BMO Covered Call Utilities ETF (ZWU.TO) Buy,…

BMO Covered Call Utilities ETF (ZWU.TO)

11.04

+0.03 (0.27%)

as of Oct 15, 2026, 1:42:08 pm Market Open.

403 watching

BUY ON WEAKNESS

The impact is going to be a big part on the pipeline component. Utility stocks have never been more expensive globally. It is fully valued. He would buy it at $12 or even close to $13 and would recommend it at those prices.

DON'T BUY

An ETF for utilities. A great defensive sector with amazing performance lately. XUT-T is good, but 60% is in the top 4 holdings (inculding Fortis and Algonquin); 4% yield and 55 basis point cost. ZUT-T is more diversified and equal-weight. ZWU is also equal weight but does covered calls to create extra income, which sells future income for gains today; yields 6%. Given the strong performance of utilities in the past year, covered calls have lagged.

BUY ON WEAKNESS

There are three interesting sectors: The traditional utilities that are rather overvalued; the telcos in Canada are good plays. They are not fully valued but not cheap; The pipelines are more linked to energy prices. He would agree that the sectors are fairly fully valued but he likes that it is defensive and has a yield. 5% lower and he would start nibbling at it.

BUY

ZWU or ZWE Both are good defensive strategies. ZWE: He's not that bullish on Europe, but at least you get income from writing the covered calls here. ZWU: Utilities are much less volatile and more stable, yet expose you to Europe. If you belive in Europe and playing defence, then both ETFs are fine. These two ETFs are highly correlated, rising and falling together. Note that utilities are risk-off, not for you if you have long-term bullish.

WEAK BUY

He does like it because it has some US. The valuation is getting high as a lot of people like it too. Be aware that you get the extra yield with the options but it will drop with the rest of the market if there is a correction.

TOP PICK

This is electrical utilities, pipelines, and telecommunications ETF. It has gone sideways in this market environment. It is a good place to park your money. Good diversification with this ETF. Yield = 6.3% : Expense ratio = 0.7%

COMMENT

It is not a replacement for fixed income. They are very interest rate sensitive. There is a covered call overly to bring the yield up to 6 or even 7%. It is not risk free.

COMMENT

ZWU is a covered call strategy on utilities, which are defensive, and the covered call adds some income. This has traditionally underperformed ZWB, banks, vs ZPW which is a put-right on the S&P 500 (you want US exposure).

BUY ON WEAKNESS

Utilities aren't cheap, but this also includes telcos and pipelines. You get diversification across Canada and the U.S. This is pricey now and he wouldn't add here. Pays a 6.5% yield, so there's some safety. It's a defensive play and he really likes this.

COMMENT

ZWC-T & ZWU-T. He loves ZWU-T as a defensive holding. ZWC-T is a broad TSX with a covered call overlay to enhance yields. Canada should underperform the world for a long time as a quarter of the index is the banks. The best two growth areas in the world for a couple of decades are healthcare and technology. These two ETFs would overweight Canada if they were your whole portfolio. ZWE-T and ZWS-T are preferable to include in a portfolio.

TOP PICK

Income focused. Yielding close to 6%. Hard to beat. Diversified out of Canada, US is close to 20%. Expense ratio: 0.71%. Good dividend play.

BUY

Good yield. A defensive name that he would own. Good diversifier.

WEAK BUY

It owns the major utilities and the covered call generates a little more income. This is an income play; don't expect much capital appreciation--this is a decent strategy.

DON'T BUY

It does not pass the screen of green. He would have a problem with it over the long term. Traditional utilities, pipelines etc. So over the next 10-20 years the pipelines may turn out to be stranded assets. YLCO-N is a green utilities alternative to ZWU but in the US.

BUY

Moving from Canadian Banks. Diversification is always a good idea. With ZWU-T you add pipelines (Can and US), Telcos (Can/US), and Can and US utilities. They are all interest sensitive in a different way and the covered call overlay will give you a higher yield. Distributions are safe.

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BMO Covered Call Utilities ETF (ZWU.TO)