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I love owning dividend-paying exchange-traded funds (ETFs) in a Tax-Free Savings Account (TFSA)—it’s a no-brainer. If I’m getting income from my investments, I want to keep it all.
That means no taxes on dividends going to the Canada Revenue Agency (CRA). The only account where I can avoid this entirely and withdraw tax-free whenever I want is the TFSA.
Here’s a look at two monthly dividend stalwarts from Hamilton ETFs that I like—both focused on Canada’s financial sector but with very different strategies.
Low-cost sector exposure
Hamilton Canadian Financials Index ETF (TSX:HFN) is perfect if you just want to own all the biggest Canadian financial stocks in a single package at a low cost.
It tracks Solactive Canadian Financials Equal-Weight Index, which holds 12 of Canada’s largest financial stocks in equal proportions. You get all six big banks, four insurance giants, and two top asset managers and holding companies.
I like the equal-weighted approach because, unlike some older Canadian financial ETFs, it’s not too top-heavy. That makes it better diversified, so no single stock dominates the fund.
Right now, HFN pays a 3.57% distribution yield with monthly payouts. But what really stands out is the low 0.19% management fee, which is currently being waived to 0% through January 31, 2026—making it an even better deal.
High-risk big bank exposure
If you want to maximize growth and income in a TFSA, the best ETF for this, in my opinion, is Hamilton Enhanced Canadian Bank ETF (TSX:HCAL).
Unlike HFN, which holds a broader mix of financial stocks, HCAL tracks Solactive Equal Weight Canada Banks Index—meaning it only includes Canada’s Big Six banks in equal proportions.
But this isn’t just any bank ETF. HCAL uses leverage, borrowing up to 25% of its net asset value (NAV) to invest more, giving it 1.25 times the exposure to the banks.
On the upside, this amplifies both share price growth and income potential. On the downside, it also means higher losses when bank stocks struggle. That makes it riskier than a traditional bank ETF, but for investors with a high risk tolerance, holding HCAL in a TFSA can help maximize tax-free growth.
Right now, HCAL is paying a high 6.16% distribution yield, with monthly payouts—a strong option for those willing to take on more volatility.
