Dynamic Active Preferred Shares ETF: Navigating Volatility with a Steady CAD 0.097 Dividend

The Dynamic Active Preferred Shares ETF (TSX: DXP) has emerged as a resilient income-generating vehicle for Canadian investors, recently announcing its April 2025 cash distribution of CAD 0.097 per unit. This monthly dividend, part of the ETF’s consistent payout strategy, underscores its focus on providing steady returns through active management. Below, we dissect DXP’s dividend history, performance metrics, and risks to assess its value in today’s market.

Dividend History: Stability Amid Sudden Shifts

DXP’s dividend trajectory reveals both consistency and strategic adjustments. For six years (2017–2023), the ETF maintained a stable monthly dividend of CAD 0.072, reflecting its disciplined approach to income distribution. However, late 2023 brought volatility: on December 28, 2023, dxp spiked its payout to CAD 0.2355—a 227% increase—before reverting to CAD 0.097 in January 2024 (a 58.8% drop). This abrupt shift likely responded to market pressures or fund performance dynamics, as dividends are declared at the manager’s discretion.

Since early 2024, DXP has stabilized at CAD 0.097 monthly, with no further cuts or hikes as of April 2025. This stability supports its 5.17% annualized yield (based on its CAD 22.51 closing price on April 16), making it a competitive income play.

Performance: Outperforming Through Active Management

DXP’s performance aligns with its mandate to track the S&P/TSX Preferred Share Index while leveraging active strategies. Over the past year, it delivered a 12.16% total return, outpacing the broader Canadian preferred share market. Since inception (January 2017), its average annual return of 5.68% underscores long-term resilience.

Morningstar ratings further validate its appeal: as of 2025, DXP earned 5 stars for 3- and 5-year performance in the Preferred Share Fixed Income category, ranking it among the top 10% of funds.

Key Considerations for Investors

1. Dividend Volatility Risks: While DXP’s post-2024 consistency is encouraging, its 2023–2024 swings highlight reliance on management’s discretion. Investors should monitor quarterly reports for potential adjustments.
2. Payout Ratio Uncertainty: The ETF’s payout ratio is listed as “not applicable,” likely due to its structure as an actively managed ETF rather than a traditional fund. This means dividends may reflect net income, capital gains, or other distributions, requiring careful tax planning.
3. Market Exposure: DXP’s focus on Canadian preferred securities ties its performance to interest rate movements and corporate credit quality. Investors should assess their risk tolerance for fixed-income volatility.

Conclusion: A Reliable Income Stream with Caution

The Dynamic Active Preferred Shares ETF (DXP) offers a compelling blend of income and active management, particularly for Canadian investors seeking monthly payouts. Its CAD 0.097 dividend since early 2024, paired with a 5.17% yield, positions it as a solid income generator.

However, investors must weigh this against its history of volatility and the lack of guaranteed distributions. With a 9.20% average dividend growth over three years and strong Morningstar ratings, DXP remains a viable option for portfolios prioritizing steady returns.

Final Take: For those willing to accept moderate risk, DXP’s monthly income stability and outperformance metrics make it a contender in the preferred share space. Monitor its next dividend announcement (estimated for May 2025) to gauge ongoing reliability.

Investment takeaway: DXP’s blend of active management and income stability shines, but investors should remain attuned to market shifts and quarterly reports.