2 reliable ETFs to increase your income without doing any work

For many Canadian investors, building a portfolio that consistently generates income can be a time-consuming and stressful process. Choosing individual dividend stocks is time-consuming, requires research, and comes with the constant worry of whether a company will cut its payout. That’s why reliable exchange-traded funds (ETFs) are one of the best ways to increase your income.

ETFs are ideal because they offer many benefits, the most important of which is the instant diversification they provide. Because these funds often own hundreds of stocks in their portfolios, investors get exposure to every single company in their portfolio at once.

So not only do ETFs make things easier for investors by reducing the risk of direct investing by offering instant diversification, but they can also save you a lot of time and research as owning a few reliable ETFs means you have far fewer individual investment decisions to make and it’s an easier way to generate income.

Some ETFs even specifically target high-quality dividend-paying companies. And the great thing about ETFs is that they do the hard work for you. All income is paid out to you, while the fund managers take care of the rest.

That’s why reliable ETFs are among the best investments newer investors can make, especially if you want to increase your passive income.

With that in mind, here are two of the most reliable ETFs you can use today to generate income without all the hassle.

A reliable high-yield dividend ETF to grow your passive income

If you want to increase your passive income with a simple and popular Canadian fund, the iShares S&P/TSX Composite High Dividend Index ETF (TSX:XEI) is one of the easiest ways to get broad exposure in Canada’s top dividend-paying companies.

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Therefore, it is perfect for those who want income but don’t have time to keep an eye on the fundamentals of individual companies. Instead of picking individual stocks, investors get a ready-made basket of high-quality dividend payers.

It’s worth noting that while the XEI tries to provide investors with the highest possible returns, it still prioritizes reliability. That means its returns are not as high as if it owned all the stocks with the highest interest rates TSX. However, the payout comes from companies with a strong history of maintaining dividends even during economic slowdowns, which is why it’s such a reliable ETF to buy.

So while the fund has a net yield at just over 4% today, given the diversification and reliability it offers, it is easily one of the best ETFs dividend investors can buy to increase their income.

A unique dividend fund with a net return of over 5%

If you prefer even more income in addition to the XEI ETF and are willing to trade some upside potential for capital gains for it, I highly recommend investors consider the BMO Canadian High Dividend Covered Call ETF (TSX:ZWC).

The ZWC is similar to the XEI in many ways and invests in high-quality and reliable dividend-paying companies. In addition, the ZWC ETF uses a covered call strategy.

By selling covered calls on the shares it owns, the fund therefore generates additional income from the option premiums, effectively increasing the total return you receive as an investor.

Because you are selling covered calls, some of the potential for capital gains is limited. However, in an environment with a lot of uncertainty and many stocks at or near record highs, that is not the biggest concern for many investors.

So if you are an investor looking to increase your income as much as possible with a high-quality and reliable ETF, the ZWC is undoubtedly one of the best to consider right now.