Two High-Yield ETFs I’d Buy for Passive Income in 2026

If you’re building a passive income portfolio in 2026, a couple of exchange-traded funds on the TSX stand out because they deliver high monthly payouts by combining broad equity exposure with covered-call and modest leverage strategies — meaning you get cash flow even if prices aren’t soaring.

1. Hamilton Enhanced U.S. Covered Call ETF (TSX: HYLD)
This fund holds a diversified basket of U.S. equities and uses a covered-call strategy plus roughly 1.25× leverage to boost its income. By selling call options on the positions it owns, HYLD collects premiums that are passed on to holders as monthly distributions. That’s why it currently yields around ~12.5% annually, which is much higher than traditional dividend ETFs. The trade-off is that if broad U.S. markets rally strongly, HYLD’s upside will be capped because of the calls it has written — but in flat or moderate markets it converts volatility into reliable income.

2. Hamilton Enhanced Canadian Covered Call ETF (TSX: HDIV)
For Canadian exposure with the same high-income approach, HDIV is the counterpart to HYLD. It owns a diversified mix of Canadian stocks — heavy on financials, energy, utilities and gold producers — and also applies covered calls with modest leverage. That combination generates a high double-digit yield (around ~10.5%) with monthly payouts, which is attractive if steady cash flow is your priority. Like HYLD, the strategy sacrifices some capital appreciation in strong bull markets in exchange for enhanced yield.

Also Read: Long term investing in Canada

Why these ETFs? They’re not traditional play-and-hope growth funds. Instead, they’re built for income — using option premiums and leverage to create distributions that are meaningfully above typical dividend yields. That makes them appealing for retirees or income-focused investors who rely on passive cash flow rather than short-term price moves.

Also Read: Dividend paying stocks Canada

Risks to understand: Because of the covered-call approach and leverage, these ETFs can lag pure equity benchmarks in strong up markets and can be more volatile in downturns. That’s the trade-off for higher income.