Best Covered Call ETFs: A Long-Term Investment Strategy

Introduction

• Paying rent monthly can be financially draining.
• Idea: Use investment in Covered Call ETFs to earn dividends to cover such expenses.
• Aim: Explain six top Covered Call ETFs and illustrate potential long-term returns.
• Example: John investing $10,000 and holding for 10, 20, 30 years with reinvested dividends.

What Are Covered Call ETFs?

• Covered Call: A deal to sell shares at a certain price before a set date, providing extra income called premiums.
• ETFs manage these strategies, making it easier for investors.

Top 6 Buy and Hold Forever Covered Call ETFs

1. Global X S&P 500 Covered Call ETF (XYLD)

• Dividend Yield: 9.37%. Pays dividends monthly.
• 10 Years: $10,000 grows to $25,300. Annual dividend: $2,266.
• 20 Years: Investment grows to $64,660. Annual dividend: $5,760.
• 30 Years: Investment grows to $164,450. Annual dividend: $14,655.
• Overview: Invests in S&P 500 stocks and sells call options for monthly income. Consistent performance even during market downturns.

2. Global X NASDAQ 100 Covered Call ETF (QYLD)

• Dividend Yield: 9.84%. Pays dividends monthly.
• 10 Years: $10,000 grows to $26,644. Annual dividend: $2,487.
• 20 Years: Investment grows to $79,991. Annual dividend: $6,682.
• 30 Years: Investment grows to $189,100. Annual dividend: $17,650.
• Overview: Invests in NASDAQ 100 tech giants, sells options for additional income. Smart score of 8/10.

3. JP Morgan Equity Premium Income ETF (JEPI)

• Dividend Yield: 10.3%. Pays dividends monthly.
• 10 Years: $10,000 grows to $27,500.
• 20 Years: Investment grows to $98,788.
• 30 Years: Investment grows to $215,152.
• Overview: Focuses on low-risk S&P 500 stocks and Equity Linked Notes for stability and high yield.

4. JP Morgan NASDAQ Equity Premium Income ETF (JEPQ)

• Dividend Yield: 11.5%. Pays dividends monthly.
• 10 Years: $10,000 grows to $31,995.
• 20 Years: Investment grows to $98,500.
• 30 Years: Investment grows to $368,210.
• Overview: Invests in large-cap US tech stocks, uses options and Equity Linked Notes for high yield.

5. Credit Suisse X-Links Gold Shares Covered Call ETN (GLDI)

• Dividend Yield: 13.71%.
• 10 Years: $10,000 grows to $39,988.
• 20 Years: Investment grows to $152,700.
• 30 Years: Investment grows to $597,000.
• Overview: Tracks gold prices via GLD ETF but sells options for monthly dividends.

6. Credit Suisse X-Links Crude Oil Shares Covered Call ETN (USOI)

• Dividend Yield: 27.38%.
• 10 Years: $10,000 grows to $246,400.
• 20 Years: Investment grows to $1,264,800.
• 30 Years: Investment grows to $4,224,511.
• Overview: Based on crude oil performance, trades call options to generate high returns.

Building a Portfolio

• Average Yield: 13.63% across all six ETFs.
• 10 Years: $10,000 grows to $31,816. Annual dividend: $3,477.
• 20 Years: Investment grows to $129,229. Annual dividend: $16,363.
• 30 Years: Investment grows to $322,700. Annual dividend: $29,933.

Conclusion

• Discussed top 6 Covered Call ETFs suitable for long-term investment.
• Potential to generate consistent and significant dividends over decades.