The Toronto Stock Exchange has set multiple record highs in August 2026, with the latest milestone on August 12. Against that backdrop, several Canadian dividend ETFs are running ahead of the broader market. Among the standouts are the TD Canadian Bank Dividend Index ETF (TBNK), the iShares S&P/TSX Composite High Dividend Index ETF (XEI), and the BMO Canadian Dividend ETF (ZDV). All three have delivered strong price gains this year and pay monthly distributions, making them a compelling option for investors seeking passive income and growth.
Canada is the birthplace of the exchange-traded fund. In early March 1990, the Toronto 35 Index Participation Units made their debut, introducing a basket of investments that could be traded on a stock exchange like ordinary shares. Legendary value investor Warren Buffett has recommended such assets to people who lack the time or experience to pick individual stocks.
The TD Canadian Bank Dividend Index ETF concentrates on Canada’s banking sector, with particular emphasis on the Big Six banks. TD Asset Management acts as portfolio advisor and uses a rules-based weighting methodology that gives greater weight to banks with higher dividend growth. Royal Bank of Canada and Canadian Imperial Bank of Commerce are currently the top two holdings, accounting for 28.3% and 23.9% of the fund respectively. TBNK has gained 35.2% year to date and 65.8% over the trailing one-year period. Units trade at C$55.27, and the fund yields 2.2% with monthly distributions.
The iShares S&P/TSX Composite High Dividend Index ETF spans all 11 primary sectors of the TSX, making it an all-weather fund. Financials, energy, and utilities carry the heaviest sector weights at 31.9%, 28.93%, and 13%, respectively. Among its 75 total holdings, technology is represented by only one stock: Open Text. BlackRock Asset Management Canada Limited manages the fund. Units trade at C$40.12, and XEI has advanced 26.7% year to date. The 15-year-old fund offers a 3.4% yield and pays monthly.
The BMO Canadian Dividend ETF is managed by BMO Global Asset Management. It invests in Canadian dividend-paying stocks selected for strong fundamentals, long-term capital appreciation potential, and sustainable dividends. The fund follows a rules-based, yield-weighted methodology that prioritizes dividend yield over company size or total market value. It holds 61 stocks, with no exposure to the technology sector. Financials and energy are the heaviest sector weights at 39.2% and 21.3%, respectively. ZDV has risen 25% year to date. Units trade at C$33.65, and the fund yields 2.7% with monthly distributions.
For investors looking to combine monthly income with market-beating returns, these three Canadian dividend ETFs offer a straightforward way to participate. Their strong year-to-date performance, combined with regular monthly payouts, highlights the appeal of dividend-focused strategies in the current market environment.
