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Opinions David Baskin
BMO Europe High Dividend Covered Call Hedged to CAD ETZWE.TOCOMMENTOct 13, 2016
David BaskinStock price when the opinion was issued
As of Jun 19, 2026. Market Open.
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Likes exposure to Europe, of which many Canadians have minimal exposure. ZWE looks at the dividend yields of its holdings. Plus, it does some covered writing, which gives you income along the way in tradeoff for upside. Attractive yield, but consider also owning some European stocks on their own. Nice piece of diversification for your portfolio, good bit of income.
In general, Europe is good value compared to US or NA markets. Lower PE and book value, higher dividend. This one has high dividend stocks, with covered call overlay. Up 11% YTD. Makes sense for cashflow. But ZWP, holding underlying securities, gives better total return. Yield is around 7.5%.
Thinks the feds will raise the interest rate in December, and it will be likely that people will sell interest sensitive stocks. A lot of the European stocks trade at cheaper metrics than similar North American names. The attraction is twofold. You can buy good quality companies at a lower price, and the hedged product is smart, because the US dollar could easily rise against the euro. This one would not be a silly idea. He doesn’t know if this qualifies for the Canadian tax credit or not though.