The 4.8 Percent Monthly Income ETF That Canadians Should Know About

One thing I have been observing in the ETF industry over the past few years is an explosion in income-oriented funds. Canadian investors, by and large, are yield-hungry. Many would rather delegate the work to an ETF than hand-pick a portfolio of dividend stocks themselves. There is nothing wrong with that.

What has changed, however, is the level of complexity. A growing number of income ETFs now use leverage. Others rely on covered calls. Some combine both. The trade-off is almost always higher fees and greater complexity.

If you are willing to look back a little further, though, you will find simpler monthly income ETFs that have been around for more than a decade and are still doing what they were designed to do.

One example is the iShares Canadian Financial Monthly Income ETF (TSX:FIE). Here is why it still deserves a look today in 2026.

What is FIE?

FIE debuted in April 2010 and today manages just over $1.3 billion in assets. As the name suggests, it has two clear objectives: focus on Canadian financial securities and generate monthly income.

The largest portion of the portfolio consists of common shares of Canada’s biggest banks and life insurance companies. These are traditional dividend-paying blue chips.

The second-largest sleeve, at roughly 20% of the portfolio, is invested in an iShares ETF that tracks Canadian preferred shares.

Preferred shares sit between bonds and common equity in a company’s capital structure. They usually pay a fixed dividend, similar to bond interest, but they are technically equity.

In the event of bankruptcy, preferred shareholders rank above common shareholders but below bondholders. Because of this hybrid nature, preferred shares typically offer higher yields than common shares but have limited price appreciation potential.

Canadian banks are heavy issuers of preferred shares because regulators allow them to count as part of their capital base. For income investors, that means exposure to bank credit quality with a higher stated yield.

The final roughly 10% of FIE is invested in corporate bonds, which are debt issued by companies rather than governments. They carry credit risk, meaning the issuer could default, but in exchange investors receive higher yields than on federal bonds.

How much yield does FIE pay?

There are two common ways to measure yield. The first is the trailing 12-month yield, which looks backward at the income actually paid over the past year. As of February 10, 2026, FIE pays a trailing 12-month yield of 4.8%.

The second is the projected distribution yield. To calculate that, you take the most recent monthly distribution, multiply it by 12, and divide by the current share price. At the moment, that figure also works out to 4.8%.

Trailing yield tells you what has already been paid. The annualized distribution yield tells you what you might receive if the current payout continues. Neither is guaranteed, but when the two line up closely, it suggests relative stability.

It is also worth noting total return. If you had reinvested FIE’s monthly distributions inside a registered account over the past 10 years, the ETF would have compounded at 11.9% annually, after fees.

However, fees are not insignificant. FIE charges a 0.74% management expense ratio. That is on the higher side compared with broad market ETFs, and there are cheaper income options available.

Still, for an ETF that has been around since 2010 and continues to deliver consistent monthly income, FIE remains relevant.

The post The 4.8 Percent Monthly Income ETF That Canadians Should Know About appeared first on The Motley Fool Canada.

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Fool contributor Tony Dong 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.