Seize Steady Income with TUSB-U.TO: A Rising Rate Winner

In a market where bond investors face the dual challenges of rising rates and volatile yields, the TD Select U.S. Short Term Corporate Bond Ladder ETF (TUSB-U.TO) emerges as a compelling income machine. With a 5.14% dividend yield and consistent monthly distributions, this ETF offers investors a rare blend of safety and income generation in an environment where traditional fixed-income assets struggle. Here’s why it deserves a spot in your portfolio now.

The Dividend Machine: 5.14% Yield with Monthly Payouts

TUSB-U.TO’s current 5.14% dividend yield outpaces most savings accounts and short-term bond funds, offering investors a steady income stream. The ETF distributes dividends monthly, with the latest payout of $0.04 per share set for June 6, 2025 (ex-date May 30). This consistency has been a hallmark of the fund: distributions have remained stable at $0.04 per share since at least March 2025, as seen in recent filings.

For retirees or income-focused investors, the ability to lock in $0.04/month per share while preserving capital is a powerful advantage. The fund’s low expense ratio of 0.28% ensures minimal friction on returns, making it a cost-effective choice.

The Laddered Strategy: Safeguarding Against Rising Rates

TUSB-U.TO’s short-term corporate bond ladder is its secret weapon. The fund invests in U.S. corporate bonds with maturities spanning 1–5 years, creating a staggered portfolio that reduces interest rate sensitivity. Unlike long-term bonds, which see prices plummet when rates rise, short-term maturities allow the fund to reinvest in higher-yielding bonds as rates climb.

This structure also mitigates reinvestment risk. As bonds mature, proceeds are reinvested into new issues at prevailing rates—meaning investors benefit from the upward trajectory of yields. While the fund’s exact duration isn’t disclosed, its focus on 1–5-year maturities suggests a duration of 2–3 years, far shorter than the 5–7 years typical of intermediate-term bond funds.

The fund’s inclusion of non-investment-grade debt (high-yield bonds) adds a yield-enhancing layer, though this introduces moderate credit risk. However, the laddered approach ensures diversification, spreading exposure across sectors and maturities.

Outperforming in a Rising Rate Environment

The Federal Reserve’s aggressive rate hikes have spooked long-duration bond investors, but TUSB-U.TO has shown resilience. As of May 2025, the ETF’s year-to-date (YTD) return of 2.82% outperformed the Bloomberg Global Aggregate CAD Hedged Index’s 0.62%, proving its ability to navigate volatile markets.

In a scenario where rates stabilize or rise further, TUSB-U.TO’s short-term focus and monthly reinvestment opportunities could fuel above-average income growth. Meanwhile, its 99.85% bond allocation (with minimal cash) keeps capital actively deployed, avoiding the drag of idle reserves.

Why Act Now?

1. Income at a Premium: A 5.14% yield is rare in today’s low-yield world.
2. Monthly Cash Flow: Perfect for investors seeking regular payouts.
3. Rate-Resistant Design: Short-term maturities shield against price declines.
4. Low Costs: The 0.28% expense ratio is competitive for actively managed ETFs.

Risks to Consider

• Credit Risk: Exposure to non-investment-grade bonds could amplify losses in a recession.
• Liquidity: While the fund’s $11.35M AUM is modest, its 30-day average daily volume of 862 shares ensures tradability.
• Interest Rate Volatility: Even short-term rates can cause temporary price dips, though reinvestment should offset this over time.

Final Call: Act Before Rates Climb Further

TUSB-U.TO is positioned to thrive as rates stabilize or edge higher. Its high yield, monthly payouts, and laddered defense against volatility make it a must-own income tool for 2025. With a dividend yield 2x that of the average short-term bond ETF, this is no time to wait.

Invest now to secure this income stream before yields rise further—or competition pushes the price up. For portfolios needing steady cash flow without excessive risk, TUSB-U.TO is your ladder to better returns.

Disclaimer: Past performance does not guarantee future results. Always review fund details and risks before investing.