Many investors like the idea of generating monthly income from their portfolios. After all, receiving cash every month can make investing feel a little more tangible. However, when evaluating Canadian exchange-traded funds (ETFs), even if generating as much monthly income as possible is the goal, the payment schedule shouldn’t be the main reason to buy it.
What’s far more important is the quality of the underlying assets and whether the investment can continue generating income and long-term returns over time.
After all, you can combine different investments to ensure you receive cash every month. But if you invest in a lower-quality ETF simply because of its payout schedule, you risk leaving profits on the table or even losing some of your hard-earned savings altogether.
With that said, one of the best Canadian ETFs for dividend investors is BMO Equal Weight REITs Index ETF (TSX:ZRE), which returns cash each month.
However, in addition, it also offers a compelling dividend yield and a simple way to gain diversified exposure to one of the most important sectors of the Canadian economy: real estate.
So, if you’ve got cash on the sidelines and are looking for a reliable Canadian ETF that returns considerable monthly income, here’s why ZRE is a name every Canadian should take note of.
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A simple way to invest in Canadian real estate
For many Canadians, real estate is one of the most attractive long-term asset classes.
The problem is that buying investment properties isn’t always practical. Real estate requires significant capital, ongoing maintenance, financing, and plenty of time and effort from investors.
However, ZRE ETF offers a much simpler solution. Instead of purchasing individual properties, investors gain exposure to a diversified portfolio of Canadian real estate investment trusts through a single ETF.
That means exposure to apartment buildings, industrial properties, retail assets, office space, and other real estate sectors without the headaches that come with direct ownership.
That diversification, as well as the equal-weight nature of the ETF, is especially important for long-term investors because, rather than betting on one real estate investment trust (REIT) or one property type, investors spread their exposure across multiple real estate businesses.
So, not only do you reduce risk, you still participate in the long-term growth and income potential of the sector.
The Canadian ETF offers a combination of income today and long-term potential tomorrow
Of course, the diversified monthly income, which comes from its roughly 20 holdings in its portfolio, is still one of the main reasons to buy ZRE, especially with a current yield of roughly 4.3%, which is much higher than many ETFs offer.
However, the appeal of ZRE goes beyond income alone. For example, real estate has historically been a valuable component of many diversified portfolios because it can provide both income and long-term capital appreciation.
So, although the sector will inevitably experience periods of weakness, particularly when interest rates rise, high-quality real estate assets remain essential to the economy.
People still need places to live. Businesses still need warehouses, distribution centres, and commercial properties. Those needs don’t disappear simply because market conditions become more challenging.
That’s why many investors consistently want exposure to the real estate sector over the long haul. And with the ZRE, which offers exposure to a number of high-quality REITs at once, it offers investors a simple strategy that removes much of the guesswork from investing.
So, while the monthly distributions may grab investors’ attention initially, the real long-term opportunity is the exposure to a diversified portfolio of Canadian real estate assets, which is why it’s an ETF Canadians should continue paying attention to.
