Building a Resilient Portfolio With Canadian Dividend Aristocrats in 2025

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Written by Brian Paradza, CFA at The Motley Fool Canada

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Canadian investors face an uncertain 2025 as the United States threatens to ignite another trade war battle with hefty tariffs on Canadian goods. However, uncertainty is the order of every investor’s day, and smart investors always prepare for bumpy economic rides by building resilient portfolios.

Building a resilient investment portfolio is critical. One proven resiliency strategy is focusing on dividend-paying stocks, particularly Canadian Dividend Aristocrats. These top TSX dividend stocks have demonstrated a remarkable commitment to sharing business profits with shareholders, making them a cornerstone for long-term growth and financial stability. They could regularly pay you respectable sums of money, even during periods of economic turbulence.

Canadian Dividend Aristocrats are TSX dividend stocks that have consistently raised their payouts every year for at least five years. While the U.S. stock market has a higher “Aristocrat” threshold of 25 years, achieving the five-year feat in the Canadian market, with its smaller economy, is a significant accomplishment. It signals financial strength, operational stability, and an unwavering dedication to rewarding investors.

These companies’ business models have proven their capacity to survive economic shocks, and they will most likely survive others in the future. As with all equity investments, there won’t be any guarantees, but the Aristocrats may continue to pay you valuable dividends through trying financial times.

To create a resilient portfolio, Canadian investors may scoop up a ready-made diversified portfolio of Canadian Dividend Aristocrats through a professionally managed exchange-traded fund (ETF).

Enter iShares Canadian Dividend Aristocrat Index ETF (TSX:CDZ).

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iShares Canadian Dividend Aristocrat Index ETF offers investors diversified exposure to a portfolio of high-quality TSX dividend-paying stocks. Its underlying index screens for large, established Canadian companies that increased ordinary cash dividends every year for at least five consecutive years.

The ETF has a large portfolio with more than $980 million in assets under management. The portfolio is diversified across 92 different securities. Financial sector stocks make up nearly a third of the portfolio weight, followed by energy at 11.3%, industrials at 10.8%, and utilities at 10.8%. The top 10 holdings constitute 26.2% of the portfolio. Holdings appear well diversified across Canadian economic sectors and individual stock positions.

The ETF pays monthly distributions. Over the past three months, the most recent monthly dividends averaged $0.109 per share, and they should yield 3.7% annually.

Given a management expense ratio (MER) of 0.66%, investors may expect to incur about $6.60 in expenses for every $1,000 invested in the ETF.

Investors who bought the iShares Canadian Dividend Aristocrat Index ETF and held it over the past decade could have grown a $10,000 investment into more than $19,700, with dividend reinvestment.

While the CDZ ETF offers instant diversification within the Canadian Dividend Aristocrat universe, it’s still crucial to consider your overall portfolio’s asset allocation. Even better, individual investors have room to cherry-pick and choose the best-placed high-conviction winners among the 92 individual stocks in the ETF.

Among the communications industry stocks, you have five Dividend Aristocrats to choose from. However, BCE stock is likely to fall off the list soon as it halts dividend increases. There are 10 consumer staples stocks to choose from. Energy stocks have nine representatives, while 21 financial stocks in the ETF remain available to check out for 2025. All sectors of the Canadian economy have proxies present, and you could build a long-term, well-diversified core portfolio of Dividend Aristocrats with them.

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The post Building a Resilient Portfolio With Canadian Dividend Aristocrats in 2025 appeared first on The Motley Fool Canada.

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Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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