Nowadays, with the markets at elevated levels and many stocks looking expensive, investors may want to consider some safer stocks to hold on to.
If you’re not sure which stocks to put into your tax-free savings account (TFSA), an exchange-traded fund (ETF) can give you some good balance and diversification. And you can also collect some excellent dividend income along the way.
The iShares S&P/TSX Composite High Dividend Index ETF (TSX:XEI) yields right around 5%, which is a fantastic payout for investors when you consider that the S&P 500 averages a yield of about 1.3%. This ETF has an expense ratio of 0.22% which is modest compared with other funds. There are 75 holdings in the fund, including big names such as Suncor Energy (TSX:SU)(NYSE:SU), TC Energy (TSX:TRP)(NYSE:TRP), Toronto-Dominion Bank (TSX:TD)(NYSE:TD), and many others. The fund contains some of the best Canadian dividend stocks you can own.
And unlike many top ETFs in the U.S., this isn’t a tech-heavy fund at all. More than 32% of its holdings are in energy stocks, followed by 31% in financials, 14% in utilities, and another 8% is in the communication sector. This ETF can provide investors with a bit more long-term stability and this year it has risen by 14% and its 5-year returns stand at just over 27%. But primarily, investors will love this investment for the recurring monthly dividend income it generates.
If you’re not sure what to put in your TFSA, this ETF can be an excellent pillar to build your portfolio around.
