Larry Berman CFA, CMT, CTA
BMO US High Dividend Covered Call ETF
ZWH-T
COMMENT
Mar 19, 2020
At market bottoms you don’t want ETFs with covered calls like ZWH-T because you are giving away some of the upside. You want ZDY-T or the currency hedged version of that. CYH-T is a benchmark for world dividends. It is a Canadian dollar currency hedged ETF. TDIV-Q is a technology dividend play.
There is space for these ETFs for yield seekers. One of the challenges in 2020 was that dividend paying stocks did terrible relative to technology that does not pay dividends. Still likes them for conservative investors.
The yield is in the 5.5%-6% range. A covered call strategy that is pretty sustainable. A group of good quality high dividend paying companies with covered call for yield enhancement. If you are bullish, you could miss out on some returns but in a sideways to down market, a prudent choice.
A good quality holding. Depends what you are holding out of an investment. Provides more income with the covered calls. In a high growth market, you do underperform. Good for income investors.
BMO has the biggest suite of covered call strategies around the world. For US high-dividend covered-call strategies, ZWS or ZWH are really good (one hedged, one not).
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At market bottoms you don’t want ETFs with covered calls like ZWH-T because you are giving away some of the upside. You want ZDY-T or the currency hedged version of that. CYH-T is a benchmark for world dividends. It is a Canadian dollar currency hedged ETF. TDIV-Q is a technology dividend play.