Mackenzie Floating Rate Income ETF's (MFT) Attractive Dividend Yield in a Rising Rate Environment: A Resilient Income Play for 2025

In 2025, investors seeking income in a rising interest rate environment face a critical challenge: how to balance yield with resilience. Traditional fixed-income assets, such as bonds, often falter as rates climb, eroding returns and increasing volatility. However, the Mackenzie Floating Rate Income ETF (MFT) has emerged as a compelling alternative, offering a forward dividend yield of 7.36% as of July 26, 2025, while its floating rate structure insulates it from the risks of rate hikes. This article explores how MFT's unique design and consistent dividend growth make it a standout income play for 2025.

The Floating Rate Advantage: Built for Rate Hikes

MFT's core strategy revolves around floating rate loans, which are generally below investment grade but offer yields that exceed conventional fixed-income instruments. These loans adjust their interest rates periodically—often quarterly or semi-annually—based on reference rates such as SOFR or LIBOR. This mechanism ensures that the ETF's income stream remains aligned with current market conditions, even as central banks raise rates to combat inflation.

For example, as of July 2025, MFT's portfolio of floating rate loans has allowed it to maintain a forward dividend yield of 7.36%, a figure that outpaces most high-yield bond ETFs. In contrast, fixed-rate bonds face declining market values and stagnant yields in a rising rate environment. reveals a consistent monthly payout, with the ETF averaging 30% dividend growth over three years. This resilience is a direct result of its ability to pass on rate hikes to income-generating assets.

Diversification and Active Management: Mitigating Risk

MFT's appeal extends beyond its floating rate structure. The ETF is actively managed by the Mackenzie Fixed Income Team, which emphasizes diversification across sectors and geographies. Its portfolio of leveraged loans has a low correlation to traditional fixed-income assets, reducing systemic risk. This diversification, combined with active credit analysis, has allowed MFT to outperform peers like the Mackenzie US High Yield Bond Index ETF (QHY) and Mackenzie Global High Yield Fixed Income ETF (MHYB) in 2025.

underscores this point. While fixed-rate ETFs struggle with falling prices as rates rise, MFT's income remains stable or even grows. For instance, in July 2025, MFT declared a $0.10628 per unit dividend, reflecting its ability to capitalize on higher market rates. This consistency is rare in an environment where many income strategies falter.

Dividend Resilience: A Track Record of Growth

MFT's dividend history demonstrates its capacity to deliver sustainable income growth. Over the past three years, the ETF has achieved an average dividend growth rate of 30%, with notable spikes such as a 56.96% increase in November 2023 and a 7.08% rise in January 2025. Even during periods of decline, such as the 33.06% drop in February 2025, the fund's active management team has acted swiftly to stabilize payouts.

This resilience is not accidental. MFT's focus on high-yield, floating rate loans ensures that income streams adjust with market conditions. For example, in May 2025, the ETF's dividend dropped by 2.93% due to sector-specific pressures but quickly rebounded to $0.1016 per unit by July. Such agility is critical in a volatile rate environment, where fixed-income assets often lack flexibility.

Why MFT Outperforms in 2025

The ETF's success in 2025 can be attributed to three key factors:
1. Floating Rate Alignment: MFT's loans reset frequently, capturing rate hikes and shielding investors from fixed-income depreciation.
2. Active Credit Management: The Mackenzie team's proprietary analysis identifies undervalued loans and avoids overexposure to weak sectors.
3. Diversification Benefits: Low correlation with traditional bonds reduces portfolio risk, making MFT a hedge against broader market volatility.

Additionally, MFT's Sharpe Ratio and beta metrics highlight its superior risk-adjusted returns. With a Sharpe Ratio exceeding many peers, the ETF generates higher returns per unit of risk, while its low beta indicates reduced sensitivity to market swings. These metrics make MFT an attractive addition to income-focused portfolios, particularly for those wary of fixed-income's current limitations.

Investment Advice for 2025

For investors prioritizing income resilience in a rising rate environment, MFT offers a compelling case. Its 7.36% forward yield and 30% average dividend growth position it as a top-tier option for those seeking both income and capital preservation. However, due diligence is essential: investors should monitor the ETF's exposure to high-yield loans, which carry inherent credit risk.

A strategic allocation to MFT could serve as a core holding in a diversified income portfolio. Pairing it with lower-volatility assets, such as short-term treasuries or dividend-paying equities, can further enhance risk-adjusted returns. Given the Federal Reserve's projected rate trajectory for 2025, MFT's structure is uniquely positioned to thrive, making it a must-watch for income seekers.

In conclusion, Mackenzie Floating Rate Income ETF (MFT) exemplifies how innovative fixed-income strategies can deliver both resilience and yield in challenging markets. As 2025 unfolds, its floating rate structure and active management make it a standout choice for investors navigating the uncertainties of a rising rate environment.