Investors are often focused on generating passive income with sources ranging from GICs to rental properties.
The universe of dividend-paying stocks is huge. While the goal is a steady stream of income, the strategies to get there differ. Depending on an ETF’s screening criteria and methodology, Mr. Liu says investors can benefit from fundamental factors that may improve risk-return potential over the long term.
With a pool of dividend-paying stocks, investors also benefit from a more consistent income stream. “If you are investing in individual stocks, payments could be a bit more irregular as companies pay quarterly or annual dividends. Most dividend ETFs pay monthly distributions, providing a smother level of income to investors,” says Chris Heakes, head of Disciplined Equities and portfolio manager with BMO Global Asset Management in Toronto.