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The TSX This week saw a strong start with a gain of 1.09% (201.17 point) Monday and nine of the 11 primary sector sectors moving forward. As oil prices rose above US$100/barrel once again, energy stocks (+3.57%), led the charge. The investment landscape is still volatile as governments battle rising inflation.
Investors continue to look for ways to protect their capital and generate income. If you’re new to the stock market, investing in individual stocks presents a higher risk. ETFs are recommended by financial advisors for beginners.
Although most ETFs will be underperforming in 2022 because of the negative market sentiment, there are still ways to ride out the dips and spikes with one fund. More importantly, you’ll still collect monthly passive income. You have many options with the TSX depending on what you prefer and how risk-averse you are. You can either choose from a variety of funds or be sector-specific.
This is the year’s top-of-mind pick. iShares S&P TSX Capped Energy Index ETF (TSX:XEG). The favorable pricing environment has allowed the energy sector to continue its dominance in 2022. XEG is a better performer than the sector with +32.22% versus -30.36%.
The trailing 1-year price return for shares is incredible at +74.26%, with a cost of $13.81 per share The dividend yield for those who invest now is 3.21%. XEG replicates the performance of the S&P/TSX Capped Energy Index. Its investment objective aims to provide long-term capital gains to investors.
Currently, stocks of oil & gas exploration and production (58.86%) and integrated oil & gas (39.59%) companies comprise the bulk of the holdings. Suncor Energy (23.83%), Canadian Natural Resources (25.04%), and Suncor Energy (23.83%), are the top two holdings from the total 28 energy stocks.
Canadian Financial Monthly Income from iShares ETF The solid pick for TSX:FIE is despite its underperformance (-14.95% in the past year). Apart from the predominantly financial stocks the dividend yield is a healthy 7.17%. The largest percentage weights are held by banks (50.43%), and insurance companies (22.11%).
FIE has exposure to other sectors like diversified financials, energy, real estate, and utilities, although it’s less than 8%. Another unique feature of this ETF is that the holdings aren’t limited to banking, insurance, and asset management firms. One-third of the holdings is in preferred shares or bonds. It is also reasonable at the current price of $6,76
Invesco Canadian Dividend ETF The ETF (TSX:PDC), primarily invests Canadian equities. As of the writing of this article, the ETF outperforms the broader market by -4.21% versus 12.38%. The attractive dividend offer of 4.15% comes in at $30.37 per sytem.
PDC currently holds 44 stock shares, with financial (46.7%), energy (22%), utilities (14%) and telecommunications (12.2%) sectors having the highest representations. Fortis, BCE?, and TELUS These are some of the most resilient dividend stocks in market downturns.
Enbridge The Bank of Montreal The top two holdings are PDC and TD. PDC’s total return of 145.67% (9.40% CAGR) in 10.01 years is very decent for an ETF.
Ideal for beginners
The ETFs that are in focus are perfect for beginners. These ETFs are a great way to earn passive income while reducing market volatility.