BMO Covered Call Utilities ETF (ZWU.TO)

REITs or utilities for a long-term investor? He is more inclined towards utilities. Have been getting beaten up lately but thinks it was overdone. He likes BMO Covered Call Utilities ETF (ZWU-T) which provides a pretty decent yield and good diversification. The problem with REITs is that there was so much interest in them earlier in the year that they got quite overpriced. Also REITs are probably more interest sensitive.

These have Call options on Canadian utilities so you are more or less getting the performance of the utilities but you are also getting the income from the Call options on them. Good conservative thing to hold but he wouldn’t put a whole lot of your portfolio in this. 20% would be quite fine.

Utilities tend to have higher debt load so if interest rates go up they tend to underperform. This has 20% US utilities. Around the 14.50 area he has been buying it.

Has sold off quite smartly. A pretty broad utility index. Good yield at 6%. Also, they are writing covered calls.

Broader based utilities. For the next few years this trades 5% on either side of $15 and generates a nice yield for you. Includes telecoms. 6-7% yield. Don’t worry too much about volatility.

6-8% dividend for next 2-3 years. Covered call strategies. Not without volatility. Likes it.

Very much likes Covered Calls but not in this market. Really great in a market that isn’t going anywhere, sort of a sideways trending market. If you are bullish on equities, you do not want to have any Covered Calls as it will drag down the performance of the position. Thinks markets are moving higher, so covered calls will impact your rate of return.

Loves it. Covered Call Utility Stock ETF. Utility stocks are relatively stable and the fact that you can do a covered against them enhances the yield a couple percent a year and is a brilliant strategy. A nice stable investment and if markets dip you still get the yield.

This would work very well for people who want a low beta portfolio. Makes a good deal of sense for a lot of people. With covered calls, you are giving away some of the upside but protecting some of the downside. Also, utilities are more conservative usually. Not against this but doesn’t always recommend it.

(A Top Pick Aug 15/12. Up 1.63%.)

This is Covered Calls on utility stocks and pays a monthly income anywhere between $0.085 and $0.09 a share and that is coming to you as capital gains and/or dividends. Yield is about 7% annually.