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Opinions Stan Wong
BMO Europe High Dividend Covered Call Hedged to CAD ETZWE.TODON'T BUYMar 13, 2018
Stock 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%.
He likes Europe, though earnings momentum is starting to flatten compared to the U.S. Here, you own high-dividend stocks in Europe, then put a covered call and pick up some more income while it's hedged to CAD. Because has risen against CAD, you're better off owning an un-hedged version of this strategy. It's better to own the underlying security instead of a covered call like this to earn a better return. Best to own a covered call in a flat or sideways market.