BMO CDN HIGH DIV COVERED CALL ETF (ZWC.TO)…

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BMO CDN HIGH DIV COVERED CALL ETF (ZWC.TO)

22.70

+0.07 (0.31%)

as of Jun 16, 2026, 7:59:59 pm Market Open.

216 watching

Investor Insights

Jun 17, 2026, 12:00 am

This summary was created by AI, based on 2 opinions in the last 12 months.

The BMO CDN HIGH DIV COVERED CALL ETF (ZWC) has garnered mixed reviews from experts. One reviewer emphasizes the importance of using dividend-paying ETFs like ZWC in a Tax-Free Savings Account (TFSA) to save for significant financial goals, such as a home. However, there is a cautionary note regarding diversification; holding ZWC alongside other ETFs like HDIV, SMAX, and ZEB may lead to duplication of strategies rather than true diversification. Another expert highlights that while ZWC provides a covered-call strategy that can be appealing for yield-seeking investors, it may not offer the maximum tax benefits when compared to global stock ETFs. Thus, while ZWC can be an interesting option for certain investors, particularly those focused on yield, understanding its place within a broader investment strategy is crucial.

Consensus

Cautious

Valuation

Fair Value

Similar

HDIV, HDIV

BUY

Good to reduce volatility. A covered call on a dividend payer layers in defence upon defence. ZWC will provide a steady income stream on the way up, yet limited vol on the way down.

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Unspecified

Has held shares in the past, but doesn't own any right now. Will leave it to investors to determine if product is right for them.

BUY

Tilted to value, preferable now with rising rates. About 37% financials, 15% energy, 13% communications. 72 bps expense ratio. Likes the strategy. Makes sense for the extra income. Yields about 6.2%.

BUY

A market cap weighted high dividend covered call strategy. It covers the top 50 stocks that are good dividend players in the TSX.

COMMENT

Is the 6.5% dividend too good to be true? Is there a return of capital portion in the yield? He doesn't believe so. On all BMO covered call ETFs you're adding 2-2.5% to the dividend to total 6.5%. No, there are no return on capital issues.

COMMENT

A covered call on the entire Canadian market. He tends to use covered calls on sectors. ZWC will give you an enhanced income stream, but its growth is limited.

COMMENT

ZPAY is his favourite way to play the US market. European ZWE is for Europe and if you need Canadian exposure. ZPAY is designed to yield around 6%. Will have some volatility but will have half of what the S&P will see.

COMMENT

The caller requested suggestions for higher dividend ETF. There's a number of ways to play it. Go to an ETF website to see which ETF fits your profile. Covered calls provide higher dividends.

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DON'T BUY

Covered calls give you a boost in the distribution. Not a bad strategy when market is flat or slightly negative. If market continues to go higher, you're better off owning the underlying securities. Consider XEI instead, no covered call. Owns the securities outright, and so you won't get as high a dividend, but you might get more performance. In last 6 months, XEI returned17-18%, whereas ZWC returned 10.68%.

PARTIAL BUY

Compare to ZDB-T. The covered writing ETF including dividends is under-performing the simple buy and hold strategy. During a recovery, the covered written stocks are capped on the upside. You get a slim amount of option premium because the premiums are priced on the volatility of the underlying equity. Don't let your whole portfolio be covered written. Be careful.

COMMENT

ZWC would be his favourite so he can be more defensive. If you are bullish, ZDV would make sense. Markets have some squeeze potential and there is liquidity coming to markets from stimulus. He does not see materially higher highs than where we are up until early next year.

COMMENT

The caller owns the many of the underlying stocks and is considering switching to this ETF. ZWC is a covered call so you will get some enhanced yield. If you seek yield, it could be a better way to go. If you want flexibility, then the individual stocks makes sense. Hard to know the right answer.

HOLD

It has the TSX covered, banks, oils and everything else. You are after it for the yield. Sometimes the managers get overwhelmed and then sell the call further out so they are very good. They are pretty agile. He would not be in a race to sell.

HOLD

They are both high dividend covered call ETFs. They have underperformed compared to tech and growth stocks. If you want good dividend paying stocks, it is a fine investment for buy and hold. They only write the options on half the positions to enhance yield.

WEAK BUY

ZWC vs. ZWB He'd stay away from financial services, as with the low rates it's hard for the banks to be profitable. He'd rather go with the broader index. The more volatile a price, the higher the premium you'll get on a covered call. The covered call strategy here hasn't delivered in this volatile environment.

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