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

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BMO Covered Call Utilities ETF (ZWU.TO)

12.14

+0.05 (0.41%)

as of Jul 24, 2026, 7:55:06 pm Market Open.

402 watching

Investor Insights

Jul 26, 2026, 12:00 am

This summary was created by AI, based on 18 opinions in the last 12 months.

The BMO Covered Call Utilities ETF (ZWU-T) is attracting attention from investors due to its diversified exposure to the utility sector, generating a yield estimated between 6-8%. Experts acknowledge that utilities tend to be sensitive to interest rate changes, but the outlook remains positive with increasing power demand, especially in the U.S. driven by sectors like AI and data centers. While the ETF employs a covered call strategy, which reduces potential upside, it’s deemed suitable for investors seeking income amidst a generally stable utility market. Many experts suggest this ETF can serve as a component of a broader portfolio, providing tax-efficient dividends while mitigating overall risk. Strategic allocations in ZWU rather than focusing solely on equities are encouraged, particularly for conservative income-seeking investors.

Consensus

Positive

Valuation

Fair Value

Similar

XDV

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.

BUY

He likes it because there are many US utilities there. He sold many in December because he wanted the pure play when the market dropped.

COMMENT

In a defensive sector which is the right one to be one during market duress. But you're selling calls to create extra income. This is merely okay. Total returns have been flat lately, though ZWU has done better than the overall markets. Hold this outside the RRSP, given tax considerations. Just remember: if the market drops 30%, ZWU will fall 24%.

COMMENT

Utilities include telephones, pipelines and power. He owns this for clients who want the dividend, not long-term performance. If interest rates rise, this will likely fall. But he foresees minimal increases coming (2 from the U.S. this year, he thinks), so ZWU will perform flatly.

COMMENT

ZUT-T vs. ZWU-T. As we go into a recession, bond rates are dropping. ZUT-T is an equal weight exposure to traditional Canadian utilities. ZWU-T includes telcos and pipelines. He is always more in favour of diversification.

BUY

Or buy ZWD instead? He likes it because it has both Canadian and American utilities, and it has a covered call. The only problem with utilities is that they can't raise revenues (pass them onto the consumer) when interest rates rise.

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BMO Covered Call Utilities ETF (ZWU.TO)