Two High-Yield ETFs to Consider for Passive Income in 2026

For income-focused investors looking to build a passive cash-flow stream without constantly monitoring individual stocks, exchange-traded funds (ETFs) remain a popular and efficient choice — especially in tax-advantaged accounts like a TFSA or RRSP. In 2026, specific ETFs that offer above-average yield combined with broad diversification can simplify long-term income strategies for investors.

One compelling option for passive income is the iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ). This fund targets a diversified mix of Canadian companies with long histories of dividend growth and consistency. By spreading capital across multiple high-yield issuers in sectors such as financials, utilities, and energy, CDZ reduces the risk tied to owning any single stock while still capturing solid dividend income. For investors focused on dependable quarterly or monthly flows, this kind of fund can serve as a strong core holding.

The other ETF favoured in high-yield strategies is the Vanguard U.S. High Dividend Yield ETF (VYM). VYM focuses on U.S. companies that offer above-average dividend yields, broadening income exposure beyond the Canadian market. This global component helps diversify risk and tap into income streams from established dividend payers in major developed markets. Because it holds large, dividend-oriented firms across various sectors, VYM can help stabilize income even during periods of market volatility.

Both of these ETFs share key advantages: diversified holdings that spread risk, professional portfolio management, and relatively low management costs compared with actively managed mutual funds. Since ETFs trade on major stock exchanges, they also offer liquidity and transparency, making them attractive for buy-and-hold passive income strategies.

Also Read: Stock investment Canada for beginners

Investors should be aware, however, that high yields often reflect underlying business risk, and distributions can fluctuate with economic conditions. Assessing each fund’s yield history, sector weights, and fee structure is an important step before committing significant capital.

Also Read: Best long term Canadian stocks

Overall, combining CDZ for Canadian dividend exposure with VYM for broader international income offers a balanced path to building a high-yield passive income portfolio in 2026 while benefiting from diversification and ongoing cash flow.