BlackRock Canada has announced the launch of the CAD-hedged iShares US High Dividend Equity Index Fund (XHD).
The TSX-listed iShares US High Dividend Equity Index ETF (XHD) has significant exposure to the telecoms sector, with AT&T currently the largest holding.
The exchange-traded fund (ETF) seeks to deliver long-term capital growth by tracking the Morningstar Dividend Yield Focus Index. The index provides access to first-class, dividend-paying US companies that have been screened for superior company quality and financial health, with the added benefit of liquidity.
“In today’s investing environment, income generation and higher yield equities are top of mind for many investors,” said Mary Anne Wiley, Managing Director, Head of iShares, BlackRock Canada.
“Our most recent investor survey found that 93 per cent believe that generating income is an important factor in making investment decisions. To help investors access those income-oriented performers, we have introduced the iShares US High Dividend Equity Index Fund (CAD-Hedged). It offers investors higher yield and lower risk by focusing on companies that are likely to pay higher than average dividends for the foreseeable future.”
The fund’s US dollar exposure is hedged back to Canadian dollars to remove the impact of currency volatility and keep the fund’s risk profile as low as possible.
“The companies XHD tracks are the 75 highest dividend-paying stocks in the Morningstar US Market Index that also meet a list of financial health criteria’,” said Oliver McMahon, Head of iShares Product Management at BlackRock Canada. “This approach helps decrease equity risk in a portfolio given the historically high-quality, low-volatility characteristics of its dividend stock holdings and offers compelling potential for both capital appreciation and income distribution.”
Major holdings currently include AT&T, Pfizer, Johnson & Johnson, Proctor & Gamble and Verizon Communications. As is typical for an income-oriented equity strategy, the fund has significant exposure to the pharmaceutical, telecommunications and utilities sectors, which combined make up over 60% of the fund.
XHD is listed on the Toronto Stock Exchange (TSX) and has a management fee of 0.30%.
Investors may also be interested in another TSX-listed US equity income ETF offered by iShares, the iShares S&P US Dividend Growers Index Fund (CAD-Hedged) (CUD). This fund tracks the S&P High Yield Dividend Aristocrats Index and is comprised of the 60 highest dividend-yielding constituents of the stocks of the S&P Composite 1500 Index that have increased dividends every year for at least 25 consecutive years (increased from 50 in December 2010). The index is weighted by indicated annual dividend yield, with constituents being re-weighted every quarter.