| | | Tomorrow I am buying 3 high yield ETF's.
One of the ETF's is RYLD which has an 11.11% yield.
This ETF is for aggressive investors only and I don't expect it to generate high total return. It is an income play only and although it carries a lot of risk due to it investing in small cap companies, RLYD's yield is fully-covered from underlying option premiums: the fund does not engage in destructive return of capital distributions or similar. Dividends have also seen quite a bit of growth since inception, although growth has been uneven, and dividends fluctuate month to month.
Since option premiums are paid out as constructive, not destructive ROC, I will be buying in a taxable account as ROC is not taxed.
I will also be buying XYLD which has a 9.58% yield.
XYLD is an index ETF that invests in the S&P 500 index and sells covered calls on its holdings.
XYLD, as most covered call funds, trades most potential capital gains for an increased 9.58% dividend yield. Said trade is a net positive when capital gains are low, but a net negative when gains are high over the long-term.
XYLD's strong yield make it a more appropriate investment for income investors and retirees.
Next up is QYLD with an 11.80% yield.
QYLD is an index ETF that invests in the Nasdaq 100 index and sells covered calls on its holdings.
QYLD, as most covered call funds, trades most potential capital gains for an increased 11.80% dividend yield. Said trade is a net positive when capital gains are low, but a net negative when capital gains are high over the long term.
Since this fund invests in technology, when tech companies are heading higher, potential capital gains for the fund are limited due to the options being called. However, in a sideways market, or where tech is declining as it is now, the fund should show better capital gains but keep in mind, this fund is geared for income investors and retirees.
These ETF's fit my investor profile as my focus is on income. |
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