Is VDY a good dividend ETF?

VDY is one of the best Canadian dividend ETFs. With a 4.5% yield, 0.22% MER, and holdings concentrated in Canadian banks and energy, it provides strong income with exposure to Canada's highest-quality dividend payers.

How often does VDY pay dividends?

VDY pays monthly distributions, making it popular with income-focused investors. Monthly payments provide regular cash flow for retirement or reinvestment.

Should I hold VDY in TFSA or RRSP?

VDY pays eligible Canadian dividends, which receive preferential tax treatment in non-registered accounts. For low-income retirees, non-registered may be optimal. For higher earners or those seeking simplicity, TFSA eliminates all tax. RRSP works well too but converts tax-efficient dividends to fully-taxable RRIF withdrawals.

VDY Review 2026 | Vanguard FTSE Canadian High Dividend Yield ETF

VDY at a Glance

Feature	Details
Full name	Vanguard FTSE Canadian High Dividend Yield Index ETF
Ticker	VDY
Provider	Vanguard Canada
Inception	November 2012
MER	0.22%
Distribution yield	~4.5%
Distribution frequency	Monthly
Number of holdings	~40-50
Exchange	TSX

Top Holdings

Company	Ticker	Sector	Weight (approx)
Royal Bank of Canada	RY	Financials	~13%
Toronto-Dominion Bank	TD	Financials	~11%
Bank of Nova Scotia	BNS	Financials	~7%
Enbridge	ENB	Energy/Pipelines	~7%
Canadian Natural Resources	CNQ	Energy	~6%
Bank of Montreal	BMO	Financials	~6%
CIBC	CM	Financials	~5%
TC Energy	TRP	Energy/Pipelines	~5%
Manulife Financial	MFC	Financials	~4%
National Bank	NA	Financials	~3%

Sector Breakdown

Sector	Weight
Financials (banks + insurance)	~55%
Energy (oil, gas, pipelines)	~25%
Utilities	~7%
Telecommunications	~8%
Other	~5%

Concentration risk: VDY is heavily weighted to banks (~45%) and energy (~25%).

Dividend Income

Investment	Annual Dividends (at 4.5%)	Monthly Income
$25,000	$1,125	$94
$50,000	$2,250	$188
$100,000	$4,500	$375
$200,000	$9,000	$750
$500,000	$22,500	$1,875

Performance

Period	VDY Return	Notes
1 year	~15-20%*	Total return (price + dividends)
5 years (annualized)	~10-12%*	Strong Canadian bank/energy performance
10 years (annualized)	~8-10%*	Includes 2020 crash recovery

Approximate. Past performance does not guarantee future results.

VDY vs Alternatives

Feature	VDY	XEI	ZDV	CDZ
MER	0.22%	0.22%	0.39%	0.67%
Yield	~4.5%	~4.8%	~4.5%	~3.8%
Holdings	~40	~75	~50	~45
Frequency	Monthly	Monthly	Monthly	Monthly
Strategy	High dividend yield	High dividend	Dividend	Dividend aristocrats
Bank weighting	Very high (~45%)	High (~35%)	High (~35%)	Moderate (~25%)

Tax Treatment

Account	Tax on VDY Dividends
TFSA	$0 (tax-free)
RRSP	Tax-deferred (taxed as income on RRIF withdrawal)
Non-registered	Canadian dividend tax credit applies (~15-30% effective rate)

For non-registered accounts: VDY’s eligible Canadian dividends are the most tax-efficient form of income (after capital gains), thanks to the dividend gross-up and tax credit.

Who Should Buy VDY

Profile	Suitable?
Income-focused investor	✅ Ideal
Retiree seeking monthly income	✅ Great fit
Believer in Canadian banks	✅ Heavy bank exposure
Want diversification (global)	⚠️ VDY is Canada-only
Want low volatility	⚠️ Energy sector can be volatile
Growth investor (no income need)	⚠️ XEQT/VEQT may be better