Should I Buy This COVERED CALL Dividend Stock ETF? [Video]

Eventually, I want to add a covered call ETF to my dividend stock portfolio, in order to boost portfolio distribution income (while adding further diversification). In today’s video, I analyze DIVO, perhaps the best covered call ETF from the standpoint of offering strong yield and long-term capital appreciation (in my humble opinion). It’s rare to find something like this in a world of capital erosion.
#covered #call #etf

Timestamps:
0:00 INTRODUCTION: DIVO COVERED CALL DIVIDEND DISTRIBUTION ETF
1:31 Update: I just made some substantial trades in my dividend stock portfolio.
2:09 SEGMENT 1: DIVO ETF STATISTICS
2:18 Amplify CWP Enhanced Dividend Income ETF
2:27 Dividend stock ETF that writes covered calls against high-quality dividend stocks.
2:57 Criteria for covered call ETFs: I want the benefit of covered calls without capital erosion.
4:01 Approximate starting distribution yield is 4.45% (dividends and covered calls).
4:23 Actively managed ETF with a portfolio manager.
4:35 Smaller ETF with only $3.24 billion market cap.
4:50 Expense ratio of 0.56% (higher due to active management).
4:57 Turnover ratio of 66% (higher than I typically like, but could be due to covered call strategy).
5:22 I own individual dividend stocks to keep my portfolio-wide turnover ratio low.
6:28 SEGMENT 2: DIVO DIVIDEND GROWTH (DISTRIBUTION GROWTH) ANALYSIS
8:01 DIVO pays monthly dividend distributions, which is great.
8:21 DIVO 5-Year Dividend Distribution CAGR is only 2.88%, lower than I’d expect.
9:28 DIVO 1-Year Dividend Distribution Growth Rate is 4.97%, which is much better (and what I would hope to see).
10:20 DIVO 2-Year Dividend Distribution CAGR is only 0.15%, which is really bad. This is a possible red flag/con of this covered call ETF.
11:07 My portfolio comparison: 3.73% dividend yield with 4.82% dividend CAGR, and I’m trying to improve.
12:20 Could the lack of consistent recent CAGR be related to options premiums skewing the equation?
13:15 I’m blending a high-yielder with SCHD, and I’m adding higher yield to my portfolio while simultaneously growing portfolio-wide dividend CAGR.
13:36 SEGMENT 3: DIVO COVERED CALL ETF HOLDINGS ANALYSIS
14:09 Companies I already own sum up to 32.47% (which is not bad).
14:35 I like that this ETF owns Apple (AAPL) and Visa (V).
15:16 I like that it has tech (growth) exposure.
15:22 KEY POINT: This ETF gives an investor exposure to low-yielding tech stocks (like AAPL and V), but offers a high 4.45% distribution yield (due to the covered call strategy).
16:28 The covered call strategy creates a system that would give me exposure to AAPL, but with a higher yield. This overtakes my concern with the CAGR.
17:05 SEGMENT 4: SUMMARY OF FINDINGS ON DIVO COVERED CALL ETF
17:15 What I Like
18:04 What I Don’t Like
19:02 WOULD I BUY THIS ETF?
20:00 Check out the pinned comment to join Patreon. I’m having a zoom meet-up next week to discuss “Pour Your Heart Into It” by Howard Schultz.
21:16 If you see me out and about, please make sure to say “hi”!
21:30 Please connect with me on Instagram. (I’m @ianlopuch)
22:05 DISCLOSURE AND DISCLAIMER

DISCLOSURE: I am long SCHD, Starbucks (SBUX), Caterpillar (CAT), The Home Depot (HD), Procter & Gamble (PG), Honeywell (HON), Walmart (WMT), IBM (IBM), Chevron (CVX), McDonalds (MCD), and Duke (DUK). I own this ETF and these stocks in my personal dividend stock portfolio.

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