My Response to “Stocktrades” Covered Call Video + Why I LOVE Covered Call ETFs for Passive Income!
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- Опубликовано: 10 фев 2025
- Covered Call ETFs are underrated because they're one of the only ways to enhance dividend yield in this low interest rate environment.
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#passiveincome #investing #coveredcalls #coveredcallETFs #etfs #putwrite #options #optionstrading #dividendstocks #dividendyield #incomestrategies
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For me, being not too close but not too far from "retirement", I like all the dividends I get and since I don't need them right now, I just reinvest them. I don't use DRIPs because I like the control to reinvest the dividends back to the stocks that make sense at that time. Great video as always.
Excellent points. The psychology of trading, the ups and downs, is a serious matter. It will affect your mental health. Science validates that while people feel great when they male a “killing” on a stock, in reality when you lose money on a stock it affects people far worse and for a longer period of time. The one point that you didnt make is that of you are working full time and reinvest this income, you will already be in the right funds when you want to “retire”. Also, your income will be much larger as well. These are perfect vehicles for those who are within at least 5 years of retirement, then throughout their retired years. Great job!
My only regret is not investing more in ZWC, ZWS and ZWE when the yields were 10-11% last May. Thanks to this channel, I also discovered split share corporations to enhance my income with the right asset mix.
Just keep buying on the dips - this will keep your average share cost below market which will increase your yield over time. If the funds prices keep climbing - the dividends will eventually increase for most due to the funds policy on payouts. If you can manage to keep some extra money available - when market corrections happen - you can pick up more shares at a bargain - increasing your yield further.
Good luck and happy (dividend) returns!
@@MrChepburn This is superb advice. As a beginner investor, thank you.
@@wendywatching you are welcome - it's easier said than done - what I do ( because I have the time ) - is to watch the market and keep an eye on my positions to see how they are trending - then decide whether to buy - also depending on how many shares I need ( and consideration of fees if any ) - I will buy in chunks - that way if my timing was wrong, I can buy some more if priced to lower. Another thing to consider is time of the month - if you do some research ( yahoo finance ), you will see that monthly dividend stocks will usually go down in price right around the dividend date ( often the last week of the month ) - of course these things don't always work - if I could predict prices - we wouldn't be having this conversation LoL. But I've managed to avoid buying too high most of the time which helps with my overall yield. However being a long term buy and hold investor - I try not to sweat it too much - if the markets are going up - and they always have in the long run, then most of your portfolio will too.
I need to elaborate on my previous reply - instead of "dividend date" I should have said "ex-dividend date" - you must purchase a security before its ex-dividend date in order to receive its next dividend or distribution payment. Here are some more things to keep in mind:
Because investors know that they will receive a dividend if they purchase a stock before its ex-dividend date, they are often willing to buy it at a premium. This often causes the price of a stock to increase in the days leading up to its ex-dividend date.
Then, when the market opens on the ex-dividend date, the security will usually drop in price by the amount of the expected dividend or distribution to be paid.
While this decrease is really based on market sentiment rather than any set rule, it makes sense because the dividend comes from the company’s reserves, therefore technically decreasing the value of the company.
@@MrChepburn Whoah! Chris! I had never heard ANYONE mention checking prices around the ex-dividend date! That is brillient! I really, really am grateful to you for sharing your strategy. I'm going to start paying attention to certain stocks around that time and see what happens.
Thanks for the latest video. I think you are right. You can't put a price on reducing stress and protecting mental health.
I started as a Dividend Growth investor. Ive been watching you for a year and I have been convinved to sell everything and follow a strategy like yours. I find the most misconception about the stock market is share price. There are other ways to make money and follow a FIRE path. For me an income strategy is best way to achieve FIRE with the least effort.
Great choice!😉
Thanks Adrian! You hit a lot of great points in this video. I’m in my mid-30’s and want to be able to sleep easy. I don’t want to have to worry about rotating the portfolio or cashing in on unrealized gains if I’m anticipating a correction. I buy, hold, and redistribute the portfolio allocations with the yield collected. My tfsa is growth/bonds 70/30 and my wife’s tfsa is basically your recipe. I’m a much bigger fan of my wife’s tfsa lol. Anyways keep up the great work as always!
I like how humble you are and how you calmly present the information. Thank you for sharing with us!
Awesome......You explained it great. These growth dudes take part of the chart and said if you would have invested here you would have done this and made more. like you said nobody will time it perfectly and right what do you do after you sell. Also with covered calls you can spend your money now on things you need. with growth you might have to wait for a long time and you dont get the money till u sell and get realized gains. Awesome video...................
Well said my friend 👍
Thanks for explaining the rationale for owning covered call ETFs. I totally agree with you about “peace of mind” is so IMPORTANT!
I appreciate your strategy. And I know people that do this strategy and prior to these covered call ETFs, I know people that utilized covered call writing in their own stock portfolios to do exactly this. I personally utilize the dividend growth and drip method to build my income over time. I enjoy owning the large cap dividend paying companies that increase their dividends over time. Knowing I can consistently double my dividends every 10 years provides peace of mind to me. When I retire it’s my intent to turn off Drip and live off the dividends and be confident that on a consistent annual basis, my portfolio income will still increase due to the financial strength of the businesses I own.
Good stuff ! Whatever makes you sleep well at night is best
I had been following both channels for quite a while when I came across their covered call video. I guess I must be in the "older audience" category because I prefer the passive income strategy. When to sell is a huge factor. Trying to time the market is too stressful. If this bull run ends soon, I can take comfort in collecting dividends while I wait for my unrealized profits to return. Thanks for your videos Adrian! You've been a huge help.
Well said !
Subscribing and watching your videos gave me a peace of mind that no RUclipsr can outperform.
As a young investor I personally like to take a hybrid approach, but I am a fan of this channel and this content because the key word for me is "peace of mind" as Adrian said. I love the fact that he also puts his money where his mouth is and shows his results each year. Personally, coming across this channel and the covered call method has drastically improved my conservative overall forecast for my expected mid-life and retirement wealth, and I stand by their importance in a balanced portfolio. Thanks Adrian!
I’m so happy I’m able to help people like you ! Thanks for the praise 😀
After watching the other RUclips video, I felt what he was saying is right with the numbers so I dropped all my positions in CC etfs. I realized that CC etfs only fit when there is no enough income to pay the bills. May be in my retirement, I’ll move back to covered call etfs for income.
If total return is what you want you might as well put everything in the sp500 . Sad to see you go… but I think you’ll be back … and sooner than retirement.
I like the concept of “ highest return VS peace of mind” . Excellent video shot, thumbs up!
Another great video! I haven't really watched other youtubers, why bother, I like your strategy and am setting myself up!
There’s a time and a place for each. I agree with you, Adrian (and Erica), but I also agree with stock trades.
As a quick example, I am currently working full time at a job which gives me a steady pay check. Therefore, I have chosen to own ZEB over ZWB because I do not need income and would benefit more from the added growth. The investment is exactly as passive because I can simply hold ZEB the same as I would ZWB. However, when the times comes that I have accumulated enough money to leave the workforce and live off my investments I can always very simply with only a few clicks of a mouse, move my shares over to ZWB or even CIC and collect the income I now need. It doesn’t need to be any more complicated than that.
There’s a time and place for each. It depends on your circumstances. And it’s pretty amazing really that we have such simple access to both.
And when you sell off your growth ETFs you create a dip for some younger guy to buy in and take over your seat to ride the growth
That’s the key , whatever works best for you
Thank you Adrian for your sincere and intelligent advice - I was facing the prospect of having to sell off chunks of my RRIF - a reit - because the stock value was rising - but - the distributions were not rising enough to meet the percentage of the age factor that rises every year- but obligates a higher taxable income - and this tax obligation forces me to sell off chunks of my asset base /
So the multi sector - cover call ETF has solved this problem - with more than enough income to satisfy the taxable and rising income from my RRIF - in the end I settled for HYLD from Hamilton...😊
glad you found a solution :) income usually solved ALL problems
Good point there, total return is unrealized unless you sell.
Thank you for clarify this and make the information accessible for everyday people. I learned a lot from your videos. I adjusted my portfolio with covered-call, split, and all-in-one etfs, and I increase my monthly income a lot. This motivate me to continue and reach my goal.
Good job ! 😉
I think that you don't need to be all or nothing investor I have a dividend growth strategy for Canadian stocks and use HHL, EIT, ZWH, ZWE, TXF to get some dividends in sectors we lack. Best part is I can keep putting it into the dividend growth stocks or the income funds whatever is cheap or fairly valued. I get cash flow now but I also get the sweet overall return and growing dividends. You can even do index growth funds with some covered call ETFs they can compliment any portfolio or be 100% of your strategy all depends on your current and future needs, portfolio size etc... Best part of all for dividend strategy is I want a market crash so I can get more shares and more income for less money. I hate green days.
The Italian Stallion does it again!!! You don't know how much your advice has helped me!! Congratulations on all your success, well deserved! Say hi to your beautiful wife and thanks for all her hard work behind the scenes. Stay safe
Good points Adrian. What do you think of using the covered call strategy and if there was a large correction over a 1-2 year period, sell the covered call etfs (which in theory would have dropped less than the non-covered call equivalent), buy the non-covered call versions at cheap prices. Ride the wave back up and then wjhen fully recovered (which would be faster in the non-covered call scenario), buy back the covered call etfs.
Sure you can do that but I prefer to buy and hold and be 100% passive 😎
Excellent work Adrian and I picked up a little more FLI.to today and yesterday it was a new position in TXF.to also added a little more SGR.to. I’m finally over $1000 a year in passive income is at $1045 as I continue to build the TFSA.
Good stuff !
Most intelligent words I've heard.
Hello, I liked also, um which are the good US covered call etf or THE best cc etf? Thabks
Thanks Adriano! I believe most of us (myself included) are afraid of change (ie: selling home or moving country) … but I’m excited to re visit this whole idea after a year of PII ❤
I inherited some money from the passing of my parents and not risking their money from huge swings in the market would give me peace of mind. I'm glad I found your channel I think I'm going to use this approach. 8% GIC's don't exist anymore like when I was a kid.
Exactly ! Good luck
@@PassiveIncomeInvesting Do you think Hamilton is safe or should I use the BMO ETFs
I think we need to include mental health in the total return. Like you say it is easy being a growth investor in a bull market, but when the market is down by 30 percent and a person doesn’t know if the bottom has been reached, the stress level is very high. I was looking at a graph of the stock market around 2008 and it was down a very long time. It wasn’t easy then.
I agree totally. Really, the slightly lower total returns are the perfectly reasonable cost of lower volatility and it's the lower volatility that us yield dogs are after, and makes the comparisons inappropriate. As a future project, I've been watching Allan Ellman's videos because I'd like to start doing CCs and cash secured puts myself on a portion of my income portfolio set aside for the purpose. Once you learn the ropes, for a little bit of setup work and monitoring, you can make about 15-25% in cash flow, as the option premiums on calls and puts on the right stock, at the right strike price and the right expiry date pay about 1.5 to 2.5%. Doing it monthly, multiply that by 12. I would set aside 100k and buy 5 blue chips with good liquid options availability and hack away.
Watched and liked, thanks Adrian! I use a combination of non-covered and covered call strategies just to have a nice diverse mix.
Hands down this is my favorite financial channel on RUclips. Thanks for bringing us such great content!
Thanks bud !
When you retire it makes more sense to use exclusively covered call ETFs because you want to maximize your income. But during your working years, when you won't be touching your dividends, it makes much more sense to focus exclusively on growth stocks and ETFs.
Thanks Adrian. Does total return considers compound growth? For example if I keep rolling my dividends into the market and keep buying more ETFs.
Yup
I agree with you passive income is great and I have both zwc and zwu in my portfolio... the only thing that the growth ETF has an advantage over covered calls is when it comes to do taxes.. if you have TFSA and RRSP all maxed out.. one not only do you pay less in capital gains tax, two you would only pay tax when you sell the growth ETF
Ya but you have no passive income while you wait …
@@PassiveIncomeInvesting Well
If we are comparing Zwu and zdv they both pay monthly income but with zdv u get capital appreciation and with zwc u don’t. Basically investing it both of those etf is similar as with zwu u are giving up capital appreciation for that extra dividend and with zdv ur taking less dividend for capital appreciation.
What u think about CI first asset? In particular NXF and CGXF?
I love them , check out my portfolio unveil video which will be out within 30 mins 😎
Another thing that the growth investors dont discuss and dont realize is the cost . When you buy a growth stock up until just the last 5 years you would have paid as much as 10 to 50 dollars a position for those trades to a broker and that is both ends buy and sell. If you have 20 to 30 positions this could add up to a tremendous amount as you sell out of a position then add a new position . And you will eventually have to sell to realize your gains. With passive investing you only buy one time and hold forever and since you pay no fee to collect dividend look at all the money you save.
Thanks for this!!
hey
good video buddy
always interesting keep on recording !!!!!
peace fred from montreal
watching this again now in jan 2024 after a bit of a bear run. Which is a chance to buy things on sale, IF there is available cash...which perhaps high yield covered calls provide.
Awesomeness. Best value as always 💪
What about being in HDIV or HYLD which are covered call ETFS, that I believe you liked as well If I remember correctly? The interest Rates are going up, we will not be in a low interest rate environment for quite awhile. How are they going to do during times like this?
Just fine bud … if you’re worried about their leverage getting more expensive, don’t . It’s a drop in the bucket
Great video and explanation!
I have another question, what if you invest in shares and eventually gain on the increase of dividends which would eventually increase the overall yields?
Yea sure it is but that’s more typical with the dividend growth strategy
Excellent dissection and debunking of an alarmist presentation
Thanks, me too I love ETF with covered calls
Hi Adrian. Enjoy you videos and your POV even if it may not be for me. As a video idea, I’d love to know some of risks associated with your strategies and the types of products you have in your portfolio. Thanks!
Watch my portfolio unveil video ! 😀
What is the formula for calculating a proper income return?
Should i hang on to my cc etf with higher intrest rates looming?
Great video - very classy response in the video as well as the comments - you da man!
Have you gone over the bad side of Covered call ETFs? specifically ZWC. thanks
The only negative is that they typically underperform in bull markets in terms of total return
@@PassiveIncomeInvesting however .. my ZWC is up 20% in past year which is bull market .. so its win win . growth and income . and i get huge div cos i bought low
Love ZWU ,ZWE, ZWC and HHL. I also like growth stocks and ETFs, they can really multiply your income. Don't think it's necessary focusing solely on one strategy.
I agree you can mix them . The key is to find the combination that works for your needs and suits your style
I think the point stock trades was trying to make is it is foolish to focus on income rather than capital appreciation you get a bigger bang for your buck if you focus on growth rather than income he does focus on a younger audience but he did admit that cover call ETFS does help a certain group of investors that need the income I like his channel but I like yours more because I am focused on income and your channel helps me do that more than any other channel another point is if you don't need the income you can simply reinvest that income back into more stocks
agreed he didn't compare apples to apples with some of his examples and agreed that income investing reduces stress I slept like a baby last spring because my dividend kept coming in I recommend dividend investing for investors of all ages it really works
interesting, I wished we had something like this in Europe in euro's. Pls find some high yielding possibilities for the European markets.
Hey Adrian, is there a canadian version of xyld (Covered Call S&P500 index etf)? I own $TXF.TO and like it quite a bit.
Nope 👎
Thanks for the response, thats a shame. Do you have enough influence to get one made, have a little chat with the folks down at BMO
Bought hydl because of your video ( baby step) already made 💰 190$ on stock appreciation ( unrealized gain) 😂 but I got a question I set up my account tfsa as a drip do you recommend it or not I only got 16000$ in it
I love the covered calls, nothing beats steady income monthly and being a dividend it’s tax efficient.
👌😀👍
Hi Adrian: I am wondering with the covered call strategy works in a bear market.
It works better in a bear market , it was one of my points in the video
Not to mention, in terms of total return…. that reliable high MONTHLY distribution can afford key reinvestment with a high yield over the long term. I used these covered call ETF’s to fund my monthly investment into other growth opportunities. Sticking with the plan and sleeping like a baby.
Excellent!
Perfectly articulated.
any luck there'd be SRIs covered call ETFs anywhere? I love the strategy, but don't like the holdings of the ones I see available...I am super picky and want a portfolio that heavily weighted towards SRIs and can't see any in covered call ETFs...
I’m very close to retirement so I’m after the income for sure. Capital appreciation is a distant second in importance. And I don’t care about market crashes as long as the income continues.
agreed!
Here's my thoughts on covered call etfs. If you have enough invested to comfortably cover 110 to 120 percent of your expenses then you can set aside money to invest when the price goes down thus insuring greater income over time and offsetting the expected 1% annual drop in total value.
I currently have a portfolio that is heavy on high yield etfs and stocks. I also hold a few high growth etfs, stocks and cryptocurrencies because I plan to retire in 5 to 6 years. When I retire I intend to liquidate my high growth investments and put them into high yield investments. In the meantime I can take those large dividends and use allocate them for maximum effect.
Cool dude , I just hope you don’t have to sell them during a bear market . 😎
Thanks for the clear and detailed view on this topic ! well done...
Does anyone know if I invest money from a HELOC to buy something like EIT.UN if I will be able to get a tax return on the interest I paid on the loan?
What is the tax rate of money coming from something like this stock?
What do you think of using leverage on covered call etf? With my broker, I can get under 2% per year interest on borrowing. Leveragin about 2-3 times
Brilliant response, Adrian!
Interesting response, thanks for sharing your input!
They are assuming your strategy don't include buy and sell... you show us many times that we should sell an under performing dividend stock and find something better. I don't think your strategy is a couch potato strategy at all. There are still fair amount of research needed... I am very happy that I found you. I had redo my RRSP based on your strategy. Very happy with the early result.
thumbs up👏👏👏👏 well put.
all the funds i have which you recommended are up big time .... so if that's killing then i love it .. LOL
“Makes me laugh every time I see it “ 🤣🤣
Totally agree. Great video
CIC vs ZWB, which would you choose?
Zwc or sbc 😎
But cc ETFs do not protect an investor during a bear market. ZWC for example tanked during March 2020...same as the non CC ETF
It’s your high cash flow that’s protected . No equities are ever protected during bear market …
I agree. Thanks
I wonder if covered calls options are so good. Why are many covered calls options ETFs new? Should they have been in existence for many years ago?
Covered calls are nothing new … it’s literally one of the oldest options strategies out there . They got popular because yield is hard to come by
@@PassiveIncomeInvesting Do their bases deteriorate over time?
It can happen if you wrote too many calls , this is why I leave it to the pros . In the end they follow whatever the holdings inside the fund do with less upside potential but higher yield . Your trading capital appreciation for income
@@PassiveIncomeInvesting I meant covered calls options ETF like QYLD. Do you think its basis deteriorates after many years?
Yes
I may be in the minority but im not a fan of diversified strategies. Mixing growth,dividend growth with income just keeps me middle of the road. Im going all in on just one.
This did not address the central argument that CC ETFs underperform. Actually you seemed to conclude the video by admitting that they do underperform. You only talked about how it helps you sleep at night and how it does better in flat or bear markets. If it works for you then great but CC ETFs do underperform in the long run
another thing that guy doesnt realize is if you wait for this big return you wont realize anything till you cash it out. I had some high paying etfs and they made the payments on my house which i got to live in for free and the price of the house went up 3 fold. while the same time that non covered etf guy will be waiting and paying payments on his house then when he cashes out at a old age he might have to give it all to the nursing home for his mom or himself which i do xrays in these places and this happens often. How come he doesnt mention that or the gains you can get with the covered call etf dividends as you get your monthly payments that all could go in to chart and my chart shows the covered call etfs way ahead of his and im enjoying before i end up sick and alone
Exactly !
Well said.
Like 99% of other reviewers, you missed the most important point: self-cannibalization of these etfs over time. Every in-the-money little spike or worse, any bull market that leads to calls becoming in in the money, results in capital EROSION for them because after selling these stocks, the portfolio managers HAVE TO BUY BACK SAME STOCKS at now HIGHER PRICES due to the fund mandate of holdung particular stocks. I did hold ZWU and ZWB from 2010 to 2022 and sold them due to rediculous low total return. Appears new us funds like JEPQ know how to write out the money options better than canadians. Capital erosion has been consistant for most of this funds due to the above and yet you missed this important point.
you have tunnel vision.... its ok most investors who do not understand these type of products do. look at the total returns, not the stock price... that's for amateurs. they are designed to provide a consistent source of income, not growth....if total return is your focus, these are not for you
@@PassiveIncomeInvesting consistent capital loss is not the same as "lack of growth" and distributions are not the same as "income". Your tunnel vision comment is out of place.
great info $$$
5:45 it states there is 83 holdings
They include the covered call positions , that’s why . Check out the holdings tab and count the stocks
I really don’t see the point of saying one thing is better than the other. They all have pros and cons. For me, I used HELOC to invest in high yield covered call etf on my personal account for stable income (for money I borrowed, I really don’t need it to fluctuate too much). For my RRSP and TFSA, I have my own money invested in etfs like QQQ, XIT, and individual stocks for potential better return. I love all of them. And thank you for your video, I watched almost all of them.
Yeah why sell and make money if you can just sleep and make money.
I hate guys that write clickbait titles and look like clowns in the video thumbnail
Wait till you show a margin strategy using infinite loop that will totally freak people out
Hi. Agree covered call ETFs can be helpful for income. You do need to stop diluting yourself and using words like "safer than market etfs", "zero risk", and "outperformance" . Pull up a three(3) comparison chart of ZWB vs ZEB or ZWC vs ZDV. The 2020 draw drawdowns were essentially the same - no protection. Each of the CC ETFs are 20% below the performance of the Non-covered during this time. Income did not make up the difference. Covered Call ETFs do not protect you in a bear or quickly declining market as your income does not make up for the drop! You will one day care about the price of your ETFs despite saying your do not.....especially when the distributions get cut at the beginning of 2023 due to asset base shrinkage. Companies will not be able to keep up the income on lower asset bases. One some of the big yielding ETFs? There are some big distribution cuts coming. Do some real math and have a look at the returns.
I stopped the subscription with Stocktrade after that😤
In short, retired look for income and young investors dividend growth.
The end! :)
Lol . Im still young and want income !