A 3.3% yield may not look flashy — but it’s built to last decades

A 3.3% yield may not look flashy — but it’s built to last decades. The iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (TSX: CDZ) holds 96 Canadian companies that have increased their dividends for at least five consecutive years. That focus on dividend growth, not just current payout, makes it a rare vehicle designed for long-term income durability.

High-yield funds often rely on leverage or covered call strategies that inflate payouts in the short term but fail when markets turn. CDZ avoids those traps. Its trailing 12-month yield sits at 3.3%, with income paid monthly. More importantly, the composition of that income is tax-efficient: most of it comes from eligible Canadian dividends, with smaller portions from capital gains and return of capital. There is little exposure to foreign or ordinary income, making CDZ a strong fit for taxable accounts.

The trade-off is cost. CDZ carries a 0.66% management expense ratio — higher than basic index ETFs — which chips away at both income and compounding returns over time. But the structure delivers where it counts. Over the past five years, the ETF has generated an annualized return of 12.3%, proof that a growing, reinvested dividend stream can build real wealth. For investors who want passive income they can rely on for decades, CDZ is built to outlast the yield chasers.