BMO Covered Call Utilities ETF (ZWU-T)

Includes telcos likes BCE, Telus, and Rogers, as well as utilities. Still likes it a lot, has it in his global dividend strategy. He reduced exposure on recent rally, moving to ZPAY for the lower risk. Before adding, wait for it to hit the low $10s.

He feels that interest rate pressure is coming to long end of the curve. A lot of these utilities are capital intensive, so likely to see additional downside. Underweight for now; look to buy into weakness, but not today (BCE is the catalyst for today's move).

70% Canadian utilities, 30% US. Includes companies such as pipelines, telcos, and traditional utilities in the energy creation and delivery space like ENB. Holds about 15-20 stocks, but with the option overlay to get the extra yield. So it's a combination of that that makes up your 60 holdings. Not a lot of turnover.

He recently trimmed exposure. Very interest-rate sensitive. So as bond yield go up in the short term in the US, there are headwinds in front of us. The pipeline component is more sensitive to the energy space, which is coming under a bit of short-term pressure. Hurting performance in recent years has been the likes of BCE, formerly a $60 company but now $45.

A basket of really good companies, high yielder. A range trader, not a bond alternative.

Utilities, pipelines, and telcos (including BCE). A utility play, with a covered call strategy. Really nice way to get a lot of income in your portfolio without a lot of volatility. But very interest-rate sensitive. Lots of ups and downs over the last 5 years, mainly based on what the bond market's done.

ZWP is the equivalent of high-dividend players, but exposed to Europe. Some of the best dividend yields come out of foreign companies. Great way for Canadian investors to get income and dividend exposure in Europe. Likes it very much.

Likes both, and owns both in his ZZZD. The mix changes from time to time as he sees more value in one or the other. Most recently, he trimmed ZWU and bought some ZWEN (direct exposure to covered call energy sector).

You need a higher return than a bond is going to give you today to keep up with inflation and grow your savings. Alternative ETFs such as ZWU, VCNS, ZWB, ZWC, and PJAN are what's needed to protect your portfolio, rather than conventional bonds. 

These are what you need to generate the income you'll need for retirement, to get a real return on your investment, more than just protection of principal.

So far this year, this one has outperformed the ZUT (not covered call). When there's a flat or tepid market, covered call strategy will give you better returns. Yield of ~7.3% remains pretty solid. Combination of dividends and deferred capital gains, so it's quite tax efficient.

Utilities remain kind of boring. Decent strategy if you need the income, but he's looking for more growth and capital appreciation.

For covered call strategies, always consider the yield and the source of that yield. With this one, you'll forego some upside if utilities markets are strong, but you get more yield on an ongoing basis. Best for ongoing yield to pay your bills.

Compare it to a non-covered call alternative such as ZUT. Over the long term, outperforms the covered call on a total return basis. The better growth alternative.

Given the kind of market we're heading into, some strategists feel pretty good about utilities. Utilities are considered defensive, as people need to pay them whether the economy is good or bad; tend to have stable dividends.

ZWU is far more interest-rate sensitive, as it focuses on utility companies. Generally as interest rates fall, utilities do better. HMAX is financial services, insurance, lifecos. Falling rates not necessarily good for them, because they're more sensitive to interest rate cuts for a slowing economy with prospects of a harder landing.

So, if rates are coming down due to an economic slowdown (as he believes), then ZWU will probably outperform HMAX in the short run.

Be cautious on covered call vehicles. They may not move as much as the underlying stocks. It is hard to pin down and he likes buying the stocks directly and sticking with the fundamentals and dividend for income.

Covered call, says pays great income, but remember that all utilities are tied to interest rates.

Dividend yield is strong (~5%), however don't expect large capital gains (covered call gives the capital appreciation away). Would recommend for investors interest in dividend yield. 

Excellent product with ~8% dividend yield. Concern about BCE dividend sustainability. Good time to buy.  Would recommend holding for the long term. 

ZWU's covered call will pay a higher dividend, though FTS' is solid and growing. ZWU pays more income because you're selling calls. The downside is that as interest rates decline, utilities will improve and you will lose that upside if you hold ZWU and not a plain ETF or Fortis itself. If you are positive utilities, don't use a covered call ETF.

Covered calls supplement income, but sometimes the underlying security performs better over time. Not in this case, which is rare (ZWU vs ZUT). ZWU pays an 8.5% dividend, including the covered call overlay. Share price has risen since October. Utilities are not a growth area, but bought for cash flow and income. Do you want the yield or growth?

Great dividend, but not a lot of growth in terms of earnings. So total return not spectacular. Utilities don't grow at 15% earnings growth rates the way, say, a MA would.

With covered call strategies, you're missing some of the upside over time. You have to really understand what you need this for, income is a prime reason. MERs are also usually higher.

Defensive stock with excellent yield (~7-8%). Would recommend buying on stock price lows. Not a growth company, so don't expect major capital appreciation. On flip side, would recommend trimming on peaks.