See how reinvesting your monthly ETF distributions compounds your income and unit count over time. Works for ZWB, ZWC, HDIV, HYLD and any covered-call ETF.
Estimates only. Not investment advice. Does not account for taxes, fees, or unit price changes.
DRIP (Dividend Reinvestment Plan) is a feature offered by most Canadian brokerages that automatically reinvests your monthly ETF distributions into additional units instead of depositing cash. For covered-call ETF investors, this means your ZWB or ZWC distributions buy more units every month — and those new units generate even more distributions next month.
Over time this compounding effect is significant. A $10,000 investment in ZWB with DRIP on for 10 years generates substantially more value than the same investment with distributions taken as cash — even with no additional contributions.
| Situation | Better Choice | Why |
|---|---|---|
| You're still accumulating wealth (working years) | DRIP ✅ | Compounding grows units and future income faster |
| You're retired and need monthly income | Cash ✅ | You need the distributions to live on |
| You have a TFSA and don't need the cash | DRIP ✅ | Tax-free compounding maximizes long-term growth |
| You want to reinvest but prefer control | Manual ⚖️ | Take cash, manually buy more units when convenient |
DRIP is set up through your brokerage, not directly with the ETF provider. Here's how at popular brokers:
Note: Some brokerages only issue fractional units for DRIP; others round down to whole units and pay the remainder as cash. Check your brokerage's specific DRIP policy.
Yes. ZWB and most Canadian ETFs support DRIP through Canadian brokerages. Enroll through your brokerage account settings — not directly with BMO.
In a TFSA, all distributions — whether taken as cash or reinvested through DRIP — are completely tax-free. DRIP in a TFSA is one of the most powerful wealth-building strategies available to Canadian investors.
Most brokerages handle fractional units for DRIP — your distribution buys a fractional unit. Some older brokerages only issue whole units and pay the remainder as cash. Check with your brokerage.
Yes — DRIP enrollment can be changed at any time through your brokerage account settings. Many investors switch to cash distributions when they retire and need the income.