After gaining 18% in 2024 and rising another 3.4% in early 2025, the TSX Composite Index continues to make new highs. However, that doesn’t mean market risks have disappeared. With ongoing U.S.-Canada trade tensions and macroeconomic uncertainties, volatility could still impact stocks in the near term.
For long-term investors looking to generate steady passive income while reducing risk, high-yield dividend ETFs (exchange-traded funds) could offer an excellent solution. These funds provide diversification, strong yields, and reliable payouts, which could be a smart addition to any portfolio. In this article, I’ll highlight two top Canadian dividend ETFs that can help you earn stable, long-term income regardless of short-term market volatility.
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iShares S&P/TSX Composite High Div ETF
The first top Canadian dividend ETF in my list is iShares S&P/TSX Composite High Div ETF (TSX:XEI). It could be a fantastic choice for investors seeking a steady stream of passive income. This ETF is designed to replicate the performance of the S&P/TSX Composite High Dividend Index, meaning it focuses on top Canadian stocks known for rewarding their investors with strong and reliable dividends. And that’s exactly what income investors love — consistent cash flow that keeps rolling in regardless of market ups and downs.
One of the biggest reasons to consider XEI right now is its monthly dividend payouts. Unlike some stocks and ETFs that only distribute income quarterly, XEI ensures that investors get regular monthly income, making it a great option for retirees or anyone relying on dividends to cover expenses. With a current annualized yield of 5.5%, it’s offering a solid return in today’s market.
Another key advantage of XEI ETF is its diversification across high-quality dividend-paying sectors. Its top holdings include Canadian energy giants like Enbridge and TC Energy as well as major banks such as TD Bank and Royal Bank of Canada. This mix provides exposure to sectors that have an amazing track record of generating stable earnings, even in uncertain economic times.
With a low management fee of just 0.20%, strong historical performance, and a focus on high-yielding Canadian stocks, XEI could be a smart choice for investors looking to build a dependable, long-term income stream.
BMO Canadian Dividend ETF
Another solid TSX-listed ETF to consider right now is BMO Canadian Dividend ETF (TSX:ZDV), offering a monthly dividend payout with a 3.8% annualized yield.
It could be a top choice for long-term income investors as it invests in a diversified portfolio of 50 high-dividend-paying Canadian stocks, which could give you stability and consistent returns even amid market volatility. Its rules-based selection strategy prioritizes stocks with strong dividend growth, yield, and sustainable payout ratios, making it a reliable option in any market condition.
With heavy exposure to financials, energy, and utilities, ZDV offers a good balance of income and growth potential. Managed by BMO Asset Management, it comes with a 0.39% expense ratio, making it a cost-effective, hands-off investment for those seeking long-term passive income.
