To find the top-performing funds in the Morningstar Canadian dividend and income equity category, we looked for those with the best returns over the last one-, three-, and five-year periods. Seven funds made it through the screen:
- Global X Canadian High Dividend Index Corporate Class ETF HXH
- iShares Core MSCI Canadian Quality Dividend Index ETF XDIV
- iShares S&P/TSX Composite High Dividend Index ETF XEI
- Purpose Core Equity Income Fund
- RBC Canadian Equity Income Fund
- RBC Quant Canadian Dividend Leaders ETF RCD
- TD Q Canadian Dividend ETF TQCD
Over the past 12 months, the average fund in the Canadian dividend and income equity category returned 28.55%. On an annualized basis, these funds have climbed 16.07% over the past three years and 13.82% over the past five. Meanwhile, the Morningstar Canada Index has risen 38.91% over the past 12 months, 23.30% per year over the past three years, and 16.77% per year over the past five years.
Funds in this category must have a stated mandate to invest primarily in income-generating securities, and they must invest at least 70% of their equity holdings in securities domiciled in Canada. In addition, they must invest at least 50% of their non-cash assets in income-generating securities such that the three-year weighted average yield on the equity component of the fund’s portfolio is above the three-year weighted average yield of the S&P/TSX Composite Dividend Index. The fund’s average capitalization must exceed the Canadian and Canadian focused small/mid cap threshold.
Screening for the Top-Performing Canadian Dividend and Income Equity Funds
We looked at returns from the past one, three, and five years using data in Morningstar Direct. We screened for Canada-domiciled open-end and exchange-traded funds in the top 33% of the category using their lowest-cost primary share classes for those periods. We also filtered for funds with a Morningstar Medalist Rating of Bronze, Silver, or Gold. We excluded funds with assets under C$100 million. This left seven investments.
Because the screen was created with the lowest-cost share class for each fund, some may be listed with share classes that are not accessible to individual investors, or they may be aimed at institutional investors and require large minimum investments. The individual investor versions of those funds may carry higher fees, reducing returns to shareholders. Medalist Ratings may differ among the share classes of a fund.
Global X Canadian High Dividend Index Corporate Class ETF
- Morningstar Medalist Rating: Silver
- Morningstar Rating: ★★★★★
Over the past 12 months, the Global X fund rose 35.93%, while the average fund in its category rose 28.55%. The fund, launched in April 2016, has climbed 17.66% over the past three years and 16.94% over the past five.
iShares Core MSCI Canadian Quality Dividend Index ETF
- Morningstar Medalist Rating: Gold
- Morningstar Rating: ★★★★★
The C$4.3 billion fund has climbed 32.04% over the past 12 months, outperforming the average fund in its category, which rose 28.55%. The iShares fund, launched in June 2017, has climbed 20.47% over the past three years and 17.86% over the past five.
iShares S&P/TSX Composite High Dividend Index ETF
- Morningstar Medalist Rating: Gold
- Morningstar Rating: ★★★★
Over the past 12 months, the iShares fund rose 37.47%, while the average fund in its category rose 28.55%. The fund, launched in April 2011, has climbed 17.81% over the past three years and 16.21% over the past five.
Purpose Core Equity Income Fund
- Morningstar Medalist Rating: Bronze
- Morningstar Rating: ★★★★
Over the past 12 months, the Purpose Investments fund rose 34.05%, while the average fund in its category rose 28.55%. The fund, launched in November 2015, has climbed 17.17% over the past three years and 14.45% over the past five.
RBC Canadian Equity Income Fund
- Morningstar Medalist Rating: Gold
- Morningstar Rating: ★★★★★
The C$4.1 billion fund has gained 33.49% over the past 12 months, while the average fund in its category is up 28.55%. The RBC fund, launched in August 2006, has climbed 17.89% over the past three years and 15.26% over the past five.
RBC Quant Canadian Dividend Leaders ETF
- Morningstar Medalist Rating: Silver
- Morningstar Rating: ★★★★★
The C$370.1 million fund has climbed 39.85% over the past 12 months, outperforming the average fund in its category, which rose 28.55%. The RBC fund, launched in January 2014, has climbed 22.54% over the past three years and 17.85% over the past five.
TD Q Canadian Dividend ETF
- Morningstar Medalist Rating: Bronze
- Morningstar Rating: ★★★★★
Over the past 12 months, the TD fund rose 42.61%, while the average fund in its category rose 28.55%. The fund, launched in November 2019, has climbed 24.21% over the past three years and 20.39% over the past five.
