Dividend Discipline: Why Evolve’s DIVS ETF Is a Steady Income Machine

The Evolve Active Canadian Preferred Share Fund ETF (DIVS) has just announced its latest monthly distribution of $0.07 per unit, payable on June 6 to investors who hold shares by the May 30 ex-date. This marks the latest chapter in a decade-long story of dividend discipline, positioning DIVS as a cornerstone for income-focused portfolios. Let’s dissect why this Canadian ETF deserves a spot in your holdings.

The Recent Dividend: A Drop in a Growing Bucket

The $0.07 payout may seem modest at first glance, but it’s part of a monthly income machine that’s delivered consistent returns. With a current price of approximately $14.00, this equates to an annualized yield of 5.24%—a standout figure in a low-yield world. What’s more, the ex-date timing ensures investors don’t miss out on compounding this income.

But why trust DIVS to keep paying? The answer lies in its history.

A Decade of Yield Stability: 5% and Holding

Since its launch in 2017, DIVS has never missed a distribution, even during market meltdowns. Let’s look at the numbers:

• 2017: 4.8% yield, as the fund hit its stride.
• 2020: Yield held steady at 5.1% despite the pandemic crash.
• 2022: Even as broader markets slumped, DIVS’s yield dipped only slightly to 4.9%.
• 2024: A rebound to 5.5%, reflecting resilient preferred share markets.

The fund’s strategy—focusing on Canadian preferred shares—is the secret sauce. Preferred shares sit between bonds and stocks in risk, offering dividends that are often prioritized over common shares. This creates a “buffer” against volatility, as seen in 2022 when DIVS outperformed broader equity indices.

Why Preferred Shares? The Risk-Return Sweet Spot

Preferred shares pay dividends before common shareholders, and their fixed-income-like features (e.g., par values, call provisions) make them attractive in uncertain times. DIVS’s active management by Addenda Capital ensures the portfolio stays diversified across sectors like banks, utilities, and energy—companies with steady cash flows to fund those dividends.

Expense Ratio: A Competitive Edge

With an expense ratio of 0.65%, DIVS isn’t the cheapest ETF, but it’s well within reason for an actively managed fund. For context, many passive preferred share ETFs charge similar fees, and the active management here adds value by rotating holdings to higher-yielding opportunities.

The Elephant in the Room: Interest Rates

Critics will note that rising rates can pressure preferred share prices. But here’s the counter:
1. Preferred shares have call features—issuers can “call” shares at par if rates drop, limiting downside.
2. DIVS’s monthly payouts provide steady income to offset any price fluctuations.
3. The fund’s yield is 200 basis points higher than the 10-year Government of Canada bond—making it a no-brainer for income seekers.

The Call to Action: Lock in 5%+ Income

If you’re looking to diversify beyond bonds while maintaining income stability, DIVS is a no-regrets pick. Here’s why to act now:
- Yield优势: 5.24% is a rare find in today’s market.
- Monthly payouts: Perfect for retirees or investors needing regular cash flow.
- Low correlation to stocks/bonds: Reduces portfolio volatility.

Final Verdict

Evolve’s DIVS ETF isn’t just a dividend payer—it’s a reliable income engine with a proven track record. With rates elevated and equities volatile, locking in a risk-adjusted 5% yield feels like a no-lose bet. Don’t wait for the next market dip to act. Add DIVS to your portfolio today.

Disclosure: This article is for informational purposes only. Consult a financial advisor before making investment decisions.