ZWC, VGG and XIC: 3 TSX ETFs to buy and hold for long-term

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ZWC, VGG and XIC: 3 TSX ETFs to buy and hold for long-term

ZWC, VGG and XIC: 3 TSX ETFs to buy and hold for long-term
Image source: © Mauriceschuckart | Megapixl.com

Highlights

  • With the S&P/ TSX Composite Index falling by nearly eight per cent quarter-to-date, some investors may want to invest in diversified equities.
  • ETFs are commonly known to bring diversification, growth exposure and dividends to portfolios.
  • ZWC’s dividend yield is over six per cent.

With the S&P/ TSX Composite Index falling by nearly eight per cent quarter-to-date (QTD), some investors may want to invest in diversified equities to extend their exposure to growth and dividend income. Exchange-Traded Funds (ETFs), for one, are commonly known to bring diversification, growth exposure and dividends to portfolios.

So, here are three TSX ETFs that you can consider if you are looking for stable investment options that can minimize the impact of the current market fluctuations.

BMO Canadian High Dividend Covered Call ETF (TSX: ZWC)

This BMO ETF currently holds a market capitalization of C$ 1.5 billion. Its utilizes covered call options to limit the downside risk and produce income by investing in Canadian companies which dole out dividends.

ZWC’s return on equity (ROE) is almost 15 per cent. ROE is an indicator of an entity’s financial performance, measured by comparing its net earnings to shareholders’ equity. ZWC units zoomed by almost four per cent in 12 months.

ZWC’s dividend yield is over six per cent. The dividend yield is the annual dividend the company pays annually expressed as a per cent of its current stock price. ZWC is scheduled to dole out a monthly dividend of C$ 0.10 on June 3.

Vanguard U.S. Dividend Appreciation Index ETF (TSX: VGG)

Vanguard U.S. Dividend Appreciation mimics the U.S. equity index (the S&P U.S. Dividend Growers Index) that tracks publicly-listed companies in the United States that are known to expand their dividend payout over time.

VGG held a market capitalization of C$ 824.31 million and had an ROE of 34.25 per cent (highest in this list). VGG’s price-to-earnings (P/E) ratio was 21.80, representing that its units are overvalued in the market.

VGG units fell by almost 10 per cent in nine months. VGG pays dividends to its unitholders every quarter.

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iShares Core S&P/TSX Capped Composite Index ETF (TSX: XIC)

This TSX-listed ETF replicates the performance of the primary Canadian index. XIC hold a market capitalization of C$ 9.6 billion (highest in this list). XIC’s ROE was roughly 16 per cent.

This ETF paid an increased quarterly dividend of C$ 0.218 on March 31. XIC’s dividend yield was about two per cent.

XIC relatively outperformed the TSX benchmark by recording a unit gain of approximately four per cent year-over-year (YoY).

ZWC, VGG and XIC: 3 TSX ETFs to build long-term wealth

Bottomline

Canadian investors who are looking to grow their investment for the long term can explore these TSX ETFs. These funds are known to provide dividend income, which is another point that low-risk investors should consider.

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Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks. 

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