As the former CEO of Berkshire Hathaway (NYSE: BRK.B), Warren Buffett turned a struggling textile mill into one of the most valuable and diversified conglomerates in the world.
What makes Berkshire unique is how it operates. Unlike a traditional company, it doesn’t just sell products or services. It wholly owns dozens of private businesses across industries; everything from GEICO to BNSF Railway, Clayton Homes, Duracell, and See’s Candies. On top of that, it manages a public portfolio of blue-chip stocks, plus a cash pile of around $350 billion.
But there’s one notable quirk: Berkshire Hathaway doesn’t pay a dividend. Buffett prefers to reinvest profits internally, and historically, he’s been able to compound shareholder value that way. It’s tax-efficient, since investors don’t owe tax on money they never receive.
But if you’re building a portfolio around monthly income, Berkshire is hard to include. And because the stock only trades in U.S. dollars, it adds currency friction for Canadian investors.
If that’s you, there’s now a way to hold Berkshire and get a consistent monthly income stream in Canadian dollars: the Berkshire Hathaway (BRK) Yield Shares Purpose ETF (NEOE: BRKY).
Source: Getty Images
What is BRKY?
BRKY is a Canadian-listed ETF that aims to provide monthly income by holding Berkshire Hathaway shares and applying a covered call strategy to about half the position. It also uses moderate leverage (25%) to enhance potential returns.
A covered call is a strategy whereby you hold a stock (in this case, BRK.B shares) and sell call options on it. A call option gives someone else the right, but not the obligation to buy the stock from you at a set price before a set date. By selling that option, you collect a premium, which becomes income.
That premium is the core of the ETF’s monthly payout. Since BRKY sells calls on only half of its Berkshire position, you still get some upside if the stock rallies. But you’re giving up the full potential gains in exchange for consistent cash flow.
The ETF does all the work for you. It manages the stock position, writes the options, and handles the leverage in a tightly regulated wrapper. As a unitholder, you don’t need to understand options trading or use margin yourself. You just hold BRKY and collect monthly payouts in Canadian dollars.
How much income does it pay?
BRKY currently pays a monthly distribution of $0.10 per unit, which works out to a 4.4% annualized yield at recent prices. That’s not sky-high, but it’s right in line with most large-cap Canadian dividend stocks and higher than the average GIC rate you’d find at major banks.
For a stock that doesn’t pay dividends at all, that’s a nice turnaround. And for Canadian investors, the fact that BRKY pays in CAD makes it easier to hold without worrying about currency exchange or cross-border tax issues.
BRKY does come with some cost. Its management fee is 0.40%, but because the fund is 1.25 times leveraged, the total expense ratio clocks in at 1.8%. That might look high at first, but don’t let it scare you off.
Leverage adds borrowing costs, and those are included in the expense figure. It’s a fair price to pay if you want to turn a non-dividend-paying U.S. stock into a monthly income stream that lands in your Canadian account automatically.
