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Larry Berman CFA, CMT, CTA Hamilton Enhanced Multi-Sector Covered Call ETF HDIV-T BUY Jun 30, 2025

Using dividend-paying ETFs in a TFSA to save for a home.

Investor is holding HDIV, ZWC, SMAX, and ZEB. By holding all of these, it looks as though you're diversified but you're just duplicating a lot of the strategies.

Likes HDIV a lot for yield-seeking investors. A nice strategy, and you probably don't need a whole lot beyond that. The dividend and covered-call strategies are nice, defensive ways to stay invested.

If an investor did want to branch out, they should be looking for growth. But he wouldn't add growth-focused now, because we're at all-time highs and he's not sure the multiple is sustainable.

Larry Berman CFA, CMT, CTA

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$17.915

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COMMENT

Quality operators for investment strategies. No issues with the ETF. This is perfect for adding diversification to your portfolio.

DON'T BUY

Problem is that Hamilton uses about 25% leverage. As a matter of principle, his contracts state that he doesn't use leverage of any kind. So he can't use Hamilton. But that's not an issue for everyone. The other issue is that Hamilton uses other ETFs within their ETFs, so you're paying double the fees of around 150 bps, and that's way too high for an ETF.

DON'T BUY

HDIV vs. HDIF HDIV will give you back part of the yield in the way of return of capital. The MER is a little high at 2.09%. So, will you get that much excess return. HDIF is shorter in its time frame. He can't decide which is better.

COMMENT

Not sure on his preference between the two. Part of HDIV's yield is ROC through covered calls. Management expense rate is a little high at 2.09. HDIF has equal weight gold, utilities, brand leaders, health leaders, etc. They are ETF's for income.

PARTIAL BUY

It uses some leverage and owns covered call writing ETF's of other providers so is diversified across covered call writers. Since it adds extra value it is worth the higher fees, but the yield cannot be entirely counted on. It is OK as a part of your portfolio.

DON'T BUY

He avoids anything with leverage for his older clients.

PARTIAL BUY

Covered call option that is food for income oriented investors. MER ratio a little high. Good exposure to Canadian world of index stocks. Leverages product that can present risk. Good on upside, but can be hazardous on downside. Good for small portion of portfolio.

WEAK BUY

Dividend sustainable?

You get the dividend from the underlying securities, that's for sure. If underlying companies cut dividends, then the dividend will be down.

But the enhancement from the options strategy comes from the price of volatility. There's nothing more volatile than the price of volatility. Extra income generated is variable. Right now, it's pretty attractive. But he'd be lying if he said that there's a strategy where you can get 10-11% forever and ever without change.

Right now, probably sustainable. Not a strategy to just buy, without understanding the mechanism of it, and forget about it. Nothing wrong with it, but the income generated is variable, with the biggest swing factor being the price of volatility. If volatility goes down, the fund can't get as much for the call options.

He uses the BMO versions of these because of the funds he runs for BMO.

WEAK BUY

This would be for a RESP account. He likes a multi-sector ETF. Enhanced means leveraged. It's an OK buy for students and the long term.

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