Maximizing Dividend Returns with BMO S&P 500 Index ETF: Timing the Ex-Date and Sector Exposure

The BMO S&P 500 Index ETF (ZSP.U:CA) offers investors a straightforward way to tap into the dividend streams of one of the world's most influential equity benchmarks. With its quarterly distribution schedule and exposure to high-yield sectors, this ETF presents an opportunity to build consistent passive income—provided investors align their timing with key ex-dividend dates. Here's how to navigate its dividend calendar and leverage its sector strengths.

The Rhythm of Dividend Distributions

The ETF's ex-dividend dates follow a predictable quarterly pattern, typically falling in late March, June, September, and December. For example:
- 2023: Payouts occurred on March 29, June 28, September 27, and December 28.
- 2024: Dates included March 27, June 27, September 26, and December 30 (estimated).
- 2025: As of June 2025, the most recent ex-date was March 28, with an estimated December payout still pending.

Ask Aime: Why was BMO S&P 500 Index ETF's dividend payout on March 29, 2023?

Investors must own shares before the ex-dividend date to qualify for the upcoming payout. Missing this window means forgoing the dividend. Over the past two years, the dividend per share has gradually declined—from $0.23 CAD in late 2023 to $0.21 CAD in late 2024—a 4.55% reduction likely reflecting broader market conditions or shifts in the ETF's underlying holdings.

Sector Exposure: Where the Yield Lies

The ETF's dividend strength stems from its exposure to the S&P 500's highest-yielding sectors, particularly utilities, consumer defensive, and financial services. These sectors have thrived in 2025, outperforming tech-heavy peers. For instance:
- Utilities (e.g., AES Corp, Consolidated Edison) contributed a 10.7% year-to-date gain, leveraging stable demand and inflation-resistant pricing.
- Consumer defensive (e.g., United Parcel Service, Walgreens Boots Alliance) and financial services (e.g., United Bankshares) sectors also delivered strong returns, aided by consistent cash flows and dividend histories.

The S&P 500 Dividend Leaders Index, which concentrates on the 100 highest-yielding companies, surged 9.0% in Q1 2025—far outpacing the broader index. This outperformance underscores the advantage of focusing on sectors with resilient dividend policies.

Current Yield and Market Dynamics

As of June 20, 2025, ZSP.U's trailing 12-month (TTM) dividend yield stands at 0.76%, with shares trading at $89.85. While this is lower than the March 2025 ex-date yield of 0.99%, the ETF remains competitive compared to the S&P 500's broader dividend yield of 1.2%. The dip reflects the reduced payout per share, but it also aligns with the ETF's passive mandate to mirror the S&P 500's composition, including its tech-heavy weighting.

Investors should note that the ETF's dividend yield is inherently tied to market price fluctuations. A rising share price (as seen in 2025's $89.85 close versus $87.50 in early 2024) can compress yields, making timing even more critical.

Investment Strategy: Timing and Diversification

To maximize returns, consider these steps:
1. Track Ex-Dividend Dates: Use the historical pattern to estimate future dates (e.g., late December 2025). For confirmed dates, aim to purchase shares one trading day before the ex-date to ensure eligibility.
2. Reinvest Strategically: Reinvest dividends to compound growth, especially in sectors poised for long-term stability.
3. Balance Sector Exposure: Pair ZSP.U with complementary investments in high-yield sectors (e.g., a dedicated utilities ETF) to amplify income potential.

While ZSP.U's yield may not be the highest in the ETF universe, its diversification across 500 stocks and its alignment with dividend-rich sectors make it a solid core holding. For income-focused investors, the ETF's blend of quarterly payouts and sector resilience offers a sustainable path to steady returns.

Conclusion

The BMO S&P 500 Index ETF is a prime tool for investors seeking to harness the dividend power of the S&P 500's top-yielding sectors. By timing purchases around ex-dividend dates and capitalizing on the defensive strengths of utilities and financials, investors can build a robust income stream. While market volatility may pressure yields, the ETF's passive design and sector exposure position it as a reliable cornerstone for dividend-driven portfolios.

Final Advice: Hold ZSP.U for the long term, but keep an eye on ex-date schedules to optimize income. Pair it with sector-specific ETFs to amplify returns and mitigate risk.