Securing Income in a Volatile Market with TUED.U: USD Exposure Meets Active Dividend Strategy

The global economy remains in a state of flux, with interest rates, geopolitical tensions, and inflation casting uncertainty over traditional income-generating assets. For Canadian investors seeking steady returns while navigating this volatility, the TD Active U.S. Enhanced Dividend ETF USD (TUED.U) emerges as a compelling option. With its recent $0.054 dividend declaration and a forward yield of 3.59%, this actively managed ETF offers a rare blend of currency-protected income growth and exposure to U.S. equities. Here's why it could be a cornerstone of your income strategy—and why timing matters.

The Case for TUED.U: Active Management in a Passive World

While passive ETFs track broad indexes, TUED.U stands out through its active management strategy, which selects U.S. companies with strong dividend histories and growth potential. This approach aims to outperform passive peers like the S&P 500, which may include low-yielding or dividend-cutting firms. The ETF's monthly distributions—a rare feature in the ETF space—provide predictable cash flow, ideal for retirees or income-focused portfolios.

Why USD Exposure Matters for Canadian Investors

Canadian investors often face a trade-off: CAD-hedged ETFs protect against currency swings but may dilute returns in a strong USD environment, while unhedged ETFs expose investors to exchange rate risks. TUED.U solves this dilemma by offering direct USD exposure without hedging costs. This makes it ideal for investors who:
- Want to avoid CAD erosion in a rising USD environment.
- Seek to diversify into U.S. equities while maintaining income discipline.
- Prefer monthly payouts over quarterly distributions common in passive funds.

Risks and Considerations: Navigating Volatility

No investment is risk-free. TUED.U's currency exposure means Canadian investors face fluctuations in USD/CAD rates. For instance, if the Canadian dollar strengthens, the CAD equivalent of distributions could shrink. Additionally, active management carries the risk of underperformance if portfolio selections lag the broader market.

The Bottom Line: Act Before July 8 to Lock in Income

The $0.054 dividend declared on June 18, 2025, is payable on July 8, but investors must hold shares by the ex-dividend date of June 27 to qualify. With the ETF's forward yield of 3.59%—among the highest in its peer group—and its focus on income sustainability, this is a critical entry point.

For conservative investors, TUED.U can complement fixed-income holdings, while aggressive traders may use it to hedge against CAD weakness. Consider allocating a portion of your income portfolio to TUED.U, especially if you believe U.S. equities will outperform Canadian markets in the near term.

Final Recommendation: A Steady Hand in a Volatile Sea

In a market where stability is scarce, TUED.U combines active selection of high-dividend U.S. stocks, monthly income, and USD exposure—all at a management expense ratio (MER) likely competitive with passive peers. While risks exist, the ETF's focus on dividend sustainability and disciplined strategy make it worth considering. Don't miss the July 8 payout—act before June 27 to secure your slice of this currency-protected income stream.

Disclosure: This analysis is for informational purposes only. Investors should consult their financial advisor to assess how TUED.U fits their risk tolerance and goals.