Q: Can you give your thoughts on CDZ in light of the following Globe commentary (similar to other blurbs I've seen in the Globe):
"And another thing: The way some dividend ETFs weight their individual constituents is a bit nuts. Take the iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ). Choosing stocks that have raised their dividends regularly, as this ETF does, is a great strategy, but assigning the largest weightings to stocks with the highest yields is a problem. Why? Because a high yield is often a sign of a struggling company whose dividend is unsustainable.
Case in point: At the end of April, CDZ’s largest holding was Aimia (AIM), which at the time yielded 8.8 per cent. But the loyalty plan operator’s shares collapsed in May after Air Canada said it would be parting ways with Aeroplan, and Aimia recently suspended all dividends. CDZ’s top holding now? Corus Entertainment (CJR.B), another struggling company that yields about 8.7 per cent and hasn’t raised its dividend since January, 2015."
https://www.theglobeandmail.com/globe-investor/investor-education/im-still-waiting-for-the-perfect-dividend-etf/article35453106/
Would you recommend a switch to a different ETF for broad-based Cdn exposure in an RRSP? What alternatives do you like that are not over-exposed to financials/materials?
"And another thing: The way some dividend ETFs weight their individual constituents is a bit nuts. Take the iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ). Choosing stocks that have raised their dividends regularly, as this ETF does, is a great strategy, but assigning the largest weightings to stocks with the highest yields is a problem. Why? Because a high yield is often a sign of a struggling company whose dividend is unsustainable.
Case in point: At the end of April, CDZ’s largest holding was Aimia (AIM), which at the time yielded 8.8 per cent. But the loyalty plan operator’s shares collapsed in May after Air Canada said it would be parting ways with Aeroplan, and Aimia recently suspended all dividends. CDZ’s top holding now? Corus Entertainment (CJR.B), another struggling company that yields about 8.7 per cent and hasn’t raised its dividend since January, 2015."
https://www.theglobeandmail.com/globe-investor/investor-education/im-still-waiting-for-the-perfect-dividend-etf/article35453106/
Would you recommend a switch to a different ETF for broad-based Cdn exposure in an RRSP? What alternatives do you like that are not over-exposed to financials/materials?
