BMO Covered Call Utilities ETF T.ZWU

How sustainable is this dividend?

[mbuch]

Seems to be to high for too long in my opinion. 

But am still considering adding some more shares. Should I wait to see if it gets cut and wait for the dip in share price?

[Panic54321]

The dividend on this can fluctuate, but it won't fluctuate a crazy amount.  It can go up and down with the market and the underlining securities that it holds.  It depends on the covered call income get it changes with market conditions..   Considering it's basically out of five-year low, I don't think it's a huge risk to add here.   ( can't really

[DeanEdmonton]

Mbuch - Take a Look at the composition of this dividend, 50% is return of capital. That is your oen money, not really a dividend. They can keep the dividend here indefinitely by continuing to raise the return of Capital amount, theoretically, it could go to 100%. This used to be a well managed covered call ETF, it hasn't been for the past couple of years. No idea why it made the Globes top ten

[Franman184]

The underlying companies pay about 5 percent and the extra income comes from the covered call. If we have volitiltiy the covered call showed be good as well. Should the underlying companies go up in price over the next few years you will probally miss out on some of the stock appreciation. I like this as a retirement income. 

[DeanEdmonton]

Franman - can you not read. Yes the underlying companies pay 5%, the fact ZWU is returning over 70% of their payout as a return of your own money means they are losing their azz on the covered call program. They aren't even paying out the base dividend, they are using part of it to cover losses on the covered calls.

[DeanEdmonton]

Just checked, for 2023. Copy and paste from a Buddy of mine's T3. It is actually a lot more than 50%, it is 74%. 2023 T3 slip (original) from BMO COVERED CALL CANADIAN BANKS ETF Box number Box name Box value 18 Beneficiary code Individual 21 Capital gains 28.37 23 Actual amount of dividends other than eligible dividends 26 Other income 30 Capital gains eligible for deduction 32 Taxable amount