Owning investments that give you reliable passive income is always important, but in 2026 it’s more important than usual.
Between geopolitical tensions, uncertainty surrounding interest ratesand markets that have already risen sharply in certain areas, it makes sense to consider strengthening your portfolio and purchasing higher-yielding investments that can help reduce volatility.
ETFs make this even easier because they offer instant diversification, lower risk on individual stocks, and a more hands-off way to build income.
That’s why, if you want to increase your passive income in 2026 without taking unnecessary risks, two of my favorite high-yield investments aren’t actually stocks; they are high quality ETFs.
One of the best high-yield ETFs to buy for passive income in 2026
If you want to increase the passive income your portfolio generates in 2026, there’s no doubt that one of the best ETFs to consider BMO Canadian High Dividend Covered Call ETF (TSX:ZWC).
There are two main reasons why the ZWC ETF is a top choice for dividend investors today. First, it has a diversified portfolio of high-quality Canadian dividend-paying stocks from sectors such as financials, utilities, telecommunications and energy. These are mature, established companies that already generate strong and predictable cash flows.
This is essential because these stocks in themselves already offer investors sustainable dividends and high returns.
The reason why the ZWC ETF is specifically made for passive income seekers isn’t just because it owns a portfolio of high-quality dividend stocks. The other main reason is the covered call strategy it uses.
To increase revenue, it returns to the investors. The fund makes covered calls on some of its investments, collecting option premiums in exchange for giving up some upside potential if those stocks rise sharply.
These premiums are then added to the dividends the underlying shares already generate, allowing the ZWC to pay a significantly higher distribution than a traditional dividend ETF.
The fund also charges a higher Manager Expense Ratio (MER) because of this strategy, but even with a MER of 0.72%, the ZWC still offers investors a net return of over 5.1% today, showing why it is one of the best high-yield ETFs for passive income seekers to buy in 2026.
And while investors can choose to buy covered call ETFs at any time, they are particularly attractive looking into the remainder of 2026.
With so much uncertainty and many stocks already trading at or above their fair value, the markets could move higher, but a massive bull run isn’t guaranteed. In those circumstances, it may make sense to trade some benefit for immediate, reliable income.
One of the best high-income ETFs in terms of relative safety
Unsurprisingly, in addition to the ZWC ETF, there is another high-yield fund that I like in 2026 for many of the same reasons: BMO Covered Call Canadian Banks ETF (TSX: ZWB).
The ZWB ETF is structured exactly like the ZWC, except it focuses exclusively on Canada’s major banks. This is critical because bank stocks are known to be one of the best dividend stocks to own over the long term, as Canadian banks are among the most stable and dominant financial institutions in the world.
They operate in a highly regulated environment, generate massive amounts of recurring revenue, and have a long history of paying dividends across multiple economic cycles.
The ZWB ETF is ideal because it provides exposure to all major Canadian banks at once, reducing risk to any one bank while benefiting from the overall strength of the sector. And with its covered call strategy, the ETF currently offers a net return of 4.7%.
So if you’re going to trade some capital gains potential for higher income, 2026 seems like exactly the kind of year where that trade-off could make sense.
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