John Heinzl is the dividend investor for Globe Investor's Strategy Lab. Follow his contributions here. You can see his model portfolio here.

If you like the idea of dividend investing but don't have the time or knowledge to manage a portfolio of individual stocks, don't despair: You can still enjoy the benefits of dividends, without all the work.

The solution: exchange-traded funds.

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The number of dividend-oriented ETFs has exploded in recent years as companies respond to the investing public's growing appetite for income.

In Canada, there are at least eight ETFs with the word "dividend" in their name, and many more that use dividend stocks as a component of a broader income-oriented strategy.

Dividend ETFs offer several benefits. They provide instant diversification by giving you exposure to dozens of stocks. They charge lower fees than dividend mutual funds. And they eliminate the need to evaluate and monitor individual companies.

That makes them an excellent solution for people who don't want to spend a lot of time looking after a portfolio.

But before you take the plunge, it's important to do your homework. Not all dividend ETFs are created equal. In fact, they can vary widely in terms of the fees they charge and the stocks they hold. Here are five things to keep in mind when shopping for dividend ETFs.

Not all dividend ETFs are cheap

If you buy a plain-vanilla ETF that tracks a broad stock market index, you can cut your costs to the bone.

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The iShares S&P/TSX Capped Composite Index ETF (XIC), for example, recently slashed its management fee to 0.05 per cent from 0.25 per cent.

But the management fee for the iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ) is more than half a percentage point higher, at 0.6 per cent. While that's not bad compared to a mutual fund, it's no bargain in the ETF space.

If you're looking for a low-cost dividend ETF, the iShares S&P/TSX Equity Income Index ETF (XEI) might be worth investigating. The fund recently dropped its management fee to 0.2 per cent from 0.55 per cent.

MERs can be hard to find

The management fee doesn't provide a complete picture of a fund's expenses. A better measure is the management expense ratio (MER).

In addition to the management fee, the MER also includes harmonized sales tax and operating expenses such as record keeping, fund valuation costs, legal fees, and costs for sending out prospectuses and annual reports. There's an additional item called the trading expense ratio, or TER, which is not included in the MER.

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Problem is, not all ETF companies make it easy to find the MER and TER. For example, if you visit the "At a Glance" web page for the BMO Canadian Dividend ETF (ZDV), you'll see that the "maximum annual management fee" is 0.35 per cent. But you have to click through to "legal and regulatory documents" to discover that the MER is 0.39 per cent, and the TER is 0.04 per cent, for total fund expenses of 0.43 per cent. (The MER, but not the TER, is also disclosed on the "product information" page that lists all of BMO's ETFs.)

Some ETFs are poorly diversified

With an MER of 0.34 per cent, the Vanguard FTSE Canadian High Dividend Yield Index ETF (VDY) is one of the least expensive dividend ETFs. However, the fund has about 55 per cent of its assets in financials (as of May 31). That exposure has helped the fund over the past year (see table) as bank stocks rose. But if Canada's banks hit a pothole, the fund will take a hit. You'll find better diversification with the First Asset Morningstar Canada Dividend Target 30 Index ETF (DXM). As of May 31, it had just 26.8 per cent of its assets in financials, and a similar combined weighting in telecommunications and consumer discretionary stocks. But the MER, at 0.66 per cent, is about twice as high as the MER of the Vanguard dividend ETF.

Watch for dogs

Occasionally, a dog can sneak into a dividend ETF. One example is struggling mutual fund company AGF Management, which is the top holding in the iShares Dividend Aristocrats ETF (CDZ).

This ETF is supposed to hold stocks with rising dividends, but AGF hasn't increased its payment since June, 2011.

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The only reason it's still in the fund is that constituent companies are allowed to maintain the same dividend for up to two years (measured to the end of November), so AGF will presumably be tossed if it fails to increase its dividend before the next rebalancing toward the end of the year. But that's of little help to CDZ investors who have already been hurt by AGF's falling share price.

No dividend ETF is perfect

Trying to find an ETF that excels in every department is a challenge. The good news is that you don't have to pick just one ETF. In my own portfolio, I supplement my individual stocks with two dividend ETFs – one ETF that holds real estate investment trusts and another that invests in the S&P/TSX 60 (this ETF, by the way, produced a total return of 28 per cent in the year to June 30, beating the entire pack of dividend ETFs).

There's no reason you can't mix and match to suit your own investing needs.