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The inbox is full again. Here are answers to some of the questions readers have submitted recently.
Q – Are there one or two U.S. based dividend paying ETFs you could recommend? – Harry S.
A – Take a look at the iShares Core Dividend Growth ETF (NYSE: DGRO). It invests in U.S. companies with a sustained history of dividend growth. It’s a broadly diversified portfolio (407 holdings) of blue-chip stocks such as JPMorgan Chase, Johnson & Johnson, ExxonMobil, AbbVie, and Apple.
Distributions are paid quarterly and are usually between $0.30 and $0.40 a unit (figures in U.S. currency). Total payments in 2024 were $1.105, for a trailing yield of 1.7%. The total return for the year to Jan. 31 was 19.2%, and the ETF has generated a very good 10-year average annual compound rate of return of 12.2%. The MER is very low at 0.08%.
Q – As a Canadian investor, are there any caveats in buying GICs in U.S. dollar accounts and TFSAs? – Alex S.
A – The only one I can think of is that you will typically receive a lower rate on a U.S. dollar GIC than on one denominated in Canadian dollars. For example, Tangerine Bank (owned by Scotiabank) was paying 3.55% annually on a five-year Canadian dollar GIC at the time of writing. The rate on a comparable U.S. dollar GIC is slightly less at 3.35%. That’s not much, but if you’re investing a lot of money it adds up.
Q – My mother, 84, has a healthy RRIF containing mostly blue-chip U.S. and Canadian dividend paying stocks. Her non-registered account has enough cash to easily fund her lifestyle for 4-5 years.
Should she take the minimum annual RRIF withdrawal amount in cash (sell stocks + accrued dividends) or take stocks in kind into her non-registered account? U.S. or Canadian stocks or both?
If yes, should she do that at the beginning of the year (now) or near the end of the year? – Peter H.
A – From a tax perspective, it doesn’t matter if she withdraws cash or stocks. Any shares withdrawn will be at market value for tax purposes. But if she intends to keep the same shares once they come out of the plan, then don’t sell them within the RRIF as this would trigger two sales commissions – one within the plan on the sale and another outside the plan on the repurchase.
I suggest focusing new purchases on U.S. stocks as I think they will outperform the TSX given that President Trump has implemented tariffs on Canadian imports.
As for beginning or end of year, I’d wait until year-end as that would allow for an extra 12 months of tax-deferred growth within the RRIF.
Q – In a recent reply to a question about Brookfield, you indicate that BIP.UN and BIPC (Brookfield Infrastructure) are the same package in different wrappers. Why then are their returns so different? Which one would be the best one to own long term? – Michel D.
A – When BIPC, which is a corporation, was created in 2020, the expectation was it would trade in parallel to BIP.UN, which is a limited partnership. The purpose of BIPC was to make the company eligible for entities that were unable to invest in partnerships, such as some pension plans and other institutional investors. However, demand for the corporate shares proved to be stronger than expected, driving up the price. As I write, BIPC is trading about $12 higher than BIP.UN on the TSX.
Since both pay the same dividend, this means the yield on BIP.UN is higher, at 4.85%, compared with 3.8% BIPC. As to which to choose, it depends on your goals. If cash flow is the priority, go with BIP.UN. If you prefer capital gains, BIPC looks like the better bet.
Q – I’m substantially overweighted in equities in our retirement accounts. For rebalancing towards fixed income, do you have some suggestions for the current situation?
Our main bond investments right now are iShares Convertible Bond Index ETF (TSX: CVD) and RBF5250 – RBC PHN Short Term Bond and Mortgage Fund (class F). – Paul P.
A – CVD invests in convertible bonds, which means they can be switched to common stock in the issuing company if specific conditions are met. These bonds are designed to provide interest income while offering a potential capital gains upside. The fund did well in 2024, gaining 13%, but that’s not indicative of long-term performance. The average annual compound rate of return since inception in 2012 is just under 4%.
The PHN fund is very low risk, and I have always liked it for conservative accounts. It won’t make you rich – the average annual compound rate of return since the fund was launched in 2007 is 2.7%. But it will protect your money in difficult times.
As things stand right now, I would be thinking about two things. First, the likelihood that Canadian interest rates will fall more, especially given the Trump administration’s tariffs on our exports. Second, the near- to mid-term future of the loonie. It’s likely to lose more value against the greenback if a trade war develops.
If you are prepared to take more risk, you may want to consider the iShares U.S. High Yield Bond Index ETF (CDN-hedged) (TSX: XHY). It provides U.S. dollar exposure and gained 6.65% in 2024. It’s ahead 1.85% this year (to Feb. 28). This fund can offer superior fixed-income returns, but it is vulnerable in bad markets – it lost 11.5% in 2022.
If your goal is simply to preserve capital, then stick to short-term bond funds. The iShares Premium Money Market ETF (TSX: CMR) is also worth considering. – G.P.
If you have a money question you’d like to ask, send it to gordonpape@hotmail.com and write Fund Library Question on the subject line. I can’t promise a personal reply but I’ll answer as many questions as possible in this space.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
Follow Gordon Pape on X at X.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.
Notes and Disclaimer
Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
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