What I’m Buying: VDY (Canadian High Dividend Yield ETF)

Vanguard Canada

Vanguard Canada

The problem that’s not really a problem

I’ve talked a bit about how I’ve been sitting on almost $10,000 of cash, waiting for the market to crash so I can buy. I actually like to have all my cash invested, along with around $30,000 on the margin, so that was $40,000 I didn’t have put to good use. Now, I do realize that having too much cash isn’t really a real problem, but it was stressing me out to not have that money working for me.

I’m all about money making me more money.

What I Bought: VDY- A Canadian High Dividend Yield ETF

I’ve made a move and bought 300 shares of Vanguard’s VDY: Canadian High Dividend Yield ETF for a total of almost $10,000. The remaining $30,000 that I’d like to have invested will wait until a market crash of some kind when I’ll be buying everything in sight.

Why I Bought VDY

Diversification

I own almost nothing from Canada with the exception of BMO (Bank of Montreal) and since I’ve moving back there soon, I want to get more exposure to the Canadian market. As Andrew Hallam mentions in his book, “The Global Expatriate’s Guide to Investing: From Millionaire Teacher to Millionaire Expat” it makes sense to have a good amount of your portfolio in the country you are living in because that is where you are earning your money and paying your bills.

Yeah Dividends! Boo to Lack of Knowledge

I love dividend paying stocks, but have not done the research necessary to be able to pick individual Canadian companies (I am far more knowledgeable about the American markets). Buying a Canadian high dividend yield ETF was a good solution because it contains 75 of the top companies in Canada, including the big banks, of which I’m a huge fan of. The yield is 3.35%, which is high enough for me to buy.

It was Fairly Valued

It wasn’t too “expensive.” The average P/E ratio of all the companies in this ETF at the time of purchase was 15.6, which very generally signifies fair value.

Vanguard is a Stellar Company

I like Vanguard (a lot!) and am very happy that they moved into Canada into recent years. VDY has a very fair management fee of 0.20%.

For more of my thoughts on personal finance and investing, check out: The Wealthy English Teacher: Teach, Travel, and Secure Your Financial Future. Click this link to see my complete dividend stock portfolio.

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