A Canadian Bank ETF I’d Buy With $1,000 and Hold Forever

Canada’s big bank stocks are among the best long-term options on the market. There are plenty of reasons for that view. That includes their reputation for consistency in results, strong growth prospects, and juicy income. A way for investors to benefit from the collective potential of all bank stocks is to consider a Canadian bank ETF.

One Canadian bank ETF for investors to consider owning is the BMO Equal Weight Banks Index ETF (TSX:ZEB).  

What makes ZEB a standout Canadian bank ETF

ZEB offers a simple way to invest in the largest of Canada’s big banks. As the name implies, this Canadian bank ETF uses an equal‑weight approach that gives each of the big bank stocks an equal allocation. This helps to avoid overreliance on any single bank stock while ensuring a balanced approach.

This equal-weight approach ensures balanced exposure across all major Canadian banks.

In other words, it’s a great low-maintenance set-and-forget pick. The ETF’s focus is on Canada’s largest and most-established institutions. This makes it easy for investors to gain diversified exposure without having to pick individual winners.

For investors who want a straightforward, low‑maintenance way to participate in the strength of Canadian banks, ZEB checks all the boxes.

How ZEB fits into a long‑term buy‑and‑hold strategy

Putting $1,000 into ZEB can serve as a strong foundation for a long‑term portfolio. The ETF’s equal‑weight structure, combined with the stability of the big banks, makes it well‑suited for investors who prefer a more hands‑off approach.

For long-term investors, ZEB provides a stable foundation built on Canada’s most reliable financial institutions.

Another key advantage of owning ZEB over individual bank stocks is the fund’s monthly dividend. Unlike the big banks that pay out on a quarterly cadence, ZEB provides investors with a monthly dividend.

As of the time of writing, that monthly dividend works out to $0.145 per share. That works out to an annual yield of just over 2.8%. Again, the focus here is on a passive, hands-off way to benefit from the entire banking sector.

Over time, those dividends can be reinvested to compound returns, and the banks’ consistent earnings help support long‑term growth.

The bottom line

ZEB stands out as a strong ETF candidate for investors looking to get equal-weight exposure to the big bank stocks.

A $1,000 position in the Canadian bank ETF won’t be enough to retire on. It will, however, be enough to form a starting position without needing to contemplate individual bank positions and allocations.

In fact, with those monthly dividends reinvested back into the ETF and additional $1,000 buys over subsequent years, ZEB can become a core asset to any well-diversified portfolio.

Buy it, hold it, and watch your portfolio (and income) grow.

The post A Canadian Bank ETF I’d Buy With $1,000 and Hold Forever appeared first on The Motley Fool Canada.

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More reading

• 3 Canadian ETFs I’d Tuck Into a TFSA and Never Consider Selling
• A Canadian Bank ETF Worth Buying With $1,000 and Never Selling

Fool contributor Demetris Afxentiou 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.