Key Morningstar Metrics for iShares Canadian Select Dividend Index ETF XDV
- : BronzeMorningstar Medalist Rating
- : AverageProcess Pillar
- : Above AveragePeople Pillar
- : Above AverageParent Pillar
IShares Canadian Select Dividend ETF balances a high yield with risk controls, earning it a Process Pillar upgrade to Average from Below Average.
The fund tracks the Dow Jones Canada Select Dividend Index, which targets high-yielding Canadian stocks while incorporating several quality screens to enhance the stability of dividend payments. This also helps exclude stocks with deteriorating fundamentals. After the eligible universe is established, stocks are ranked by indicated annual dividend yield. Existing constituents can remain in the index if they rank among the top 40 dividend-payers, while new entrants are added until the portfolio reaches 30 holdings. This treatment of current constituents promotes portfolio stability and keeps turnover low.
Holdings are weighted by indicated annual dividend yield, resulting in a consistently higher yield than most peers. The fund’s 4.27% average 12-month yield for the last 10 years through June 2026 was about 1.65 percentage points higher than the Canadian dividend and income equity Morningstar Category average.
Although the portfolio is limited to just 30 stocks, a 10% cap on individual position sizes helps keep stock-level concentration lower than that of many peers with larger portfolios. However, the absence of sector constraints results in a substantial tilt toward financials, Canada’s largest sector, which accounts for more than half of the fund’s assets.
Concentration in financials has driven performance. The fund outperformed the Canadian dividend and income equity category average by 1.2 percentage points annualized from its 2005 inception through June 2026, thanks in large part to strong returns in large bank stocks. While these firms have helped returns lately, the fund can falter when its largest holdings slip.
iShares Canadian Select Dividend Index ETF: Performance Highlights
The fund’s concentrated exposure to financials has driven its strong performance. Its 7.61% annualized return beat the Canadian dividend and income equity category average by 1.2 percentage points from its inception in 2005 through June 2026.
Canada’s largest banks have been among the market’s strongest performers, and the fund’s heavy stake in the financials sector relative to the category average has allowed it to capture much of that upside. However, underweighting the energy sector hurt some of the fund’s defensive ability in 2022 when stocks from that sector did much better than the broader market’s decline. The fund lagged the category average by more than 5 percentage points that year.
The same drivers have delivered strong results during the first half of 2026. The Royal Bank of Canada, the fund’s largest holding, gained nearly 23%, while Bank of Montreal and Toronto-Dominion Bank, the portfolio’s second- and fourth-largest positions, each returned more than 30%. Given the fund’s concentration in financials, strong gains from these big banks helped it beat the category average by 7.71 percentage points so far in 2026. While these concentrations can sometimes magnify gains, they can also magnify losses when those positions fall out of favor.
