What to Do with XEQT Dividend: 5 Smart Strategies for Canadian Investors

If you own XEQT (iShares Core Equity ETF Portfolio), you’re probably receiving regular dividend payments. But here’s the question every XEQT investor faces: What should you do with your XEQT dividend?

The short answer: Reinvest it in more XEQT shares for maximum long-term growth. But there are several strategies to consider depending on your financial goals and situation.

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In this comprehensive guide, we’ll explore 5 smart strategies for handling your XEQT dividends, with detailed analysis of why reinvesting is usually the best choice for building long-term wealth.

Understanding XEQT Dividends

XEQT Dividend Basics:

XEQT Dividend Sources:

XEQT’s dividends come from its underlying holdings:

This is the best strategy for most investors because it maximizes compound growth and maintains your asset allocation.

Why Reinvest XEQT Dividends:

✅ Compound Growth: Dividends buy more shares, which generate more dividends
✅ Maintains Allocation: Keeps your portfolio balanced as intended
✅ Automatic Rebalancing: No need to manually manage asset allocation
✅ Cost Effective: No additional trading fees on most platforms
✅ Tax Efficient: Reinvested dividends still qualify for tax advantages
✅ Set and Forget: Once set up, it runs automatically

How to Set Up Dividend Reinvestment:

On Wealthsimple Trade:

  1. Go to your XEQT holding
  2. Click “Settings” or “Manage”
  3. Enable “Dividend Reinvestment Plan (DRIP)”
  4. Your dividends will automatically buy more XEQT shares

On Other Platforms:

The Power of Dividend Reinvestment:

Example: $10,000 invested in XEQT with 2% annual dividend yield:

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Strategy 2: Use Dividends for Other Investments

When This Makes Sense:

Smart Ways to Use XEQT Dividends:

Option A: Add Bonds

Option B: Diversify Further

Option C: Build Emergency Fund

Pros and Cons:

Pros:

Cons:

Strategy 3: Take Dividends as Cash Income

When This Makes Sense:

How to Take Cash Dividends:

Automatic Cash Deposits:

Tax Considerations:

Pros and Cons:

Pros:

Cons:

Strategy 4: Hybrid Approach (Mix of Strategies)

Best of Both Worlds:

50% Reinvest + 50% Cash:

Seasonal Strategy:

Age-Based Strategy:

How to Implement:

  1. Calculate your quarterly dividend amount
  2. Decide on your split (e.g., 70% reinvest, 30% cash)
  3. Set up automatic reinvestment for the reinvest portion
  4. Use the cash portion as planned

Strategy 5: Tax-Optimized Dividend Strategy

Maximize Tax Benefits:

In TFSA:

In RRSP:

In Non-Registered Account:

Tax-Efficient Dividend Management:

Canadian Dividend Optimization:

Foreign Dividend Management:

Comparing All 5 Strategies

Strategy Growth Potential Simplicity Flexibility Tax Efficiency
Reinvest XEQT ⭐⭐⭐⭐⭐ ⭐⭐⭐⭐⭐ ⭐⭐ ⭐⭐⭐⭐
Other Investments ⭐⭐⭐⭐ ⭐⭐ ⭐⭐⭐⭐⭐ ⭐⭐⭐
Cash Income ⭐⭐ ⭐⭐⭐⭐⭐ ⭐⭐⭐⭐⭐ ⭐⭐
Hybrid Approach ⭐⭐⭐⭐ ⭐⭐⭐ ⭐⭐⭐⭐ ⭐⭐⭐
Tax-Optimized ⭐⭐⭐⭐ ⭐⭐⭐ ⭐⭐⭐ ⭐⭐⭐⭐⭐

Winner: Reinvest in XEQT for most investors

Real-World Examples

Example 1: Young Investor (25 years old)

Example 2: Middle-Aged Investor (45 years old)

Example 3: Retiree (65 years old)

Common Questions About XEQT Dividends

“How often does XEQT pay dividends?”

XEQT pays dividends quarterly (4 times per year) in March, June, September, and December.

“What’s the current dividend yield?”

XEQT’s dividend yield is approximately 1.5-2.0% annually, but this varies based on market conditions and underlying company performance.

“Are XEQT dividends qualified for the dividend tax credit?”

Yes, partially. The Canadian portion (~25% of XEQT) qualifies for the dividend tax credit, while foreign dividends do not.

“Can I set up automatic dividend reinvestment?”

Yes! Most Canadian brokerages, including Wealthsimple Trade, offer automatic dividend reinvestment plans (DRIP).

“What if I need the dividend income for expenses?”

That’s perfectly fine! Taking dividends as cash income is a valid strategy, especially for retirees or those with immediate financial needs.

“Should I reinvest dividends in a TFSA or RRSP?”

Yes! In registered accounts, dividend reinvestment is especially beneficial because there are no tax implications on the dividends.

How to Set Up Dividend Reinvestment

Step 1: Choose Your Platform

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Step 2: Enable DRIP

Wealthsimple Trade:

  1. Go to your XEQT holding
  2. Click “Settings” or “Manage”
  3. Toggle “Dividend Reinvestment” to ON
  4. Confirm your selection

Other Platforms:

Step 3: Monitor and Adjust

The Bottom Line: Why Reinvest XEQT Dividends

For Most Investors, Reinvesting XEQT Dividends is Best Because:

✅ Maximum Compound Growth: Your money works harder for you
✅ Maintains Asset Allocation: Keeps your portfolio balanced
✅ Automatic Management: Set it and forget it
✅ Cost Effective: No additional trading fees
✅ Tax Efficient: Especially in registered accounts
✅ Proven Strategy: Time-tested approach to wealth building

When to Consider Other Strategies:

Ready to Optimize Your XEQT Dividends?

🎁 Get $25 of XEQT for free on Wealthsimple

The best time to start optimizing your XEQT dividend strategy is now. Whether you choose to reinvest for maximum growth or use a hybrid approach, the key is to have a plan and stick to it.

Remember: The power of dividend reinvestment compounds over time. Even small quarterly dividends can grow into significant wealth when reinvested consistently.

Start building your wealth today with XEQT and let your dividends work for you!

Disclosure: This post contains referral links. I may receive compensation if you sign up through these links, but this doesn’t affect my honest assessment. I genuinely believe XEQT is an excellent choice for Canadian investors seeking long-term wealth building through dividend reinvestment.