I'm always a little torn about these covered call ETFs, like QYLD, XYLD, etc.
The dividend payout is inconsistent and difficult to predict. Compare the dividend to something smooth and sexy like Realty Income.
Taking a note from the Compounding Quality framework (and some inspiration from Buffett), I want to own quality businesses that provide strong desired goods and services inside of a robust business model run by superb management teams. (is that a run-on sentence or what?! 😄) These ETFs don't really "do anything" or "make anything" in the traditional sense. They make money off of speculation of price movements. You could almost call them unproductive assets.
For those reasons, I wouldn't make ownership of something like this a cornerstone of my income portfolio. However, I can see an instrument like this riding on top of a well established income portfolio to give it some extra juice. If people/funds are willing to kick out money and there's nothing illegal, immoral, or unsafe about it then who I am to close my satchel and refuse the coins? 💰 Seeking Alpha says the yield on XYLD is ~9%.
I tend to agree that a portfolio of solid dividend payers should be the base. These types of funds are gaining some popularity, so we thought it might be interesting to give an overview of what they are and how they work.
I'm always a little torn about these covered call ETFs, like QYLD, XYLD, etc.
The dividend payout is inconsistent and difficult to predict. Compare the dividend to something smooth and sexy like Realty Income.
Taking a note from the Compounding Quality framework (and some inspiration from Buffett), I want to own quality businesses that provide strong desired goods and services inside of a robust business model run by superb management teams. (is that a run-on sentence or what?! 😄) These ETFs don't really "do anything" or "make anything" in the traditional sense. They make money off of speculation of price movements. You could almost call them unproductive assets.
For those reasons, I wouldn't make ownership of something like this a cornerstone of my income portfolio. However, I can see an instrument like this riding on top of a well established income portfolio to give it some extra juice. If people/funds are willing to kick out money and there's nothing illegal, immoral, or unsafe about it then who I am to close my satchel and refuse the coins? 💰 Seeking Alpha says the yield on XYLD is ~9%.
I tend to agree that a portfolio of solid dividend payers should be the base. These types of funds are gaining some popularity, so we thought it might be interesting to give an overview of what they are and how they work.