Here Are My 2 Favourite ETFs to Buy for High-Yield Passive Income in 2026

When it comes to investing and finding high-quality stocks and exchange-traded funds (ETFs) to buy in 2026, there’s no question that one of the biggest goals for most investors is building passive income.

However, already just a quarter of the way into the year, that goal has become a lot more complicated.

Interest rates aren’t falling as quickly as many expected, inflation is still uncertain, and volatility remains elevated due to the war in the Middle East. That means simply parking your money in cash or Guaranteed Investment Certificates may not be enough if you actually want your income to grow over time.

And that’s exactly why more investors are looking for reliable Canadian ETFs to buy for passive income in 2026.

However, when looking to boost income, one of the biggest mistakes that investors often make is focusing only on the yield. When you’re building a passive-income portfolio, though, you need to balance both reliability and yield.

That’s why finding reliable ETFs to buy for high-yield passive income isn’t only about generating income today; you also want your portfolio to continue growing over time.

So, with that in mind, here are two of my favourite ETFs to buy right now, one that acts as a foundation for long-term growth and one that helps boost your income today.

A core ETF to buy and hold for long-term income and growth beyond 2026

If you’re building a passive-income portfolio for the long haul, the most important piece is having a strong foundation. That’s why iShares S&P/TSX Composite High Dividend Index ETF (TSX:XEI) is one of the best funds to buy for high-yield passive income in 2026.

The XEI is one of the best ETFs to buy and hold for long-term dividend growth because it offers instant diversification and owns many of the largest and most reliable companies in Canada, including banks, pipelines, utilities, and telecom stocks.

These are businesses that generate steady cash flow, operate in essential industries, and have long track records of paying and increasing their dividends.

That’s what makes XEI such a strong core holding; it focuses on owning high-quality companies that can grow both their earnings and their dividends over time.

That’s important for long-term investors because, in addition to offering a yield just shy of 4% today, which may not be as high as some other income-focused ETFs, you still get the full benefit of the market’s upside.

That’s why it’s such a strong long-term holding for passive income-focused investors. Over the long haul, as the TSX and Canadian economy continue to grow, your investment and the passive income it generates both grow with it.

So, over time, you’re not just collecting income, you’re also building wealth as those dividends increase and your capital appreciates.

A high-yield ETF to help boost your income

Once you have a solid foundation in place, that’s when it can make sense to buy a higher-yield ETF to complement your core holdings and boost your income in 2026.

So, if you’re looking for both a reliable long-term investment and a higher-yielding fund for more immediate income, BMO Canadian High Dividend Covered Call ETF (TSX:ZWC) is a top choice.

The reason the ZWC can significantly boost your income is that, instead of just holding dividend stocks, it also uses a covered call strategy to generate additional income.

In simple terms, the fund sells call options on a portion of its holdings, which allows it to collect premiums and increase the overall yield it pays to investors. That’s why the ZWC can offer a significantly higher yield, currently sitting at roughly 5.75%, than a traditional dividend ETF.

And in an environment like 2026, where markets may be more volatile or trade sideways, that strategy can be especially effective, because instead of relying on strong price appreciation, it turns that volatility into income.

However, since the fund is selling potential upside through those options, it won’t benefit as much in environments when markets rally strongly.

That means the share price tends to be more stable, but you’re giving up some long-term capital gains potential in exchange for higher income today, which is why it’s one of my favourite ETFs to buy to help boost passive income in 2026.

The post Here Are My 2 Favourite ETFs to Buy for High-Yield Passive Income in 2026 appeared first on The Motley Fool Canada.

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More reading

• TFSA Balances at 30: Where Do Most Canadians Stand?
• Want Decades of Passive Income? Buy This Index Fund and Hold it Forever
• The Top 3 Canadian ETFs I’m Considering for 2026
• 3 Canadian ETFs to Buy and Hold Forever in Your TFSA
• 3 Canadian ETFs I’d Snap Up Right Now for My TFSA

Fool contributor Daniel Da Costa 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.