Latest news with #TonyDong
Yahoo
22-07-2025
- Business
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This 4% Yield Is Why Smart Money Loves Dividend Investing
Written by Tony Dong, MSc, CETF® at The Motley Fool Canada There are plenty of dividend ETFs on the TSX, but this one is my favourite. It offers a solid 4% yield, is highly tax efficient thanks to its focus on eligible Canadian dividends, charges low fees, pays monthly, and unlike many of its competitors, has actually outperformed the S&P/TSX 60 over time. That's the whole case, right there. But if you keep reading, I'll break down each of these points in more detail and explain why I believe the Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY) is one of the best long-term dividend ETFs in Canada. What is VDY? VDY tracks the FTSE Canada High Dividend Yield Index, a rules-based index that selects Canadian companies with above-average dividend yields. This is a passive ETF, but it's far more concentrated than your typical broad-market fund. VDY holds only about 50 stocks, with a heavy tilt toward financials and energy, two sectors that dominate the Canadian market and are known for paying consistent, high dividends. The index's focus on yield gives the fund a natural value tilt, but many of the companies in the portfolio also score well on quality metrics. On average, the portfolio trades at a 14.3 times price-to-earnings ratio, has a return on equity of 11.9%, and an earnings growth rate of 7.6%. There's solid, fundamental strength supporting each dividend. VDY also stands out for its low cost. The management expense ratio is just 0.22%, which means you'll pay only $22 annually on every $10,000 invested. That's less than what most people spend on a single pizza night. VDY yield and performance VDY currently yields around 4% with a recent monthly distribution of $0.1474 per share. That figure reflects the 12-month trailing yield. If you had held the ETF over the past year, this is approximately what you would have received in cash payouts, on average. It's also incredibly tax-efficient. In most years, the entire dividend is considered a qualified Canadian dividend, which gets preferential tax treatment in non-registered accounts. In some years, there may also be small amounts of capital gains or return of capital, both of which are also tax-efficient. Capital gains are taxed at half the rate of regular income and return of capital reduces your cost base, which can defer taxes into the future. And if you're holding VDY inside a Tax-Free Savings Account (TFSA) and reinvesting your dividends, those tax advantages become even more powerful. Over the past 10 years, VDY has compounded at a 10.2% annualized total return, beating the broader S&P/TSX 60 Index, which did 981% annualized. For investors looking for dependable monthly income, tax-efficient cash flow, and long-term compounding, VDY continues to deliver. It's the kind of ETF that doesn't just pay you now. It builds wealth quietly, month after month. The post This 4% Yield Is Why Smart Money Loves Dividend Investing appeared first on The Motley Fool Canada. More reading 10 Stocks Every Canadian Should Own in 2025 [PREMIUM PICKS] Market Volatility Toolkit A Commonsense Cash Back Credit Card We Love Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 2025 Sign in to access your portfolio
Yahoo
11-07-2025
- Business
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I'd Invest in This Canadian REIT ETF Over a Rental Property Any Day
Written by Tony Dong, MSc, CETF® at The Motley Fool Canada After years of runaway prices, the Canadian housing market is finally correcting in major cities like Toronto and Vancouver. That's great news if you're a first-time buyer. Between the First Home Savings Account (FHSA), which lets you save up to $40,000 tax-free, and the Registered Retirement Savings Plan (RRSP) Home Buyers' Plan, which offers up to $60,000 in withdrawals for a down payment, there's meaningful support in place. Many provinces also slash land transfer taxes and property taxes through various grants. But if you're thinking about buying a rental property? Hard pass. Cap rates, which measure rental income as a percentage of property value, remain low, especially once you factor in maintenance, vacancies, interest payments, and the headache of managing tenants. Pre-construction condos are even worse. Just check Reddit for horror stories of investors now underwater on units. If you want real estate-linked income, paid monthly, and at a 4.8% yield that's tax-free in the right accounts, like a Tax-Free Savings Account (TFSA), here's what I'd invest in instead: BMO Equal Weight REITs Index ETF (TSX:ZRE). ZRE is a Canadian-listed ETF that tracks the Solactive Equal Weight Canada REIT Index. This means it holds a basket of Canadian real estate investment trusts (REITs) in equal amounts, rather than letting the largest ones dominate. That's important because Canada's real estate market is narrower. ZRE gives you exposure across the board. Retail REITs that own malls and plazas make up about 39% of the fund. Multi-family residential REITs, which own apartment buildings, account for another 31%. The rest is spread across diversified REITs, healthcare facilities, offices, and industrial properties. You're not betting on one building or one city. You're getting a professionally managed portfolio of thousands of underlying properties. As of the latest figures, ZRE has a 4.83% annualized yield with monthly distributions. That's solid. But more importantly, the type of income it pays can vary, and that matters for taxes. In 2024, ZRE's total distribution per unit was $1.459. Here's how it broke down: about 6% was eligible dividends, 41% was other income, 30% was capital gains, and roughly 12% was return of capital. The rest included some foreign income. The easiest way to avoid headaches is to hold ZRE inside a TFSA. You can't buy a rental condo tax-free, but you can buy a real estate ETF that owns hundreds of properties, and get all that income without dealing with tenants, repairs, or taxes. The post I'd Invest in This Canadian REIT ETF Over a Rental Property Any Day appeared first on The Motley Fool Canada. Before you buy stock in Bmo Equal Weight Reits Index Etf, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bmo Equal Weight Reits Index Etf wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $24,927.94!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 30 percentage points since 2013*. See the Top Stocks * Returns as of 6/23/25 More reading 10 Stocks Every Canadian Should Own in 2025 [PREMIUM PICKS] Market Volatility Toolkit A Commonsense Cash Back Credit Card We Love Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 2025 Sign in to access your portfolio
Yahoo
29-06-2025
- Business
- Yahoo
Building a $35,000 TFSA Portfolio One Step at a Time
Written by Tony Dong, MSc, CETF® at The Motley Fool Canada Despite its name, the Tax-Free Savings Account (TFSA) isn't really designed to be just a savings account. Parking your money in cash or a high-interest savings product inside it is a complete waste of what this account can offer. Here's why: The TFSA is one of the most powerful tools available to Canadian investors. Any capital gains, dividends, or interest earned inside the account are completely tax-free, not just tax-deferred. That means you get to keep every dollar your investments earn, and you don't have to report it when you file taxes. Plus, all the contribution room you build up over the years can be reclaimed if you ever make a withdrawal. So, if you've managed to stash away $35,000 in your TFSA, it's time to start treating it like a real investment portfolio. And the easiest way to do that is by using low-cost, diversified exchange-traded funds (ETFs). Here's a simple combination I like, using three ETFs from BMO Global Asset Management. Begin with broad U.S. equity exposure through BMO S&P 500 Index ETF (TSX:ZSP). It tracks the S&P 500 Index, which includes the 500 largest publicly traded companies in the United States. This ETF charges a very low 0.09% management expense ratio (MER), making it extremely cost-efficient for long-term investors. And here's the real kicker: beating the S&P 500 is hard. According to SPIVA data, over 88% of active managers underperformed this benchmark over the past 15 years. That means your best bet is to ride with the index instead of trying to beat it. ZSP lets you do just that. Next, add exposure to your home market with BMO S&P/TSX Capped Composite Index ETF (TSX:ZCN). This ETF has a rock-bottom MER of 0.06%, making it one of the most affordable ways to invest in Canada. ZCN tracks the S&P/TSX Capped Composite Index, which includes a wide range of Canadian companies from multiple sectors. The 'capped' part just means no single company can dominate the index beyond a certain weight, helping keep things diversified. It's a great way to get exposure to Canada's largest publicly traded companies, without having to pick and choose individual stocks. Round things out with international developed market exposure through BMO MSCI EAFE Index ETF (TSX:ZEA). The MER is slightly higher at 0.22%, but that's normal when investing outside North America due to higher operational costs. The ETF tracks the MSCI EAFE Index, which stands for Europe, Australasia, and Far East. That includes countries like the U.K., Germany, France, Japan, and Australia. Adding international stocks helps smooth out regional risk and ensures your portfolio isn't overexposed to North American markets. This simple three-ETF combination gives you a globally diversified equity portfolio inside your TFSA using just $35,000. You get exposure to thousands of companies across multiple countries and sectors, all at a very low cost, and with no need to monitor or rebalance every week. It's a smart way to make your TFSA work for you. The post Building a $35,000 TFSA Portfolio One Step at a Time appeared first on The Motley Fool Canada. Before you buy stock in Bmo S&p/tsx Capped Composite Index Etf, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bmo S&p/tsx Capped Composite Index Etf wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $24,927.94!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 30 percentage points since 2013*. See the Top Stocks * Returns as of 6/23/25 More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
28-06-2025
- Business
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One TSX ETF to Avoid (and One to Buy Hand Over Fist)
Written by Tony Dong, MSc, CETF® at The Motley Fool Canada I've seen a lot of bad exchange-traded funds (ETFs) in my time. Some are confusingly structured. Others charge way too much in fees. A few do both, and that's what brings us here today. I'm thrilled to finally share one particularly egregious example with you. It's the kind of fund that deserves to be left to gather dust in some forgotten account or delisted. But I won't leave you hanging in negativity. I'll also give you one TSX-listed ETF that is low cost, tax efficient, and diversified – an ETF I consider a 'buy hand over fist' candidate. Let's get this out of the way: the iShares India Index ETF () is one of the worst ways you could try to invest in India as a Canadian. It's not because I dislike Indian stocks or the Indian economy. Frankly, I don't know enough about its market to give a detailed take on its growth potential. The problem is how this ETF is built. Instead of directly owning Indian companies, XID holds a U.S.-listed ETF that tracks the Nifty 50 Index. That's right – your Canadian ETF is just a wrapper for a U.S. ETF, which itself is a wrapper for Indian equities. Every time an Indian company pays a dividend, the Indian government takes a foreign withholding tax cut. Then, the U.S. ETF holding those stocks collects the dividend after that first cut and pays it out to XID, which gets hit again with a 15% U.S. withholding tax before anything reaches your hands. Even in a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP), you're getting taxed twice on the same dividend income. That's because only direct U.S.-listed ETFs avoid the 15% cut in an RRSP, and XID isn't one of them. It's a Canadian-listed ETF holding a U.S. ETF that holds Indian stocks, making it a a tax inefficiency sandwich. And the kicker? XID charges a 0.99% MER. That's nearly $99 in fees for every $10,000 invested, every single year, before factoring in the double dividend haircut. That's bordering on mutual fund territory, and we're supposed to be past that era. Now let's cleanse our palates with something that actually makes sense: the iShares Core S&P/TSX Capped Composite Index ETF (). XIC tracks the entire Canadian stock market, including large, mid, and small caps, with a cap of 10% on any one stock so no single company dominates the fund. It gives you diversified exposure to the Canadian economy with just one ticker. XIC is everything XID is not. It's straightforward, low cost, and tax smart. The MER is only 0.06%, or $6 a year on every $10,000 you invest. That's nearly 17 times cheaper than XID. Plus, XIC pays a solid 2.6% yield, and it's made up of eligible Canadian dividends, which are incredibly tax efficient in non-registered accounts thanks to the dividend tax credit. And in registered accounts like the TFSA or RRSP, you get to keep 100% of those dividends – no foreign withholding, no hidden tax traps. The post One TSX ETF to Avoid (and One to Buy Hand Over Fist) appeared first on The Motley Fool Canada. Before you buy stock in Ishares Core S&p/tsx Capped Composite Index Etf, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Ishares Core S&p/tsx Capped Composite Index Etf wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $24,927.94!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 30 percentage points since 2013*. See the Top Stocks * Returns as of 6/23/25 More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
27-06-2025
- Business
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Why $10,000 Invested This Way Could Pay Off in the Long Run
Written by Tony Dong, MSc, CETF® at The Motley Fool Canada Sometimes the laziest investment methods are the most effective. And few strategies are lazier or more reliable than plunking $10,000 into an exchange-traded fund (ETF) that passively tracks the S&P 500 Index and letting time do the heavy lifting. No, this isn't a globally diversified portfolio. And yes, it leans into America's long streak of outperformance. But the sheer simplicity, low cost, and historical returns make this a strategy worth considering, especially if you're looking to invest with minimal effort. Here's how it works, and how to get started as a Canadian investor. The S&P 500 is a stock market index that tracks 500 of the largest publicly traded companies in the U.S. To be included, a company must meet specific requirements around size, profitability, and liquidity. It's also market-cap weighted, which means bigger companies get more weight in the index. This structure gives you several advantages: low turnover, automatic exposure to sector leaders, and what's known as a 'self-cleansing' effect – winners to the top, while laggards naturally fall off. It's no wonder that 88% of actively managed U.S. large-cap funds underperformed the S&P 500 over the last 15 years, according to SPIVA. Had you invested $10,000 into the S&P 500 in the early 1990s and left it alone, you'd be sitting on over $240,000 by 2025. That's a 10.4% annualized return, according to the backtest. Of course, that return came with some serious bumps along the way, including a maximum drawdown of 55.2% during the 2008 financial crisis. But the long-term trend is undeniable: patient investors who stayed the course were rewarded far more than those who left their cash on the sidelines (which only returned 2.5% over the same period). If you're a Canadian investor looking to mirror that kind of performance, a great option is the Vanguard S&P 500 Index ETF (). It trades in Canadian dollars, so there's no currency conversion fee, and it has a rock-bottom management expense ratio (MER) of just 0.09%. For a $10,000 investment, that's only $9 a year in fees – a tiny cost to track one of the most influential stock indexes in the world. So if you're looking for an easy, proven way to invest for the long term, consider doing what the stats say works: buy the market, stay the course, and let time do the compounding. The post Why $10,000 Invested This Way Could Pay Off in the Long Run appeared first on The Motley Fool Canada. Before you buy stock in Vanguard S&p 500 Index Etf, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Vanguard S&p 500 Index Etf wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $24,927.94!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 30 percentage points since 2013*. See the Top Stocks * Returns as of 6/23/25 More reading Made in Canada: 5 Homegrown Stocks Ready for the 'Buy Local' Revolution [PREMIUM PICKS] Market Volatility Toolkit Best Canadian Stocks to Buy in 2025 Beginner Investors: 4 Top Canadian Stocks to Buy for 2025 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 2025
