Ever dreamed of owning real assets like pipelines, power utilities, data centers, and telecommunications infrastructure while also generating passive monthly income?
Thanks to two distinct exchange-traded funds (ETFs) from Hamilton ETFs, this isn’t just a dream — it’s an achievable investment strategy.
These ETFs allow you to tap into a collection of the largest North American utility and energy stocks, ensuring a steady flow of monthly income. Here’s how you can get started with these high-yield monthly dividend ETFs.
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Hamilton Utilities Yield Maximizer ETF
Hamilton Utilities Yield Maximizer ETF (TSX: UMAX) offers a unique approach to investing in some of Canada’s largest utilities, pipelines, telecoms, and railways.
Unlike typical utility ETFs that may concentrate solely on electricity generation and gas distribution, UMAX provides a more diversified exposure across essential infrastructure sectors.
Utilities are already known for their high dividend yields, but UMAX enhances this by using an options strategy known as covered calls.
This means the ETF sells call options on up to 50% of its portfolio holdings that are at the money — meaning the strike price of the options sold is equal to the market price of the underlying stocks.
This strategy aims to generate additional income from option premiums, which can be significant, but it also caps the potential upside gains if the underlying stocks rise above the strike prices of the call options.
As of October 9, the ETF’s most recent monthly distribution was $0.17 per share, which, at the current price of $14.64 per share, translates to an impressive annualized yield of 13.93%.
Hamilton Energy Yield Maximizer ETF
Hamilton Energy Yield Maximizer ETF (TSX: EMAX) offers investors an effective way to gain exposure to the North American energy sector.
Unlike typical Canadian energy ETFs, EMAX diversifies its portfolio by including significant holdings in notable U.S. oil and gas companies, expanding its reach and potential market impact.
EMAX also uses a covered call strategy similar to that of its counterpart, UMAX, but with a crucial distinction: It sells at-the-money options on up to only 30% of its portfolio. This strategy allows for greater upside potential, keeping 70% of the portfolio unrestricted.
The rationale behind this more conservative approach to option coverage is rooted in the inherent volatility of energy stocks, which can command higher option premiums due to their larger price fluctuations.
As a result of this strategy, EMAX is able to generate considerable income from the premiums without overly compromising the growth potential of its holdings.
The ETF’s latest monthly distribution, paid at $0.167 per share against a share price of $15.91 as of October 9, results in an annualized yield of 12.59%.
