BMO Europe High Dividend Covered Call Hedged to CAD ET (ZWE.TO)

Europe covered call. Its biggest weighting is France and it sold off in recent weeks and then today is on new highs. This is the safeness way to play Europe.

BMO Europe High Dividend Covered Call hedged to CAD (ZWE-T) or BMO MSCI Europe High Quality (ZEQ-T)? This one is basically a value screen, or alternatively you can go for a quality that is similar, but not exactly the same through ZEQ. Either way, you are looking at factor investing. He doesn’t find a lot to choose between the 2. Either would do well for you.

A diversified basket of high dividend covered calls are something he likes. He would consider adding ZWC-T. If we go into a 20% bear market then an ETF like these will only fall about 80% of the downside of the market in general. Also, look at ZWU-T in a recession.

Covered calls. You can miss some upside if stocks run up a lot. They are valuable when the market becomes volatile. If you need yield as opposed to price appreciation, then this is good. 6.7% yield.

It is a broad, European, covered call strategy. It could easily fall 10-15% minimum. Don’t put new money to work here now. Europe overall is pretty cheap, however.

BMO high dividend or BMO Europe high dividend? He loves these and uses them in his fund. When you want to play defence, a high dividend concentration in stocks, tend to have lower downside risk. If you do this with a Covered Call, you get an enhancement on your yield.

Likes the European space and has been cautiously moving into it. There are a lot of events on the horizon. The covered call writing gives this about a 6.75% yield. He would be more inclined to go directly without having a covered call strategy on top. You would probably get more torque and upside here by not using the covered call strategy. Not using covered calls brings down the costs.

He likes this because it has 2 things that he is always telling people to do. 1) Invest outside of Canada, and 2) anything that has a dividend bent to it is pretty much, as a by-product, going to be a value kind of tilt. This basically gives you European large cap value stocks, which is a good and reasonably conservative way to diversify your portfolio.

European Market. He plays it with ZWE-T. It has high dividends and a covered call strategy with a currency hedge. 6-7% yield. For the next 5 years that would be pretty good for Europe. It is the more conservative way to go.

Comment on an ETF Basket of ZWE-T, ZDH-T and ZWH-T. ZWE-T is high dividend Euro stocks with a covered call. A defensive way to play Europe. ZDH-T is hedged. ZWH-T is international High Dividend US, non-hedged. He likes them all and owns them in his funds.

Thinks the feds will raise the interest rate in December, and it will be likely that people will sell interest sensitive stocks. A lot of the European stocks trade at cheaper metrics than similar North American names. The attraction is twofold. You can buy good quality companies at a lower price, and the hedged product is smart, because the US dollar could easily rise against the euro. This one would not be a silly idea. He doesn’t know if this qualifies for the Canadian tax credit or not though.

A covered call ETF based on the largest European stocks. It has a pretty attractive yield of about 7%. The dividend part will be classified as income, but the covered call is capital gain. The question is, do you want to be in Europe right now? He has basically left Europe and not adding it to positions. However, this is a really good ETF and a good way to participate in European markets with a covered call overlay giving you some downside protection.

It is his preferred way to play Europe. Dividend companies with covered calls being written on them. With a defensive outlook, it is a nice way to be in the market.

Europe has had some good growth already. The CAD hedging on this is helpful, especially if it’s in retirement accounts where your liabilities in the future are going to be in Cdn$. In general, this is going to be a basket of blue-chip European dividend players. If you saw some of the European valuations get a little bit closer to the US by 10%-20%, he would probably take it off.

European equities are fraught with political risks, but looking at European equities, particularly with a yield versus government bond yields, there is a radical difference. At a certain point, there is going to be a rotation back into equities, and these institutions will have to take on more risks to meet their liabilities. He likes this ETF and it is a good hold. Dividend yield of over 7%.