Earning $200 per month from a $15,000 investment sounds great on paper, but it’s important to temper expectations. That income target implies a 16% annual yield, which is far above what most traditional income investments offer.
Reaching for a yield this high comes with real tradeoffs. Higher-yielding investments often involve greater volatility, payout instability, and capital risk, especially if the distributions aren’t fully backed by sustainable earnings.
That said, I subscribe to the “buyer beware” approach. If you understand the risks, such as interest rate sensitivity, poor long-term total returns, or principal erosion and still want to pursue this kind of high-income strategy, there is a TSX exchange-traded fund (ETF) that could get you close.
Meet the Global X Enhanced Equal Weight Canadian Banks Covered Call ETF (TSX:BKCL). As of May 21, this ETF was paying a 15% annualized yield, which puts it right in the ballpark of our monthly income target. Here’s how it works.
What is BKCL?
BKCL’s portfolio tracks the Solactive Equal Weight Canada Banks Index, meaning it holds all six major big Canadian banks in equal proportions.
This index is rebalanced regularly, which helps maintain even exposure across all six and, by extension, systematically follows a buy-low, sell-high strategy as performance among the banks diverges.
What sets BKCL apart is its use of a covered call strategy layered on top of this portfolio. This involves selling call options, essentially contracts that give someone else the right to buy the ETF’s holdings at a set price in exchange for an upfront payment.
These call options generate steady premium income in addition to the dividends collected from the bank stocks themselves. The trade-off is that this strategy caps upside, meaning if bank stocks rally sharply, BKCL won’t capture all the gains.
However, the combination of equal weighting and active option management gives it a blend of diversification and consistent cash flow, albeit at the cost of potential long-term total return.
Finally, this ETF also uses light leverage (1.25 times exposure), meaning for every $100 you invest, you’re effectively getting $125 worth of bank stock exposure. That amplifies both income potential and volatility.
How much could you earn?
If you invested $15,000 into BKCL at its current market price of $18.81 per share, you’d be able to buy approximately 797 shares. BKCL’s most recent monthly distribution was $0.235 per share, which would generate $187.80 per month, very close to your $200/month target. That’s an annualized yield of about 15%, assuming distributions stay consistent.
Sounds appealing? It is—on the surface. But this kind of yield doesn’t come without meaningful risk. BKCL is not a traditional buy-and-hold ETF for beginners. It uses leverage, which means your gains can be amplified—but so can your losses. It also sells covered calls, which cap upside during rallies and can lead to underperformance in strong markets.
And because the ETF concentrates entirely on Canadian banks, any sector-specific downturn or regulatory shock could hit your principal hard. If a major bank cuts its dividend or if the sector sells off, both the share price and monthly payout could drop significantly.
BKCL may offer strong income now, but it’s best suited for experienced, risk-tolerant investors who understand the mechanics of leverage and options and who are comfortable with high volatility along the way.
