dividend covered call ETFs
If you’re looking to boost the passive income your portfolio generates in 2026, two top Canadian ETFs you’ll certainly want to consider are BMO Canadian High Dividend Covered Call ETF (TSX: ZWC) and BMO U.S. High Dividend Covered Call ETF (TSX: ZWH).
The ZWC ETF is one of the most straightforward ways to generate high levels of income from Canadian equities. And the ZWH adds international diversification to the mix by providing exposure to U.S. dividend-paying stocks.
Both ETFs hold a diversified portfolio of high-quality dividend stocks from their respective countries across a broad range of sectors like financials, utilities, energy, and telecom.
In Canada, these are already some of the most reliable, cash-generating businesses in the country, which is why ZWC is one of the best funds to consider this year.
Meanwhile, ZWH is one of the top Canadian ETFs to buy for income investors, as some of the world’s largest and most dominant companies are based in the U.S.
And since both funds already own high-quality dividend-paying stocks that generate significant distributions for investors, the covered call strategy they use further boosts the yields they can offer.
For example, right now ZWC offers a yield of roughly 5.7%, and ZWH offers a yield upwards of 6.2%.
If you’re looking to boost your income with a fund that offers a significant yield and instant diversification, these two Canadian ETFs are easily two of the top names to consider.
A top Canadian ETF to buy for big bank exposure in 2026
In addition to the two high-dividend covered call ETFs, another name I’m strongly considering for 2026 is BMO Covered Call Canadian Banks ETF (TSX: ZWB).
ZWB uses the same strategy, but instead of owning stocks from sectors across the economy, it focuses specifically on Canadian banks. And Canadian banks are already some of the best and most reliable dividend stocks you can own.
They generate steady earnings, operate in a highly regulated environment, and have long track records of paying and increasing dividends.
And with its covered call strategy, the ZWB currently offers investors a yield upwards of 5.4%, while most of the big banks offer yields between 2% and 4%.
So, if you’re looking to boost your income in 2026 with a reliable Canadian ETF, ZWB is certainly a top choice.
