The BMO Global Dividend ETF Portfolio

Still no sign of a simple, globally diversified dividend ETF trading in Canadian dollars as we approach the midpoint of 2025. Anyone at iShares, Global X, or Vanguard want to step up and take a punt?

In the meantime, the DIY route is the way to go. Fortunately, you can put together a solid global dividend portfolio using just three ETFs from BMO Global Asset Management. Here’s how to do it.

Why BMO dividend ETFs?

I like BMO's dividend ETFs because they stick to a consistent, rules-based approach grounded in what my former editor David Dierking (of ETF Focus and now Lead-Lag Media) called the three pillars of dividend investing: growth, yield, and sustainability.

The BMO dividend ETFs start with a universe of large-, mid-, and small-cap stocks that meet basic size and trading volume requirements. From there, they remove anything that’s not a common equity, so no REITs and no preferred shares.

Next, they assess each company’s dividend payout using a forward-looking five-year grading system. They calculate the payout ratio (dividends divided by operating cash flow) and evaluate whether the company’s dividend is growing and sustainable over time. Companies are assigned a score from 0 to 5 based on this payout ratio trend, with more recent years weighted more heavily.

Once that screen is complete, they select the top 50 or 100 names with the highest dividend yields that also passed the sustainability and growth screens. The portfolio then weights these companies based primarily on yield, with a small tilt toward buybacks, and imposes caps by sector and individual stocks.

They reconstitute the list of eligible companies every December using updated fundamentals and only add new stocks that are in the top 80% for dividend yield. The portfolios are then rebalanced in June to get back to their target yield weightings.

Overall, it’s a straightforward, data-driven process that avoids yield traps and chases dividends with some discipline.

How to put it together

Here’s how I’d build this dividend-focused global portfolio using BMO’s ETFs: allocate 50% to the BMO US Dividend ETF (ZDY), 30% to the BMO International Dividend ETF (ZDI), and 20% to the BMO Canadian Dividend ETF (ZDV).

That’s roughly in line with global equity market weights, with a slight home-country tilt toward Canadian stocks to help reduce currency risk and improve tax efficiency in registered accounts.

Using this allocation, the portfolio’s weighted average management expense ratio (MER) comes out to 0.37%, and the weighted average yield is approximately 2.93%.

From January 2016 through April 2025, this combination of ETFs, rebalanced annually, produced a compound annual growth rate (CAGR) of 8.85%, compared to 10.33% for the iShares MSCI World Index ETF (XWD) over the same period.

I recommend holding this portfolio inside a registered account like a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP). That’s because the tax drag from dividend distributions can be significant in a taxable account.