Topic: How To Invest

Q: Pat, Could I have some info on the BMO CA High Dividend Covered Call ETF (ZWC)? Thanks.

Article Excerpt

A: BMO Canadian High Dividend Covered Call ETF, $18.26, symbol ZWC on Toronto (Units outstanding: 63.4 million; Market cap: $1.2 billion; www.bmo.com/gam/ca/investor/products/etfs), focuses on mostly high-quality Canadian stocks. Its top holdings are CIBC at 5.2%; Enbridge, 5.1%; Canadian National Railway, 5.1%; BCE, 5.1%; Royal Bank, 5.0%; Telus Corp., 4.9%; Bank of Nova Scotia, 4.8%; TD Bank, 4.8%; Manulife, 4.3%; and Bank of Montreal, 3.9%. The ETF’s industry breakdown is Financials, 39.9%; Energy, 13.5%; Communications services, 13.1%; Utilities, 9.6%; Industrials, 9.4%; Materials, 7.0%; Consumer staples, 4.0%; and Consumer discretionary, 3.4%. BMO Canadian High Dividend Covered Call ETF yields a very high 7.1%. However, the dividend income that the company receives from its own portfolio is insufficient to cover its own dividend to its own investors. To make up the difference, the ETF has to make a profit on trading its portfolio. It also aims to raise its returns by writing call options on the portfolio’s securities. Selling call options generates a stream of income…