The Modified BTSX Strategy for 2026

 

Years ago, I had a mixed bag of low yield ETFs and stocks with low gain potential where my goal was accumulating dividend income, continuing into retirement. 

Doing a Google search for stocks ranking from highest yield down in the TSX, I looked down through 60 of them and wanted to narrow down that list to what companies and banks could produce a decent total gain for the long term with compounding in mind.

Eventually I came across the Beat The TSX strategy that has beaten the TSX index annual return on average over the years. I didn't expect the list of 10 stocks with a different mix every year to beat the TSX yearly return on a given year where the stock market has it's ups and downs which affects some sectors/businesses more than others.

A good summary of the BTSX and updated for 2026 is on a recent Million Dollar Journey post.  

Companies and banks I researched in the list as they changed over the years, expanded to more than 20 stocks in the TSX 60 ranked by dividend yield I currently own. 

In the current list for 2026, I sold both BCE before the dividend cut last year and Telus where they have now stopped their dividend growth plans and perhaps a cut coming but no mention of that to date.

The steady news of over the top expenses and unsustainable dividends with these two Telcos brought on the decision to sell both. BCE looks like it's dividend policy is more in line now going ahead. It may pull off an Algonquin Power, AQN revival.

I never owned Algonquin Power where I thought the initial yield, when I looked it over years back was too high and that was cut. But, AQN has improved and made gains going into this year.

From the 2025 list ... Power Corporation: POW, TD Bank:TD and Emera: EMA performed better than I expected.  Overall, the TSX yearly gain of 29%+ was a surprise for 2025 with the BTSX closing the year with a 28% gain, even with the Telco laggards in that list.

The 2026 BTSX list.

1. Telus (T) 
2. Enbridge (ENB) 
3. Pembina Pipeline (PPL) 
4. BCE (BCE) 
5. Canadian Natural Resources (CNQ) 
6. TC Energy Corp (TRP) 
7. Emera (EMA) 
8. Bank of Nova Scotia (BNS) 
9. Sun Life (SLF) 
10. Canadian Tire (CTC.A) 

I rehashed my portfolio when I initially read about the BTSX strategy and concentrated more on specific sectors like the Big Banks, the pipelines, energy/power, oil/natural gas and financial/insurance companies to build on into the future and pleased with the results as I continue to accumulate with the Plan.

Taking the Pipeline sector for example, I initially bought Enbridge: ENB and then added Pembina Pipeline: PPL when it was a monthly dividend payer and now quarterly while PPL got into the BC coast natural gas plants for exporting. Expansion plans continue there.

Like Hannibal on The A-Team ... I love it when a plan comes together.

Banking On It in January, 2026

 

We are into 2026 already after a couple weeks of prepping for the holidays. The start of another year accumulating dividends from stocks with a yield of 3% and up yearly. 

The average Canadian stock investor made a 20% return less dividends or higher in 2025 by selecting stocks out of the top 20 or more by descending dividend yield ending a great year. Although predictions are everywhere for 2026, no one knows what lies ahead so I just continue with my long term plan holding mainly banks, pipelines, utilities and the financial insurance sector, which has performed better than I expected in 2025.

Looking at the ex-dividend calendar for January, it's once again what I call a Big Bank month in Canada with most of them having declaration dates starting with the Bank of Nova Scotia, TD Bank, the Bank of Montreal and Royal Bank having ex-dividend dates towards the end of January.

With decent quarterly reports ending 2025, the banks are getting expensive and an option is to buy partial shares with brokers like Wealthsimple, Questrade and TD Investing.

Where I own the banks, I look forward to the yearly dividend increases, once again occurring in the last quarter of 2025 except BNS.TO, which may happen this year. But I can't complain where the stock gained 36.50% in the last 6 months, soaring to a current $100 per share. 

Personally, where financials are a foundation for my portfolio, 2026 is the year I'm looking for more income on a monthly basis from the banks and turning more to ETFs which hold banks and those with other sectors mixed in that I'm comfortable with.

ETF providers of which there are many now and have their own versions of bank or financial sector holdings in their ETFs. BMO's ZWB.TO, with ZEB as one of it's top holdings is my choice and recently increased it's distribution by 9%. Being a covered call, it's chart shows a roller coaster over the years but it's been moving up since April of 2025 so like that total return to date.

                                         As of January 4th, 2026: ZEB 2.95% - ZWB 5.38%

Mid month, I'll be thinking about Emera, EMA.TO with an ex-dividend date of January 30th with a current yield of 4.33%. The utility, based in Nova Scotia jumped 26% over the last year but has levelled off some lately and the stock is below it's fair value or undervalued at this time.

Interesting is a mega project highlighted by the Federal Government for a multi billion dollar Nova Scotia and Newfoundland offshore wind farm project which has the potential to help power east coast provinces, Quebec and Maine which is looking for additional power sources.

Emera is involved in the Wind West Initiative in it's preliminary plans and stages. Federal money will be needed to make it more than just discussions and planning so see what unfolds in the future with that project. Cheaper power for users down the road? I doubt it but more "green" supply if it happens. 

The TSX, S&P/TSX composite index gained near 29% for 2025. Totally unexpected from the beginning of 2025 predictions and that's not including dividends. This year, I'd be happy with half ... a 15% gain with another, anything can happen year with US/Canada trade negotiations continuing, what's going on economically and around the world impacting the Markets on a weekly basis.