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 25, 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) has garnered positive reviews from various experts who highlight its utility exposure, tax efficiency, and appealing yield of over 7%. Experts note that while the ETF is interest rate sensitive, it provides a diversified approach to investing in Canadian utilities, telcos, and pipelines, making it a solid choice for income seekers. The covered call strategy utilized by ZWU can enhance returns, though some experts caution that it limits upside potential compared to holding the underlying stocks directly. Overall, the ETF is viewed as a good addition to a diversified portfolio, especially in a market with increasing power demand due to factors like AI and data centers. Recommendations emphasize the importance of not over-concentrating investments and considering market conditions when investing in utilities.

Consensus

Positive

Valuation

Fair Value

Similar

XDV

DON'T BUY

it's underperformed the bank ETF since inception. So, the covered call isn't adding value, but rather generating fees.

DON'T BUY

FSZ vs. ZWU Both pay around an 8% dividend, which at that level it's probably not pure dividend you're getting on a long-term basis. About 6.5% is the limit for a sustainable dividend level. Plus, you get worries about the future of hydrocarbon demand. He himself doesn't see this, but it's a scenario to consider. Both FSZ and ZWU, you're getting some of your capital back to fund their dividends--this is not sustainable. ZWU has underperformed the equal-weight bank ETF since inception. So, the covered call portion isn't adding value, but is an additional-fee generator. He's rather buy the underlying stocks. Fiera has done a ton of purchases, not all of them cheap or good. Their wealth management business has been positive in the last 18 months, but you risk a market correction and a major re-pricing of assets, more so than any Canadian bank.

BUY

ZWU vs. ZWE Includes telecoms, pipelines, and electric companies as well as utilities. Good for conservative investor, who wants a nice yield of tax-efficient income. Very good yield about 7.5%. Longer term, you might have more growth in ZWE if you can look beyond the next 6-12 months.

COMMENT

Caller had a question on tax treatment. About 30% of the dividend stream comes from US corporations. This would see withholding tax. The capital gains coming from the covered calls are cap gains, and the dividends from Canadian companies will see beneficial tax treatment and the US dividend will be taxed.

DON'T BUY

For the long term The only problem is that utility stocks rely on government contracts, so are vulnerable to an increase in interest rates; they can't adjust quickly. So, if rates rise, utilities will decline even though the dividends now look attractive.

BUY

He likes ZWU, a basket of telecoms and pipelines, where you get the high yield plus the covered call option premiums.

BUY

Caller asked for an infrastructure ETF. Gives you exposure to aspects of infrastructures like pipelines, utilities, and telcos. Aspects of infrastructures are there. Lots of different ways to look at infrastructure. PAVE gives you access to roads and infrastructure.

BUY

A good ETF to get exposure to pipelines, telecos and other high dividend paying utilities. There is a covered call enhancements on top of it. Pays a 6-7% on average, which is great for dividend seekers.

COMMENT

Hard to say which one would perform the best in a correction. ZZZD has a very defensive posture with half of the portfolio hedged to downside risk. ZWU and ZPAY are in ZZZD. Would look to be defensive in the next few months.

COMMENT

There is dividend from the underlying companies and there is also yield from covered calls. The stock price adjusts on the ex-dividend experience.

COMMENT

For yield seekers, ZWU is a great domestic play. Yield is currently around 7%. It is interest rate sensitive and to energy. If you want European dividend plays, he would recommend ZWE and ZWP.

COMMENT

Likes Europe better. When not investing in Canada, you don't get the dividend tax credit. In a taxable account, would focus on ZWU since it has favourable tax treatment. In a registered account, he has been allocating to international companies since dividend is better.

BUY

Utilities are capital intensive and has debt on their balance sheets. If inflation is going to push interest rates up, it would hurt margins, off-set by their regulatory ability to increase yield and income. You get some inflation protection. A great dividend player.

BUY

For income in retirement account. Would prefer ZWU to HHL. If markets correct over the next few quarters, there will be more correction in HHL. Likes both and are both buys in pull backs.

BUY

For income in retirement account. Would prefer ZWU to HHL. If markets correct over the next few quarters, there will be more correction in HHL. Likes both and are both buys in pull backs.

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BMO Covered Call Utilities ETF (ZWU.TO)