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Quick verdict: Choose XEI if you want the slightly broader iShares Canadian dividend ETF with 75 holdings and a higher recent published yield figure. Choose VDY if you prefer Vanguard and are comfortable with a more concentrated Canadian dividend portfolio led by banks and energy. Both currently list a 0.22% MER, both pay monthly, and neither should be your entire portfolio.
When comparing VDY vs XEI, you are not choosing between a dividend ETF and a growth ETF. You are choosing between two Canadian dividend ETFs with similar fees, monthly distributions, and heavy exposure to Canada’s dividend-paying sectors.
That makes the decision more about construction than cost. VDY is the Vanguard option with a concentrated high-dividend tilt. XEI is the iShares option with more holdings and a slightly different index methodology.
VDY vs XEI: side-by-side comparison
| Feature | VDY | XEI |
|---|---|---|
| Full name | Vanguard FTSE Canadian High Dividend Yield Index ETF | iShares S&P/TSX Composite High Dividend Index ETF |
| Provider | Vanguard Canada | BlackRock iShares |
| Benchmark | FTSE Canada High Dividend Yield Index | S&P/TSX Composite High Dividend Index |
| Inception date | November 2, 2012 | April 12, 2011 |
| Management fee | 0.20% | 0.20% |
| MER | 0.22% | 0.22% |
| Fund assets | About $7.5B CAD | About $3.8B CAD |
| Holdings | 61 stocks | 75 holdings |
| Recent yield | Equity yield about 3.4% | Distribution and 12-month trailing yield around 3.70% |
| Distribution frequency | Monthly | Monthly |
| Best fit | Vanguard investors comfortable with a concentrated Canadian dividend tilt | Investors who want a broader Canadian dividend ETF at the same MER |
Source note: VDY data comes from the official Vanguard VDY product page and April 30, 2026 VDY factsheet. XEI data comes from the official iShares XEI product page and April 2026 XEI factsheet. ETF data changes, so verify current figures before investing.
What VDY holds
VDY tracks the FTSE Canada High Dividend Yield Index. Vanguard’s factsheet describes the benchmark as a market-cap-weighted index focused on dividend income, with constituents selected from the FTSE Canada All Cap Domestic Index.
In practice, VDY is dominated by the parts of Canada that pay large dividends: banks, pipelines, energy producers, utilities, telecoms, and insurers. As of Vanguard’s April 30, 2026 factsheet, VDY’s sector exposure was about 56.0% financials and 30.2% energy.
That concentration is both the appeal and the risk. You get a strong Canadian dividend profile, but you are making a very large bet on a small number of Canadian sectors.
What XEI holds
XEI tracks the S&P/TSX Composite High Dividend Index. BlackRock describes it as a low-cost ETF that pays monthly dividend income and is designed as a long-term foundational holding.
As of the April 2026 iShares factsheet, XEI held 75 securities. Its top holdings included Suncor Energy, Toronto-Dominion Bank, Royal Bank of Canada, TC Energy, Enbridge, Canadian Natural Resources, Nutrien, Bank of Montreal, CIBC, and Bank of Nova Scotia.
XEI is still a Canadian dividend ETF, so it is not globally diversified. But compared with VDY, its 75-holding portfolio gives it a slightly broader feel.
The main differences between VDY and XEI
1. XEI is broader
The most practical difference is breadth. XEI lists 75 holdings, while VDY is more concentrated. That does not automatically make XEI better, but it does reduce the feeling that a small handful of names are doing all the work.
2. VDY is more concentrated in financials and energy
VDY’s current factsheet shows a very heavy combined weighting in financials and energy. That can be great when Canadian banks and energy stocks are strong. It can be painful when those areas lag.
3. Recent yield favours XEI
Recent official data showed XEI with a higher published yield figure than VDY. Do not treat that as permanent. ETF yields move as prices and distributions change, and providers do not always present yield metrics in exactly the same way.
Fees and MER
Fees are tied. VDY and XEI both currently list a 0.20% management fee and a 0.22% MER.
On a $100,000 investment, a 0.22% MER is about $220 per year before trading costs. If you want to model the long-term dollar impact, use the ETF fee drag calculator.
Performance considerations
VDY and XEI should often be influenced by the same broad forces: Canadian bank earnings, oil and gas prices, interest rates, dividend policy, and investor appetite for income stocks.
Their performance can differ because the indexes select and weight stocks differently. A more concentrated fund can outperform when its biggest positions are working and underperform when they are not.
The bigger warning is that dividend yield is not total return. A high yield does not help much if the underlying price falls or the portfolio is too concentrated for your risk tolerance.
Dividends and distributions
Both VDY and XEI pay monthly distributions. That is useful for investors who want cash flow or like seeing regular income arrive in the account.
For accumulation investors, monthly distributions are less important. You can reinvest them, but you should still care about total return, diversification, and whether a dividend tilt fits your full portfolio.
Tax and account considerations
Because these ETFs hold Canadian dividend-paying stocks, they can be attractive in non-registered accounts where eligible Canadian dividends may receive favourable tax treatment. The exact tax breakdown can change each year, so check the providers’ tax documents.
In a TFSA, distributions and growth are tax-free. In an RRSP, taxes are deferred until withdrawal. For account choice basics, see TFSA vs RRSP.
Who should choose VDY?
- You prefer Vanguard ETFs.
- You want a concentrated Canadian high-dividend ETF.
- You are comfortable with a heavy financials and energy tilt.
- You already understand that dividend ETFs are not the same as broad-market Canadian ETFs like VCN or XIC.
Who should choose XEI?
- You want a Canadian dividend ETF with more holdings.
- You prefer iShares or already use iShares ETFs.
- You like monthly income but want a slightly broader dividend basket.
- You are comparing dividend ETFs as an income tilt, not as your whole portfolio.
Should you hold both VDY and XEI?
Most investors do not need both. VDY and XEI overlap in purpose and hold many of the same types of Canadian dividend stocks.
If you hold both, you are mainly blending index methodologies. That can be fine, but it is usually unnecessary. A simpler approach is to choose one dividend ETF and pair it with broader Canadian, U.S., or global equity exposure.
If you are buying ETFs regularly, the brokerage matters too. Questrade can make sense for Canadian DIY investors who want broad account support, ETF investing, and CAD/USD flexibility. You can open a Questrade account here. Bonus terms and platform pricing can change, so compare current details before signing up.
For the brokerage side of the decision, see our Wealthsimple vs Questrade comparison. If you are new to ETF orders, start with how to buy stocks in Canada.
Final verdict
XEI gets the slight edge for most investors comparing VDY vs XEI because it has more holdings and a higher recent published yield figure at the same listed MER. VDY still makes sense if you prefer Vanguard and knowingly want the more concentrated Canadian bank-and-energy dividend profile.
The key is to use either ETF as a tilt, not as an entire investment plan. Canadian dividend ETFs can be useful, but they are not a substitute for a diversified global portfolio.
If you are deciding between Canadian dividend income and U.S. large-cap growth instead, see our VDY vs VFV comparison.
VDY vs XEI FAQ
Is VDY better than XEI?
VDY is better if you want the Vanguard Canadian dividend ETF and are comfortable with heavier financials and energy exposure. XEI is better if you want a slightly broader high-dividend basket with the same listed MER.
Does VDY or XEI have a higher yield?
Recent official data showed XEI with a higher published yield figure than VDY, but yields change with prices and distributions. Always check current provider pages before investing.
Do VDY and XEI pay monthly distributions?
Yes. Both VDY and XEI pay monthly distributions, which is one reason they are popular with income-focused Canadian investors.
Should I hold both VDY and XEI?
Most investors do not need both. They both target Canadian dividend stocks, so the overlap is meaningful even though the holdings and weights are not identical.
Is VDY or XEI better in a non-registered account?
Both can be tax-efficient in a non-registered account because much of the income is Canadian dividends, but the exact tax mix can change. Check annual tax characteristics and consider personal tax advice.
Are VDY and XEI good core ETFs?
They can be useful income tilts, but they are not ideal as an entire portfolio. Both are concentrated in Canada and lean heavily into dividend-paying sectors.
Disclaimer: This is general information, not personalized financial advice. ETF fees, holdings, yields, and distributions can change. Check the current fund pages and consider speaking with a qualified financial professional before investing.
Last updated: May 30, 2026
