BMO US High Dividend Covered Call ETF (ZWH.TO)

He likes this. It has a really good yield of around 5%. Remember this is US$, so the dividend you are getting will not give you the dividend tax credit. However, you are getting capital gains on the sale of the options.

The decline over the summer was all currency. If North Korea escalates, the US$ could shoot up and then you would get an increase in the ETF.

This is how he takes his position in the US market. He has started adding his US exposure back after hedging previously. ZWH-T does not have a currency hedge version.

A pretty diversified ETF. He likes the Covered Call in that sector. This has backed up so much because of the currency. He is reasonably positive on the US currency, so if you like the yield, you have probably seen the worst decline. You can add to this. 5.5% projected yield.

Be careful of this because there are 2 names, ZWH and ZWH.U. The latter is in US$. There is no problem with this ETF. Dividend yield of about 5.3%. He likes this.

This buys high dividend stocks in the US selling Covered Calls against them. You don’t get any benefit from dividends on the high dividend stocks from a tax advantage, because they flow through as ordinary income to Canadian investors. High dividend stocks tend to have no option premiums, because they are normally not that volatile. He would prefer BMO’s US Put Write ETF (ZPW-T), but this works also.

There is a US version that trades in US currency, but he does not believe there is any difference in the tax treatment of them.

He likes this. One of the major reasons is the US$ taking a hit, and the ETF dropping like a rock. It has bounced, and thinks it is going to go back up. Very safe. Has an excellent yield.

It is like ZWE-T. It finds the best quality or dividend payers. We have seen a dramatic decline recently because of the Canadian dollar. He likes the US exposure. Don’t get out of it.

This has taken about a 10% hit relating to the Cdn$. These are very good quality dividend paying stocks. The dividends have growth sustainability and they also write options. The dividend is excellent and this is a good time because of the Cdn$.

Increasing US exposure in the TSX ETF? There are a couple he would look at. BMO Dow Jones Indus. Avg. Hedge (ZWA-T), which is a covered call on the Dow stocks, as well as BMO US High Dividend Covered Call (ZWH-T) which is based on the higher dividend paying S&P. He likes both of these. They are more expensive because they are Covered Calls but is quite impressed with the value added. He has a lot of these.

The High Dividend Covered Call means that the options on high dividend stocks are typically not very expensive, because the dividend tends to dampen the volatility of the underlying stock. Think of this as a tool where you are basically taking US stocks, collecting US currency risks, collecting dividends and collecting some Call premiums as well. Think of it as an income play. He would probably be more inclined to use the ZWB on Canadian banks, because he likes that sector.

Exposure with dividends to the US through ETF’s, Dow, S&P, and/or techs? If you want dividends, the NASDAQ is not the place to go. Going back 100 years, the large cap US stock market, S&P has had a dividend yield of about 4%. Currently, the dividend payout is less than half of that. The companies that are not giving extra money back to shareholders in the form of dividends, are giving it back in a different way by buying back shares. If you want a dividend focused strategy, you want to be diversified. The Dow is a bad index because it is poorly weighted. One of his favourite ways to play dividends in the US is through an ETF, ZWH. You are getting a yield of around 3.5%-4% on the dividend side, and it is diversified across all the economic sectors, and has a covered call overlay to enhance the yield.

High dividend covered call ETF. If retired or about to, then this is probably fine. If you want growth then you are selling some of it in terms of call option premiums. Foreign dividends are not as tax efficient as Canadian.

A good product, and BMO is a real leader in Covered Call ETFS. He would caution that in this market we are in a pretty good environment to be in US financials, so you might be leaving some money on the table. This is a relatively more conservative product, because you get the extra income from the covered call writing. There is always a chance that you could be called away.