Latest news with #YieldMax
Yahoo
4 days ago
- Business
- Yahoo
GameStop Covered Call ETF Debuts Amid Meme Stock Resurgence
The first options-based income ETF tied to GameStop Corp. (GME) launched today, expanding the rapidly growing category of single-stock covered call funds. The Bitwise GME Option Income Strategy ETF (IGME) aims to generate high yields by writing covered calls on shares of GameStop, giving up some upside in exchange for option premium income. The fund, which charges an expense ratio of 0.98%, fell 2.1% in afternoon trading. IGME is just the second ETF tied to the meme stock, following the T-REX 2x Long GME Daily Target ETF (GMEU), a leveraged product that launched in April and has quickly grown to $17 million in assets under management. While most single-stock ETFs have focused on leveraged and inverse strategies, covered call funds have also gained significant traction, especially on volatile names with cult-like retail followings. The YieldMax suite has been particularly successful. The YieldMax TSLA Option Income Strategy ETF (TSLY) has amassed $1.2 billion in assets, while the YieldMax MSTR Option Income Strategy ETF (MSTY) now commands a massive $4.8 billion, despite launching just over a year ago. These funds sell call options to generate yield, offering investors eye-popping monthly income streams. But the strategy comes with a trade-off: capped upside and continued exposure to downside risk. If the stock surges, covered call ETFs miss out on most of the gains. If it drops, they still feel the pain, just slightly cushioned by the income. That trade-off hasn't worked out well lately. MSTY is up 109% over the past year, trailing Strategy Inc.'s (MSTR) 149% gain. TSLY has climbed only 39%, while Tesla Inc. (TSLA) jumped 94% over the same period. Still, investors continue to pile in, lured by the big yields and the simplicity of the strategy. Issuers, in turn, are capitalizing on the demand. Like IGME, the YieldMax funds charge hefty fees of around 1%. The GameStop ETF is a curious move for Bitwise, a firm best known for its crypto-focused lineup. On the surface, a fund tied to a video-game-retailer-turned-meme-stock doesn't quite fit. But there is a crypto connection. Like MicroStrategy before it—once a software firm, now essentially a Bitcoin holding company—GameStop appears to be following a similar playbook. The company recently disclosed it had purchased over $500 million worth of Bitcoin, adding another layer of volatility and intrigue. Bitwise cited the move as part of its rationale for launching IGME, saying, 'GameStop's return potential, historically high volatility, and recent adoption of bitcoin as a treasury asset make it a compelling choice for a covered call strategy.' Time will tell if IGME catches fire. For now, retail enthusiasm for GameStop—once the face of the meme-stock movement—has waned and shifted toward names like Strategy and Palantir Technologies Inc. (PLTR). But with options premiums still elevated and yield-chasing still very much alive, GameStop may yet find a second life in the ETF | © Copyright 2025 All rights reserved Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19-05-2025
- Business
- Yahoo
High-Yield ETFs: Big Payouts, Bigger Trade-Offs?
While a significant amount of money continues to flow into low-cost, plain-vanilla ETFs, the ETF universe is becoming increasingly complex. Most new ETFs being launched are actively managed, and many make use of derivatives. Two recent regulatory changes—the 'ETF Rule' and the 'Derivatives Rule'—have made it easier for providers to launch ETFs and incorporate derivatives into their strategies. The explosion in derivative-backed ETFs has been particularly striking. Most of these new derivative-based ETFs fall into one of three categories: Buffer or defined outcome ETFs Leveraged or inverse single-stock ETFs Option-based income ETFs Some of the newest products even combine options-selling strategies with leveraged single-stock ETFs. (See: Buffer ETFs Attract Billions as Investors Seek Shelter from Market Turmoil) This article takes a closer look at ETFs that trade options on single stocks to generate exceptionally high yields—among the hottest-selling funds in the market today. Thanks to their eye-catching distribution rates, these funds are generating significant buzz on social media. However, they generally underperform the underlying stocks, even as they continue to attract assets from investors drawn to their lucrative monthly payouts. We analyzed the performance of 24 single-stock covered call ETFs in the YieldMax suite from their respective inception dates. We focused on YieldMax because it is the clear leader in this niche, significantly ahead of competitors despite a recent surge in similar offerings. Many of YieldMax's ETFs launched in 2023—providing a limited, yet more substantial, performance history compared to most rivals, which are even newer. Despite their eye-popping distribution rates, these products tend to underperform on a total return basis due to steep declines in share price. Of the 24 YieldMax ETFs we examined, only two managed to slightly outperform their respective underlying stocks. Option Income ETFs: How the Strategy Works YieldMax currently offers 48 ETFs in U.S. markets, with total assets under management of over $10 billion. Though relatively new—the oldest, TSLY, debuted in November 2022—the suite has grown rapidly, largely driven by its headline-grabbing distribution yields of 100% or more. Inspired by this success, many copycat ETFs have entered the market. According to the provider, the primary investment objective of these funds is to seek current income; the secondary objective is to seek exposure to the price movement of the underlying stock, subject to a cap. These funds do not actually hold the underlying stocks. Instead, they gain synthetic exposure by taking long positions in call options and short positions in put options. They also hold Treasury securities for collateral and additional income. To generate monthly income, the fund manager sells call options against the synthetic long position. These calls typically have expirations of one month or less and strike prices about 0%–15% above the current share price. In some cases, managers use covered call spread strategies to further enhance yields. The YieldMax Reddit community has around 44,000 members, many of whom discuss using these ETFs to replace their 9-to-5 jobs or to generate retirement income. The four most popular products in the suite are linked to some of the hottest and most volatile stocks. The inherent volatility of these stocks leads to higher option premiums—and higher potential income. Each of these ETFs has gathered over $1 billion in AUM. Yields are calculated by annualizing the most recent monthly payout and dividing it by the fund's latest NAV. However, yields can vary significantly from month to month as income from selling options depends on fluctuations in the underlying stock, implied volatility, and other factors. Performance Since Inception We analyzed the total return—including distributions—of YieldMax ETFs from their inception versus their respective underlying stocks. Some stocks surged, some declined, and others remained relatively flat—but in all cases except those tracking PayPal PYPL and Marathon Digital MARA, the ETF underperformed the stock. For the four most popular products, the performance gap was substantial—showing that investors may be leaving a lot of money on the table in pursuit of yield. YieldMax MSTR Option Income Strategy ETF (MSTY) The most popular product in the suite celebrated its one-year anniversary in February and now boasts $4 billion in assets. It is also the highest-yielding single-stock ETF in the lineup, offering a distribution rate of 136%. Since inception, it has delivered a total return of 286%, while MSTR stock has surged 457% during the same period. Image Source: Zacks Investment Research Once a little-known, money-losing software firm, Strategy MSTR has become the largest corporate holder of bitcoin and now trades like a leveraged bet on the cryptocurrency. Its stock commands a significant premium over the value of its bitcoin holdings. Some experts believe the financial engineering behind MSTY—and the premium valuation—may be unsustainable. If you're bullish on bitcoin, why not consider the iShares Bitcoin Trust IBIT, which charges just 0.25% and closely tracks the price of the asset? TSLA Option Income Strategy ETF (TSLY) The oldest product in the suite holds $1.2 billion in assets. Since its debut in November 2022, the ETF has gained approximately 22%—significantly underperforming Tesla TSLA shares, which are up about 102% over the same period. It has also lagged the S&P 500 and Nasdaq-100 indexes, which have gained 53% and 85%, respectively. Image Source: Zacks Investment Research For context, low-cost index funds like the SPDR Portfolio S&P 500 ETF SPLG and Invesco NASDAQ 100 ETF QQQM charge just 0.02% and 0.15% in fees, while most option income products charge close to 1%. TSLY currently boasts a striking yield of nearly 107%. NVDA Option Income Strategy ETF (NVDY) The second most popular product in the family has generated a total return of about 187% since its inception in May 2023. However, shares of the AI darling NVIDIA NVDA have risen approximately 372% over the same period. Still, the ETF has attracted $1.3 billion in assets. Image Source: Zacks Investment Research YieldMax COIN Option Income Strategy ETF (CONY) CONY, which tracks Coinbase COIN—a major beneficiary of bitcoin's rise—has returned 120% since its debut in August 2023. Over the same period, COIN stock has gained about 209%. The ETF currently sports a yield of 97% and has about $1.1 billion in assets. Image Source: Zacks Investment Research Single-Stock Option Income ETFs vs. Diversified ETFs These ETFs sell one-month call options with strike prices slightly above the current stock price. In doing so, investors give up much of the upside if the stock rises while still bearing most of the downside if the stock falls—creating an asymmetric risk-reward profile. By contrast, the JPMorgan Equity Premium Income ETF JEPI—which helped launch the covered call trend—uses a bottom-up fundamental process to construct a diversified, defensive portfolio of about 125 stocks. (Read: What's Behind the Surge in Options Income ETFs?) The fund then sells out-of-the-money S&P 500 index call options to generate monthly income. This portfolio doesn't experience the outsized moves seen in names like Strategy or Coinbase, which explains why the performance shortfall may not be too striking. Bottom Line You should only invest in a fund tied to a single stock if you're bullish on that specific name—in which case, you're generally better off owning the stock directly. If you expect the stock to decline, it's best to steer clear of any product linked to it. These ETFs may outperform if the underlying stock remains range-bound. However, since they use market swings as an income-generating strategy, don't expect jumbo distributions. If you're drawn to high monthly income and can accept an asymmetric risk-reward profile—as well as potentially unfavorable and inconsistent tax treatment—these funds may still appeal to you. ETFs have democratized access to markets, and innovation in the space has been remarkable. But with complex products like these, it's essential for investors to fully understand how they work—and what outcomes are realistic. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NVIDIA Corporation (NVDA) : Free Stock Analysis Report Tesla, Inc. (TSLA) : Free Stock Analysis Report MicroStrategy Incorporated (MSTR) : Free Stock Analysis Report PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report Marathon Digital Holdings, Inc. (MARA) : Free Stock Analysis Report SPDR Portfolio S&P 500 ETF (SPLG): ETF Research Reports JPMorgan Equity Premium Income ETF (JEPI): ETF Research Reports Invesco NASDAQ 100 ETF (QQQM): ETF Research Reports Coinbase Global, Inc. (COIN) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
01-04-2025
- Business
- Yahoo
Redditor Reveals Dividend Portfolio That Earns $18,492.07 Per Year After '4 Years of Investment'
Dividend portfolios start small but grow over time as you make regular contributions and reinvest the dividends. A Redditor let us see this in action by showcasing their portfolio after "4 years of investment." The individual earns $18,492.07 in annual dividend income and prioritizes high-yield funds like the JPMorgan Equity Premium Income ETF (NYSE:JEPI) and JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ). Several people commented on the post. The reactions were mixed, with some people being impressed while others expressed caution. Don't Miss: Inspired by Uber and Airbnb – Deloitte's fastest-growing software company is transforming 7 billion smartphones into income-generating assets – Many are using retirement income calculators to check if they're on pace — Some commenters expressed their concerns about the original poster chasing high yields. While high-yield stocks and funds result in elevated dividend income, these investments tend to lag the stock market. For instance, JEPI has only delivered an annualized 7% return over the past three years, which has trailed the S&P 500 during the same timeframe. One of the commenters offered a brutal assessment. "OP will lose his tail on the Yield Max funds," the commenter stated. The Redditor has allocated approximately $20,000 into Yield Max funds. Another detail about the Redditor's yield chasing is that the dividend distributions are not qualified dividends. The Redditor generates their income from REITs and ETFs that generate income from options trading. This distinction results in all of the dividend income being taxed at ordinary income. While JEPI has given an annualized 7.0% return over the past three years, the real return is lower after you account for taxes. Trending: One commenter said that they wished they got those returns, but the individual was worried about the investments losing value. "Only getting 4% on $600k but also would be worried sick of principal drop," the commenter stated. A 4% yield is still higher than average, but you can find a bunch of dividend stocks that offer qualified dividends and 4% yields. A $600,000 dividend portfolio that yields 4% produces roughly $24,000 per year. That amount should continue to climb higher as the commenter makes more contributions and reinvests the dividend. Most young dividend investors don't need high yields right now. They aren't going to retire for a few decades, and setting their sights on lower-yielding dividend stocks can minimize risk and potentially lead to more capital appreciation. This approach also results in a lower tax bill since the distributions are treated as qualified commenter thanked the original poster for sharing their portfolio and referred to it as good motivation. Seeing someone else earn more than $18,000 in annual dividend income can inspire you to set more ambitious goals and pursue similar results for your portfolio. It's good to surround yourself with like-minded people. The Dividends subreddit brings dividend investors together. The people in the community share their portfolios and tips while responding to each other. Putting yourself in these types of communities can show you what's possible if you work hard. Read Next: Have $200K saved? Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? This article Redditor Reveals Dividend Portfolio That Earns $18,492.07 Per Year After '4 Years of Investment' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio
Yahoo
31-01-2025
- Business
- Yahoo
77-Year-Old Dividend Investor Earning $270,000 a Year Shares Top 6 Stock Picks – 'I Now Sleep Much Better at Night'
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Dividend stocks are in focus as concerns for a higher-for-longer interest rate scenario rise and investors turn to stable companies to offset potential volatility. Dividend stocks also perform well when interest rates are going down. Ed Clissold, Chief U.S. Strategist at Ned Davis Research, said on CNBC a few months back that dividend stocks outperforming non-dividend-paying companies during the Fed's easing cycles has been a "pretty consistent" trend over the past few decades. But which dividend stocks can help you reach a stable and significant income? Let's see a case study for ideas. Don't Miss: Unlock the hidden potential of commercial real estate — CEO of Integris gathered a team of senior investment managers who have $34.22 billion in combined owned and managed assets in the West Coast — Last week, someone asked old, experienced dividend investors for investment advice and ways to reduce tax liabilities and risks during income investing on r/Dividends, a Reddit discussion forum with over 660,000 followers. The post received over 90 comments, with many investors sharing their success stories and advice. An investor said he had 50 years of experience in stock investing and shifted to dividend income about five years ago. He, 77, revealed in a separate comment that he raked in about $270,000 in retirement income. "I now love actively managing my nest egg portfolio and sleep much better at night. I believe investment return, risk mitigation and minimal tax's are directly proportional to investment knowledge and experience. Five years ago I was yielding about 8% with COVID discounted preferred dividend stocks. They appreciated and B grade or higher have not yielded 8% for several years so, researched other dividend stocks," he said. Trending: 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Let's discuss some of his portfolio's notable dividend stocks and funds. YieldMax NVDA Option Income Strategy ETF The 77-year-old retired investor said he had YieldMax NVDA Option Income Strategy ETF (NVDY) in his portfolio "for fun." He recommended the ETF to Redditors who have a higher risk appetite. "I am doing a test investment with NVDY to learn more about YieldMax, their trading strategy and technology. Hoping for some longevity and no decay, not just short term speculation worries. NVDY is about the longest offering of their funds at two years, with the most assets at $1.3B," he said in a separate comment. YieldMax NVDA Option Income Strategy ETF (NVDY) makes money by selling call options on Nvidia. Recently, the ETF has gained popularity amid the buzz around Nvidia. The fund has a distribution rate of about 52%. NVDY suits investors who believe in Nvidia's long-term potential but want to hedge against possible declines in the chipmaker's shares. Altria Altria (MO) was a high-yield stock in the portfolio of the investor who collected about $270,000 a year in retirement income. Altria has a 7.8% dividend yield and over 50 years of consecutive payout increases. Last month, Bank of America increased its price target on the stock to $65 from $55. The firm believes lower corporate taxes, tariffs and tighter border controls under the new U.S. administration could bode well for the tobacco company. JPMorgan Nasdaq Equity Premium Income ETF The investor said he was "very happy" with his dividend ETFs, including the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ). JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) is a covered call ETF that distributes monthly dividend income. It invests in Nasdaq companies and generates extra income by selling call options. The fund has a dividend yield of more than 9%. In the December quarter, the JPMorgan Nasdaq Equity Premium Income ETF outperformed its benchmark, the Nasdaq 100 S&P 500 High Income ETF NEOS S&P 500 High Income ETF (SPYI) is a high-yield covered call ETF that pays monthly dividend income. It invests in some of the top S&P 500 companies and generates extra income by selling call options on stocks, generating extra premium income for shareholders. SPYI has a dividend yield of over 12%. Some of SPYI's biggest holdings include Apple, Nvidia, Microsoft, Amazon, Meta Platforms, Tesla, Alphabet and Broadcom. Guggenheim Strategic Opportunities Fund Guggenheim Strategic Opportunities Fund (GOF) exposes investors to fixed-income and debt securities. It invests in various credit instruments, including corporate bonds, asset-backed securities, mortgage-backed securities and other high-yield debt. However, it's a risky investment because it invests in ungraded bonds, also known as junk bonds. Cornerstone Strategic Investment Fund Cornerstone Strategic Investment Fund, Inc. (CLM) is a closed-end management investment company that seeks capital appreciation through investment in U.S. and non-U.S. stocks. The fund has a dividend yield of 16%. Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. to decide which one is right for you. The changing interest rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through dividend stocks... Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider. For instance, the from EquityMultiple targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000. . Don't miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga's favorite high-yield offerings. This article 77-Year-Old Dividend Investor Earning $270,000 a Year Shares Top 6 Stock Picks – 'I Now Sleep Much Better at Night' originally appeared on
