Larry Berman CFA, CMT, CTA BMO Covered Call Utilities ETF ZWU-T WAIT Nov 04, 2024

It tracks companies with stable earnings which are soft of priced like bonds. Covered calls gives a little more income. Utilities act like bonds. It has faced the rise of interest rates, but rates will ease and will benefit this sector, which is a good place to be.

Both offer similar exposure. He doesn't looked at HUTL's foreign exposure, but likes both as a strategy. They take turns outperforming each other. Even. Both are good.

They are both relatively safe or stable sectors so you could add both to your portfolio.

Remember that a GIC and dividend stock have different levels of risk. Consider preferred shares and covered call ETFs like ZWC which gives broad exposure to Canadian dividends with a covered call overlay. ZWU, too, which is an alternative to fixed income, but gives equity market risk.

Is 30% exposed to US telcos, communications and pipeline, so most of this holds Canadian dividend stocks. Buy this and sleep at night. Very defensive. He sold some of this last Friday to buy more aggressive in his portfolio during this strong sell-off. But this is not bad to hold at all.

In the area of the market that's quite stable, mainly because utilities are regulated by government. They do become interest-rate sensitive. Recently got caught up in the AI hype and all the power that will be needed, so got a bit ahead of themselves. Low beta. About as safe as it gets in the stock market.

When the sector outperforms, that's a warning signal. And we've had a couple of those days. Great place to hide, good yield, getting the covered writing premiums. Challenge is that because utilities are so low volatility, that premium is less.

For dividend seekers. Gives you exposure to great Canadian dividend payers like telcos, utilities, pipelines. Lots of diversification, so when a BCE has a bad run you're still generating income.

ZWU holds Canadian utilities, writes covered calls on ~50% of the portfolio. Use it if you have a neutral or range-bound view of the Canadian utilities market. If you buy near market bottom, won't participate as much in the snap-back.

If you see growth and capital appreciation on the horizon, use ZUT -- almost the same basket, but with no covered call overlay. Lower yield. Money works for you over the long haul.

Holds Canadian utilities, pipeline and telcos and pays over 7% with less correlation to the market, but it's equity risk, not money market risk.

This is a safer way to hold Enbridge, which this ETF holds. This holds diverse dividend payers from Canada and the US in utilities with a covered call overlay to generate extra income.