Passive Income - ETF Investments

7/10/20252 min read

Investing Smart: ETFs that pay you!

Are you looking to grow your money without becoming a full-time stock picker? Want regular income but not sure where to start? Exchange-Traded Funds (ETFs) might be your best option — especially those that pay high monthly dividends.

Whether you're a new investor or looking to build a steady passive income stream, this guide will walk you through the benefits of dividend-paying ETFs, key things to know, and three top-performing ETF options worth exploring.

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What Are ETFs?

ETFs (Exchange-Traded Funds) are baskets of stocks, bonds, or other assets that you can buy or sell like a stock. They’re a simple, diversified way to invest in a broad market, sector, or theme — and many now offer monthly dividends.

✅ Pros of Investing in Dividend-Paying ETFs

Monthly Income – Get paid monthly like a paycheck, ideal for budgeting and retirement.
Diversification – One ETF can hold dozens or hundreds of stocks or bonds.
Passive Investing – No need to pick individual stocks or monitor daily markets.
Reinvestment Power – Reinvest dividends to compound returns over time.
Low Fees – Most ETFs have lower management fees than mutual funds.
Liquidity – ETFs trade on the stock market, so you can buy/sell anytime.
Built-In Risk Spreading – Minimized risk by spreading across many assets.

❌ Cons of Dividend-Paying ETFs

📉 Market Volatility – Your ETF can still drop in value when the market dips.
🧾 Taxable Income – Dividends may be taxed if held in a non-registered account.
💵 Yield Traps – Not all high yields are sustainable — research matters.
💼 Overlap Risk – Some ETFs may hold similar assets, reducing diversification.

Key Points to Know (At a Glance)

✅ Look for low MERs (management expense ratios) — under 0.75% is ideal.
✅ Monthly payers help smooth cash flow for retirees or income-focused investors.
✅ Choose ETFs with a history of stable distributions (not just high yields).
✅ Consider covered call ETFs for enhanced income.
✅ Use registered accounts (like TFSA/RRSP) to minimize taxes in Canada.

3 High-Dividend ETFs Worth Watching (2025)

Here are three Canadian-listed ETFs known for their high monthly payouts:

1. Harvest Premium Yield Treasury ETF (HPYT.TO)

Dividend Yield: ~20% (As of this writing)
Distribution: Monthly
Overview: Hold longer dated US Treasury bonds that are secured by the full faith and credit of the US government, employing up to 100% covered call writing to generate a higher yield and maximize monthly cash flow.
Bonus: Exposure to high quality US Treasury Bonds through US listed ETFs

2. Hamilton Utilities YIELD MAXIMIZER ETF (UMAX.TO)

Dividend Yield: ~14% (As of this writing)
Distribution: Monthly
Overview: Designed to provide investors with high monthly income by combining exposure to Canada's top 60 large-cap companies with a covered call strategy
Bonus: Top large cap companies.

3. Canadian Financials Yield Maximizer ETF (HMAX.TO)

Dividend Yield: ~13.58% (As of this writing)
Distribution: Monthly
Overview: Not a traditional stock ETF — it holds high-interest savings deposits. A great place to park cash and still earn solid returns, with almost zero volatility.
Bonus: Diversified exposure to Canada’s 10 largest financials

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Is a High-Dividend ETF Right for You?

If you're:

Tired of low interest in savings accounts
Wanting passive income
Looking to grow wealth without picking individual stocks
Interested in monthly cash flow for retirement, reinvestment, or bills
then high-dividend ETFs may be a perfect fit.

Final Thoughts

ETFs are a flexible and powerful tool for modern investors. By choosing high-dividend-paying ETFs, you can build a reliable income stream, diversify your portfolio, and do it all with less effort than managing individual stocks.

Build your wealth today! (Yes, that’s me — when you see 'Recommended by Scot!)

Remember, it’s not just about chasing high yields — focus on stability, transparency, and long-term performance.