StockAssembler Blog

Exploring the Harvest Covered Call ETFs

• Harvest covered call ETFs offer high yields (7-9%) but often underperform conventional ETFs in strong bull markets due to capped upside potential.
• Sectors like healthcare and banks show better relative performance, especially in flat or volatile markets, while REITs, utilities, and energy tend to lag.
• Investors must weigh the trade-off between steady income and long-term capital growth when choosing covered call ETFs.

Comparing Canadian REITs: Allied Properties, RioCan, and Granite

Allied Properties, RioCan, and Granite REIT represent different sectors within Canadian real estate, each facing unique challenges and advantages. Allied, primarily office-focused, has struggled with the shift toward remote work, affecting occupancy rates and raising concerns about its high debt-to-EBITDA ratio and rising payout ratio. In contrast, RioCan (retail) and Granite (industrial) have maintained stable occupancy rates and stronger financial health, making them appealing for income-focused investors. Allied’s future growth and recovery hinge on reducing debt and stabilizing cash flows. While its lower valuation may reflect these risks, it could also signal an undervaluation in Canadian REITs as a whole.

Analysis of Hamilton Covered Call ETFs

• Income Focus: Hamilton’s covered call ETFs aim for high income through writing call options, appealing to income-focused investors, but limit growth potential.
• Performance Variability: QMAX shows potential for outperforming QQQ, while SMAX, HMAX, and UMAX underperform against SPY, ZEB, and XUT, particularly in bullish markets.
• Mixed Results for HDIV: HDIV outperforms the Canadian XIU index but lags behind the U.S. SPY index, indicating a trade-off between income and growth opportunities.

Building a High-Yield Portfolio with Balance in Sectors and Risk

• Income-Focused Strategy: Aims for high dividend yields averaging around 7-8%, with a mix of real estate, energy, and defensive sectors.
• Diversification & Balance: Combines high-yield REITs, stable dividend payers, and growth-oriented stocks to achieve income with some potential for capital gains.
• Risk Management: Spreads exposure across different sectors to balance risks and stabilize returns.

Evaluating Global X Covered Call ETFs

• Covered call ETFs provide high income through option writing but limit upside in strong bull markets.
• When comparing Global X covered call ETFs (e.g., ENCC, GLCC, QQCC) to their non-covered call counterparts, the covered call versions generally underperform, especially in sectors with strong growth like NASDAQ 100.
• While some sectors (oil, gas, and gold) showed less disparity in performance, long-term investors in covered call ETFs should be mindful of their potential limitations during bull markets.

Exploring a Modified 60:40 Strategy with Covered Call ETFs

• Covered Call ETFs: Combining sector-specific covered call ETFs can offer high yields and competitive returns compared to traditional market benchmarks.
• Risk Management: Adding bond ETFs to a stock-heavy portfolio can reduce losses during market downturns, offering a more balanced approach.
• Yield Optimization: Including covered call bond ETFs may enhance dividend yield, though their long-term performance requires further evaluation.

High-Yield ETFs and Split Share Corporations in the Canadian Banking Sector

• Several high-yield ETFs and split share corps provide exposure to the Canadian banking sector while providing high income.
• ZWB and BKCC underperformed over the last 10 years, while SBC and BK outperformed.
• Newer ETF BANK.TO shows potential, with a 10% outperformance over two years compared to ZEB.
• Split share corps offer higher yields but come with greater risk due to leveraged structures.

Designing a Defensive Stock Portfolio with Utilities, Oil & Gas, and Blue-Chip Stocks

• Create a defensive stock portfolio with a focus on utilities, oil & gas, and blue-chip stocks.
• Selected stocks include ENB.TO, CJ.TO, and BCE.TO, emphasizing high dividends and strong fundamentals.
• This approach balances income generation with reduced volatility, protecting overall capital.

Investing in REITs - creating your REIT portfolio vs. REIT ETF?

• Potential for high dividends and tax benefits: Individual REIT stocks can provide higher yields (if selected correctly) and more favorable tax treatment on dividends than REIT ETFs.
• Volatility risk: Individual REITs can be more volatile, but this can be mitigated by building a diverse portfolio.
• Balanced approach: A diversified portfolio of REITs offers reduced volatility while maintaining higher income and tax benefits.

Understanding covered call ETFs

• Not all covered call ETFs perform equally.
• Evaluating performance can be done by comparing stock price returns to index funds.
• Covered call ETFs can be a good option for those seeking stock price appreciation and dividend income.