TSX Dividend ETFs Crush Market With Strong Gains

The Toronto Stock Exchange reached multiple record highs in August 2026, with its latest milestone on August 12. Among Canadian dividend exchange-traded funds (ETFs) that are outperforming the broader market are TD Canadian Bank Dividend Index ETF (TBNK), iShares S&P/TSX Composite High Dividend Index ETF (XEI), and BMO Canadian Dividend ETF (ZDV). These three funds have delivered strong price gains this year, with monthly distributions making them a compelling option for investors seeking passive income and growth.

TBNK focuses on Canada's banking sector, with particular emphasis on the Big Six banks. It uses a rules-based weighting methodology that gives greater weight to banks with higher dividend growth. Royal Bank of Canada and Canadian Imperial Bank of Commerce are currently the top two holdings, accounting for 28.3% and 23.9% of the fund respectively. TBNK has gained 35.2% year to date and 65.8% over the trailing one-year period.

XEI spans all 11 primary sectors of the TSX, making it an all-weather fund. Financials, energy, and utilities carry the heaviest sector weights at 31.9%, 28.93%, and 13%, respectively. XEI has advanced 26.7% year to date and offers a 3.4% yield with monthly distributions.

ZDV invests in Canadian dividend-paying stocks selected for strong fundamentals, long-term capital appreciation potential, and sustainable dividends. The fund follows a rules-based, yield-weighted methodology that prioritizes dividend yield over company size or total market value. It holds 61 stocks, with no exposure to the technology sector. ZDV has risen 25% year to date and yields 2.7% with monthly distributions.