ETFs Like RDE Help Capture Canada’s Top Dividend Payers
The Purpose Core Equity Income Fund (RDE) offers investors exposure to Canada’s strongest dividend-paying firms, balancing quality, yield, and long-term growth.
Dividend investing isn’t a new idea for investors, but it is perhaps underappreciated because of its simplicity. The significance and influence of dividends when investing over a long-term horizon has been well established; however, what is equally important is maintaining exposure to companies that have demonstrated their commitment to (i) paying dividends consistently and (ii) growing them over time.
In examining the Canadian dividend landscape, the 2024 Dividend Forecast Overview published by S&P Global provided some noteworthy insights, such as the ten largest dividend-paying companies accounting for 57% of the dividends in the S&P/TSX 60. In 2024, these firms were estimated to have paid approximately US$37.07 billion in dividends. Many of these firms are familiar names to Canadian investors, reflecting their seminal role within the broader economy. For 2025, nine of these firms are expected to increase their distributions.
According to S&P Global Market Intelligence, Canadian dividends are projected to yield a median of 3% forward. However, the table below indicates that the largest dividend-paying companies provide an above-average yield.
Investing in Dividend Growth with Purpose Core Equity Income Fund
For Canadian investors focused on Canadian dividend growth-focused firms, the Purpose Core Equity Income Fund (Ticker: RDE) provides exposure to large capitalization, dividend-paying stocks of Canadian firms with the intention to outperform the Canadian equity market over a period longer than 5 years.
The fund's investment approach follows a four-step process. First, a top-down macro analysis is performed to incorporate market cycle frameworks into portfolio management, guiding factor, sector, and risk exposures. Second, the fund evaluates dividend quality by assessing dividend health and growth potential. It is important to note that the manager has the ability to include U.S. dividend payers to enhance diversification. Third, fundamental analysis is used, with a strong focus on free cash flow as a key quantitative factor. Lastly, risk analysis is conducted to build the portfolio and manage risk exposure, including monitoring for signs of deterioration.
In examining the fund's performance over both the short term (i.e., year-to-date) and long term (i.e., 5 years), investors have benefited, demonstrating the effectiveness of the fund’s investment strategy and the positive effect of dividends on their portfolio.
RDE’s impressive performance over the years can be attributed to its exposure to the financial and energy sectors, which hold many of Canada’s largest firms. As noted in the firm’s recent market commentary, the fund’s exposure to Barrick Gold, Alphabet, and Finning International has benefited the fund, given the recent theme of strong commodity (i.e., gold) demand, rising technology earnings, and healthy infrastructure spending; an indication that, though the fund has a dividend focus, the underlying holdings are still high-quality firms that have strong and profitable business operations.
Takeaway
Many ETF solutions are available for Canadian investors interested in dividend investing. RDE provides investors with full exposure to quality, high‑dividend stocks that are well-positioned to handle market volatility and grow over the long term.
Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
