BMO US High Dividend Covered Call ETF (ZWH.TO)

(A Top Pick Dec 30/14. Up 17.89%.) This is higher dividend stocks with more of AT&T and GE type of holdings. This is bought on the Toronto exchange, but is basically unhedged and some of the appreciation is from currency. A very good Covered Call product.

It has been one of his favourite ETFs: dividends from the US with a covered call overlay. He has gotten out of this exposure because he wants to be a currency hedged investor through, e.g. ZWA-T.

Doesn’t think interest rates are going to soar to any great degree, and you are getting a good return on this. If you are after yield and a good quality portfolio, this is a good place to be.

With this all of your gains during the last year, have basically been from currency. Although it trades in Canada, it is essentially US$, and isn’t hedged. He likes this.

This is taking S&P stocks that are paying a higher dividend, and writing Calls on it. They also have one based on the 30 Dow stocks, BMO Dow Jones Industrial (ZWA-T). What he really likes about these things is that they are not writing Calls on an index, they’re writing them on all 30 stocks (or all 6 banks), so you are getting a better rate of return.

(A Top Pick Sept 2/14. Up 20.35%.) Still likes it.

(or ZWA-T). Can low volumes be a problem? No. Unless you are a day trading there is no issue. You have the liquidity of the underlying holdings. The market makers make the market for you.

This is a basket of dividend paying equities. They have covered calls written against them. What BMO does with most of their funds, which he assumes they are doing with this one, is that they don’t write covered calls against the whole portfolio, which is a positive. This gives the portfolio an opportunity to recover. You are going to get a US monthly pay. There is nothing wrong with this. A good play.

A US ETF to get US dividends? Be aware that any dividends received as a Canadian is taxed as income, not as a dividend. He would suggest something like this, a Covered Call on the S&P on the higher dividend yield ETF’s. Dividends will be taxed, but the capital gains will come to you as capital gains. This one is pretty stable.

The underlying portfolio looks good as they are dividend growers. The covered call policy has been accretive. Just stay in it.

Covered Calls are one of his favourite vehicles. He uses them for about 10% of the portfolio, because the returns on fixed income are so meagre. This is usually pretty close to 5.5%-6%.

Weaker Canadian dollar is better for the forestry industry, but how much is priced in right now? This one gives exposure to all 10 economic sectors, covered call overlay and a great way to get yield into your portfolio. But he is reducing his exposure to the Canadian/US dollar exchange rate.

BMO US High Dividend Covered Call (ZWH-T) or BMO High Yield Corp Bond US Hedge to Cdn (ZHY-T)? Corporate bonds are probably going to be riskier than covered calls. Covered calls gives you the guaranteed income and are more stable with regards to the underlying investments. The corporations are going to be giving a higher return if the market remains benign, but you are taking a risk in case we have a hike or there's a credit crunch with regards to those corporations. You don't need the hedging these days because the Cdn$ is, if anything, dropping. If you could get it with an un-hedged version, it would be better still. If he really had to choose, he would select the Covered Call.

This is a US Covered Call ETF with a higher dividend. He likes this and has quite a bit of it. Pays around a 5% dividend yield. You have to remember that the yields will be treated as income in Canada, but you have the advantage of the Covered Calls being treated as capital gains.

Dividends account for a very big chunk of a portfolio return. There was a double top in June and July. There is good support where it is now. Pays monthly distributions.