BMO Europe High Dividend Covered Call Hedged to CAD ET (ZWE.TO)

Is it good for income? - Some of the most famous consumer brand names. Dividend is quite high and safe. All these big companies are selling to emerging markets more than Europe. That is why he likes it.

ZWE-T vs. ZWU-T vs. ZWB-T. A 100% stake in anything is generally a bad idea. These three give you 2/3rds of your portfolio seeking dividends in Canada. He would add ZPW-T for US put writes. ZWH-T would give you a broader exposure. He would underweight Canada.

[Are the dividends safe?] BMO in their screen looks at the leverage ratio of the companies to see if they will be stressed in terms of paying their dividends. It is still a good holding.

ZWE-T or ZWP-T. European market. Covered calls. You get less upside participation but get a higher yield. ZWE-T is currency hedged and ZWP-T is not.

Likes this. He'd buy this if he were playing Europe. But diversify with, say, ZWU, which does covered call for utilities and has expanded beyond Canadian utilities into the U.S. Also look at ZWA and ZWH for further diversification. He likes all these covered calls. The fees are high, but he has seen first-hand the added value these products give.

The consensus is very negative on Europe. It would tend to overweight the classical defensive sectors and on top of that they are selling calls. If you are betting on the recovery of Europe, you wouldn’t want to use this. He prefers a purer play on Europe.

BMO finds the best European dividend payers spread across many countries and sectors, then write a covered call overlay. It pays a dividend over 6% and has kept it very well with markets. It's his favourite way to play Europe.

ZWC vs. ZWE vs. ZWU. ZWC has a lot of the good dividend payers with a covered call overlay. ZWU is lower risk than ZWC, as it doesn’t have exposure to energy and financials. If interest rates go up in a big way, ZWU will underperform, and could easily go down 3-5%. The dividends for these are safe. ZWU is attractive from a defensive standpoint. ZWE has exposure to the 3 biggest country markets, very few financials, a currency hedge, little Italy exposure. It could fall 5-7% in the next months, and then it would be a pretty decent buy.

A way to play European market and has covered calls. Neat thing is it has a 5-6% yield. Conservative way to play Europe, though limited upside because of the covered call.