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TD Active U.S. Enhanced Dividend ETF: A Steady Dividend Play Amid Market Volatility

Nathaniel StoneThursday, Apr 17, 2025 9:02 am ET

2min read

The TD Active U.S. Enhanced Dividend ETF (TUED) has declared a monthly dividend of CAD 0.078, reinforcing its reputation as a reliable income-generating vehicle for Canadian investors. With an ex-dividend date of March 28, 2025, and a payment date of April 4, this distribution highlights the ETF’s focus on delivering consistent cash flows while offering exposure to U.S. equities. But how does this dividend fit into the broader investment landscape, and what should investors consider before jumping in?

Dividend History and Growth

The CAD-denominated TUED ETF has a track record of monthly distributions, with the March 2025 dividend marking a notable increase. Over the past three years, the dividend per share has grown from CAD 0.051 in 2023 to CAD 0.078 in 2025—a 57% rise. This growth aligns with the fund’s strategy of actively selecting U.S. companies with strong dividend histories.

The forward dividend yield as of April 2025 stands at 3.59%, a compelling figure compared to broader market averages. However, investors should note that this yield is based on the most recent distribution and may fluctuate with share price movements. For context, the ETF’s annualized dividend over the past year was CAD 0.74 per share, translating to a 2.82% yield.

Key Considerations for Investors

Frequency and Consistency:
Monthly dividends provide steady income, which is particularly attractive for retirees or those seeking predictable cash flows. Unlike quarterly or annual payouts, this structure allows investors to reinvest or use dividends more frequently.
Tax Implications:
The ETF’s December 2024 distribution included a reinvested capital gain of CAD 2.80680 per unit, which was consolidated without changing unit counts. Such distributions may affect tax liabilities, as capital gains are taxed differently from dividends. Investors should monitor tax documents provided by TD Asset Management for accurate reporting.
Currency and Market Risks:
TUED invests in U.S. equities, exposing investors to currency fluctuations between CAD and USD. Additionally, the ETF’s performance is tied to U.S. market volatility, which could impact both dividends and share prices.

Competing with Peers

The USD-denominated version of the ETF (TUED.U) offers a lower dividend of USD 0.054, reflecting differing currency dynamics. While TUED.U’s yield is slightly lower (2.82% annually), it may appeal to investors seeking direct USD exposure. A comparative analysis of both classes could help determine which aligns better with an investor’s goals.

Risks and Challenges

Management Fees: The ETF’s Management Expense Ratio (MER) isn’t explicitly stated in available documents, but investors should review the prospectus to ensure fees don’t erode returns.
Active Management Drawbacks: While active selection aims to outperform passive funds, it also introduces the risk of underperformance if portfolio choices falter.
Dividend Volatility: The March 2025 dividend marked a sharp increase from prior months, suggesting potential variability. Investors should assess whether the fund can sustain such payouts over time.

Conclusion: A Solid, if Not Perfect, Income Option

The TD Active U.S. Enhanced Dividend ETF remains a viable choice for income-focused investors seeking exposure to U.S. equities. Its 3.59% yield and monthly distributions offer stability, while its active management may provide an edge over passive peers. However, investors must weigh this against currency risks, potential dividend fluctuations, and the need to diligence MERs and tax impacts.

Key data points reinforce this assessment:
- Dividend Growth: A 57% increase from 2023 to 2025 signals a strategy that prioritizes income generation.
- Tax Efficiency: The 2024 reinvested distribution underscores the importance of monitoring capital gains allocations.
- Competitive Yield: The 3.59% forward yield outpaces many Canadian fixed-income alternatives, even if it trails some high-yield U.S. ETFs.

For now, TUED appears best suited for investors who can tolerate moderate volatility and seek a blend of income and growth. As always, pairing this ETF with a diversified portfolio and staying attuned to official updates on ex-dividend dates (like the upcoming April 2025 date, which remains unconfirmed) will be critical to maximizing returns.

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