The Global X Nasdaq-100 Covered Call ETF (QYLD) is one of the most popular income-oriented exchange-traded funds in the U.S. With a double-digit yield and the promise of monthly income, it attracts investors looking for consistent cash flow. But behind the headline yield, there are trade-offs that every investor should understand before buying.
This article provides a comprehensive review of QYLD, including how it works, its advantages, drawbacks, performance history, and whether it deserves a place in your portfolio. This post is available in Video format!
What Is QYLD?
QYLD was launched by Global X Funds in 2013. The fund is designed to provide high current income by using a covered call strategy on the Nasdaq-100 Index.
Here’s how it works:
QYLD buys all the stocks in the Nasdaq-100 (the same holdings as QQQ).
The fund then sells (“writes”) at-the-money call options on the Nasdaq-100 index.
The premiums collected from selling these options are distributed to shareholders as monthly dividends.
This strategy is often called a “buy-write” approach: you buy the index and simultaneously write calls against it.
Is QYLD a good investment?
Let’s break down the main benefits of holding QYLD:
Positives
Attractive Yield: QYLD consistently pays out yields in the 12–13% range, significantly higher than traditional dividend ETFs.
Monthly Income: Unlike many ETFs that pay quarterly, QYLD distributes income monthly — making it easier to plan cash flow for expenses.
Lower Volatility vs. QQQ: While it won’t fully protect against losses, the option premiums provide some cushion in choppy or declining markets.
Liquidity: With more than $6 billion in assets under management, QYLD trades with tight bid-ask spreads, making it accessible for retail and institutional investors alike.
Ease of Use: For investors who like the idea of covered calls but don’t want to manage options directly, QYLD offers a turnkey solution.
Volatility comparison: QYLD has a lower volatility than the NASDAQ 100 (source of graphic: portfoliolabs.com)In bear markets, QYLD protects investors and in normal circumstances will offer a better performance than the NASDAQ 100. The graphic depicts growth of 10K invested in the past 6 Months
The charts highlight that QYLD generally exhibits lower volatility than the Nasdaq-100. By writing covered calls, the fund collects option premiums that help smooth out price swings. This makes QYLD less sensitive to sudden surges and corrections, offering investors a steadier ride compared to a pure growth index ETF.
Over shorter horizons, this strategy shows its strengths in choppy or declining markets. The second chart illustrates how, during downturns, QYLD has been able to limit losses more effectively than the Nasdaq-100. The income from option premiums acts as a cushion, allowing the ETF to protect capital while still delivering monthly cash flow.
That said, the trade-off is visible during rising markets, where QYLD underperforms because its upside is capped. Investors benefit from more stability and reliable distributions, but they won’t fully capture the rallies of tech-heavy indices. In essence, QYLD prioritizes income and smoother performance over aggressive capital appreciation.
Negatives
Limited Growth Potential Since QYLD writes at-the-money calls, it essentially sells away most of the upside from Nasdaq-100 rallies. When tech stocks soar, QYLD captures very little of that growth.
NAV Decay Over Time The fund’s net asset value (NAV) tends to drift lower over the long term because option income often comes at the cost of capital appreciation. In other words, you get high income but sacrifice long-term wealth growth.
High Fees QYLD charges an expense ratio of 0.60%, which is steep compared to plain index ETFs like QQQ (0.20%) or VOO (0.03%).
Dividend Sustainability Concerns Distributions are largely driven by option premiums, which depend on market volatility. In calm markets, premiums are smaller, and dividends can shrink. Some payouts may also come from return of capital, which isn’t true “income.”
Concentration Risk Like QQQ, QYLD is dominated by large tech companies such as Apple, Microsoft, Nvidia, and Amazon. While diversified within tech, it doesn’t provide broad sector exposure.
Performance QYLD
ETF
Div Yld
QYLD
13.67%
–
QQQ
0.71%
Source: Yahoo finance – QYLD ETF
Over the past year, QYLD has delivered a total return of around 5.6%, reflecting modest gains supported primarily by its steady monthly income distributions. While its yield remains attractive, annual results can vary depending on market conditions and the premiums collected from selling options.
Looking at the medium term, performance has been uneven. The 3-year annualized return sits at 12.0%, boosted by periods of strong volatility, whereas the 5-year figure drops to 6.8%, showing how sensitive the strategy is to market cycles. QYLD tends to perform better in environments with heightened uncertainty where option premiums are larger.
Over longer horizons, QYLD has shown stable but moderate growth, with 8.6% annualized over 10 years and 7.7% since inception. This track record confirms its role as an income-driven product: consistent monthly cash flow with steady long-term returns, though without the explosive growth of pure equity strategies.
Is QYLD Sustainable? What is the risk of QYLD?
QYLD’s dividends come mainly from option premiums, which means payouts can vary with market volatility — often rising when uncertainty is higher. While this makes the income stream less predictable than traditional dividends, it also allows QYLD to maintain an attractive yield and steady monthly cash flow for income-focused investors. Over time, investors should expect less capital appreciation, since upside growth is traded for income, but for those prioritizing regular distributions and portfolio stability, QYLD can still be a reliable income-generating tool.
Is QYLD a monthly dividend
Yes, QYLD offers a monthly dividend distribution.
QYLD ETF Holdings
Practice example: covered call strategy
To better understand how QYLD’s strategy works, let’s look at a simple example. An investor owns 100 shares of Company A, priced at $30 each. Expecting the stock to stagnate or dip slightly, the investor sells a call option with:
Strike price: $26
Premium: $4
Maturity: April
Quantity: 100 shares
The investor collects $400 in option premiums (4 × 100). Two scenarios can occur:
Scenario
Stock Price Outcome
Action
Result
Case 1
Price rises above $30 (breakeven)
Buyer exercises the option → Seller must sell at $26
• Shares sold below market value • $400 premium collected offsets loss • Effective sale price = $30
Case 2
Price falls below $30 (breakeven)
Buyer does not exercise
• Seller keeps 100 shares • $400 premium collected as extra income • Generates additional return despite price drop
Video
Since its launch in 2021, HDIV has become one of Canada’s most talked-about income ETFs. Its promise: deliver stable monthly income with lower volatility than the Canadian market, while giving investors access to multiple key sectors through an actively managed, covered call strategy.
With a distribution yield of around 12%, HDIV is built for investors seeking consistent cash flow rather than maximum capital appreciation. This makes it especially appealing for retirees, income-oriented investors, and anyone looking to balance returns with risk management.
Recent Performance
Since inception, HDIV has outperformed the S&P/TSX 60 Index. For example, between July 2021 and July 2025, a $10,000 investment in HDIV grew to $17,300, compared to $15,500 for the S&P/TSX 60.
This outperformance is largely explained by the ETF’s ability to consistently add option premiums to the dividends already paid by the underlying securities. While HDIV does cap upside during strong bull markets (a natural tradeoff with covered call strategies), it has shown resilience in volatile periods, providing investors with steady income even in challenging environments.
Structure and Strategy
HDIV is a fund of funds: it doesn’t buy stocks directly but invests in a suite of Hamilton ETFs, each of which applies a covered call strategy.
Covered calls generate option premiums on top of dividends, significantly boosting income.
Sector diversification spans Canadian banks, energy, utilities, gold, technology, and healthcare — giving broader exposure than the traditional Canadian market, which is heavily concentrated in financials and energy.
Leverage (25%) is used to enhance yields. The fund’s leverage is capped at 125% of NAV, keeping it within a moderate range.
Monthly distributions are a core feature, providing reliable cash flow.
Sector Allocation (July 2025)
Financials: 36%
Technology: 17%
Energy: 13%
Gold: 12%
Utilities: 14%
Healthcare & others: ~8%
This allocation blends defensive sectors (banks, utilities, gold) with growth engines (technology, healthcare), creating a balanced income-oriented portfolio.
Fees (MER)
As of July 2025, HDIV’s Management Expense Ratio (MER) is 2.55%.
It’s important to note that the fund itself charges no direct management fee. The MER reflects operating expenses + the fees of the underlying Hamilton ETFs.
While this is high compared to traditional index ETFs, it is in line with other derivative-based income strategies and justified by the complexity of managing covered call positions and sector exposure.
✅ Advantages of HDIV
High and stable monthly income: with a 12% yield, it meets the needs of retirees and cash flow-focused investors.
Broader diversification: exposure to sectors like technology and healthcare helps reduce Canada’s natural concentration in banks and energy.
Lower volatility: option premiums cushion downturns, reducing overall volatility compared to the market.
Moderate leverage: enhances yield while remaining controlled.
Reliable cash flow: monthly payouts align with investors’ income needs.
Turnkey solution: instead of managing multiple sector-specific covered call ETFs, investors can access them all through HDIV.
⚠️ Risks and Limitations
Capped upside: in strong bull markets, HDIV will underperform broad indices due to options limiting gains.
Leverage risk: while moderate, the 25% leverage amplifies both gains and losses.
Sector concentration: despite diversification, exposure to banks and energy remains significant.
High fees (2.55% MER): part of the income goes to covering costs.
Market risk: covered calls cushion declines but don’t eliminate losses in prolonged downturns.
Interest rate sensitivity: like many income products, HDIV may face pressure when rates rise.
Reinvesting vs. Taking Distributions (DRIP or Cash)
Income-oriented investors (e.g., retirees) may prefer taking cash distributions to fund expenses.
Growth-focused investors may choose to reinvest via a Dividend Reinvestment Plan (DRIP), compounding returns over time.
The choice depends on your goals: immediate income or long-term wealth building.
🎯 Conclusion
HDIV is a unique Canadian ETF that combines high income, sector diversification, and covered call strategies into a single product. It is best suited for conservative and income-focused investors who value stability and cash flow over growth.
That said, investors must be aware of its tradeoffs: capped upside in bull markets, higher fees, and modest leverage risks.
👉 In short: HDIV is an excellent passive income tool, ideal for generating monthly cash flow and stabilizing a portfolio, but less suitable for maximizing long-term capital growth.
Video
The DJQ1100, also known as the Desjardins Investment Savings Account – Series F, is an interesting savings solution for investors who want to maximize the security of their capital while maintaining great flexibility. In this article, we’ll explore why this product can be a great choice for investors looking to balance yield, security, and liquidity.
Why choose DJQ1100?
The DJQ1100 offers a unique combination of advantages, positioning it as a powerful tool for different investor profiles.
First of all, the DJQ1100 guarantees optimal security. Deposits in this account are insured by the Autorité des marchés financiers (AMF), which guarantees the protection of the capital invested. This feature makes this product an ideal choice for conservative investors who want to minimize risk.
Secondly, this account offers full liquidity. Funds are available at any time, with no lock-in period or withdrawal fees. This flexibility makes it particularly useful for short-term financial needs or in the event of unforeseen events.
In addition, the interest rates offered by the DJQ1100 are competitive. The return is calculated daily and paid monthly, ensuring steady and predictable capital growth.
In addition, this product does not have any fees. Unlike some mutual funds or guaranteed investment certificates (GICs), the DJQ1100 has no management or service fees, maximizing returns for investors.
Finally, the DJQ1100 is very accessible. A minimum initial investment of only $1,000 is required, making it affordable for a wide audience of investors. This accessibility, combined with other benefits, makes the DJQ1100 an attractive and versatile savings solution.
How to buy a Desjardins mutual fund (DJQ1100-C) step by step on your online broker
Step 1: Choose the “Mutual Funds” tab
In the navigation bar (at the top), click on Mutual funds (arrow 1).
This opens the form to place an order.
Step 2: Select the fund company
In the menu on the right, select the fund company (e.g. DJQ DESJARDINS FUNDS) (arrow 2).
You can also select the currency if necessary.
Step 3: Choose the fund
In the “Fund name” field, select the desired fund (in this case, DJQ CPT EP PLAC (SR-F) SFA, code DJQ1100-C) (arrow 3).
The fund code is automatically entered in the central section (“Fund Code”).
Step 4: Enter the transaction details
Make sure that the Buy option is checked (top left).
Choose your account (e.g. “CAD Cash”).
Enter the amount in CAD or the quantity of units you want to buy.
Choose what you want to do with the dividends : reinvest or receive cash.
Step 5: Verification and confirmation
Checks the transaction date (example: March 12, 2025).
Click on Check (green button at the bottom right).
You will have an overview of the transaction before confirming the purchase.
Ideal investor profile
The DJQ1100 is designed for investors who:
Prioritize security: Ideal for protecting capital while earning a reasonable return.
Want flexibility: Perfect for investors who may need to access their funds quickly.
Plan for the short or medium term: Useful for building an emergency fund or preparing short-term projects.
Comparison with other financial products
Characteristics
DJQ1100
GIC (Guaranteed Investment Certificate)
Mutual Funds
Security
Guaranteed by the AMF
Capital guarantee
No warranty
Accessibility of Holdings
Available at all times
Locked-in until maturity
Liquid but with possible fees
Yield
Competitive rates, paid monthly
Fixed, predictable
Variable, market-dependent
Management fees
None
None
Often high
Investment horizon
Short to medium term
Short to medium term
Medium to long term
Use Cases
1. Emergency Fund
The DJQ1100 is a great option for building an emergency fund thanks to its full liquidity and security. Investors can access them quickly when needed while enjoying a competitive return.
2. Transition to a long-term investment
If you’re waiting for the right time to invest in stocks or ETFs, DJQ1100 can serve as a temporary solution to grow your capital while waiting for an opportunity.
3. Short-term investment
For short-term projects like a trip, renovation, or major purchase, the DJQ1100 offers a stable return and easy access to funds.
Points to consider
Despite its many advantages, DJQ1100 has some limitations that investors should consider before committing.
First, yields are limited. While the product offers great security, the DJQ1100 does not offer the high returns that one might get with riskier investments, such as stocks or exchange-traded funds (ETFs). This is a trade-off to consider for those looking for maximum capital growth.
Secondly, this product does not promote long-term growth. The DJQ1100 is primarily designed to meet short- and medium-term needs. It is less suitable for investors who want to build wealth over several decades or maximize their long-term returns. As a result, investors looking for a sustainable and future-oriented solution may need to supplement this product with other investment options.
Summary table of benefits
Benefits
Description
Security
Capital guaranteed by the AMF.
Flexibility
Full access to funds at any time, with no withdrawal fees.
Interest rate
Competitive, calculated daily and paid monthly.
No fees
No management or transaction fees.
Admissibility
Available for RRSPs, TFSAs and non-registered accounts.
Conclusion
The DJQ1100 is a versatile financial product that offers security, flexibility and reasonable returns. It is ideal for conservative investors or those looking for a tool to manage short-term needs. However, for long-term growth objectives, it would be relevant to explore options such as ETFs or stocks.
If you’re looking for a balance between safety and return in the short term, DJQ1100 could be a smart choice. Don’t hesitate to consult a financial advisor to integrate this product into your overall strategy.
For Canadian investors focused on maximizing income, covered call ETFs have become some of the most popular investment choices. Many of these funds now manage billions of dollars in assets, showing just how much demand there is for predictable cash flow.
But what makes them so attractive for income seekers?
1. High Dividend Yields
Covered call ETFs generate extra income by selling call options on their holdings. The premiums collected can significantly boost distributions, often resulting in yields much higher than traditional dividend ETFs.
2. Smoother Ride (Lower Volatility)
The covered call strategy is designed to provide more stability. By selling upside potential in exchange for income, these ETFs tend to be less volatile than holding the underlying stocks directly.
3. Reliable Passive Income
If your main objective is to earn high monthly or quarterly distributions, covered call ETFs can be an appealing choice. They’re especially popular among retirees and income-focused investors who prioritize cash flow over long-term growth.
⚠️ Important Trade-off: The high yields come at a cost—limited capital appreciation. Because the upside is capped when call options are exercised, these ETFs usually underperform in strong bull markets.
What We’ll Cover in This Post
In this article, we’ll go beyond theory and look at the most popular covered call ETFs in Canada. We’ll break them down into two categories:
Diversified Income ETFs – funds that provide broad exposure across sectors while still generating high income.
Sector-Specific Covered Call ETFs – funds that focus on one sector (like banks, energy, or tech) and use covered calls to maximize income from those industries.
Finally, we’ll highlight our top picks in each category, so you can see which covered call ETFs may fit best into your portfolio.
as of August 22nd 2025 – Source Yahoo finance – Performance = Total return incl. Dividends
Best Diversified Covered Call ETFs
Among the diversified funds, HDIV (Hamilton Enhanced Multi-Sector Covered Call) really stands out. It invests in seven different sector ETFs and adds modest leverage (25%) to enhance both yield and performance. With an 11.32% yield and the best 3-year total return in the group (19.54%), it’s the strongest all-around option for investors who want high monthly income without betting on a single sector.
For those seeking U.S. exposure, HYLD (Hamilton Enhanced U.S. Covered Call) deserves attention. It focuses entirely on U.S. covered call ETFs and, like HDIV, uses 25% leverage. The result is a very attractive 12.65% yield and solid multi-year returns. This makes HYLD a convenient way for Canadians to tap into U.S. income opportunities without having to piece together multiple funds.
HDIF (Harvest Diversified Monthly Income) plays a similar role but without leverage. It’s built as a “fund-of-funds,” spreading investments across banks, utilities, technology, healthcare, and global brands. Its yield is still a double-digit 10.50%, but the lack of leverage makes it less risky than HDIV or HYLD. For conservative income seekers, HDIF provides peace of mind with dependable distributions.
If you prefer a purely Canadian option, ZWC (BMO Canadian High Dividend Covered Call) is a reliable choice. With a 6.43% yield and steady five-year returns of 12.04%, it offers broad Canadian exposure, all dividends are Canadian (making it tax-efficient), and the strategy smooths out volatility. It won’t match the yield of HDIV or HYLD, but it is safer and more stable.
Finally, HBF (Harvest Brand Leaders Plus Income) offers something different: exposure to global “top brands” like Microsoft, Disney, and McDonald’s, combined with a covered call strategy. With a yield of 7.76% and consistent results, it’s attractive for those who want global blue-chip exposure while still receiving dependable monthly income.
Verdict – Diversified ETFs:
Best overall: HDIV, thanks to its performance and diversification.
Best U.S. play: HYLD, for Canadians who want high yield from U.S. equities.
Best conservative choice: ZWC, stable and tax-efficient.
Best Sector-Focused Covered Call ETFs
For investors who want to concentrate on specific industries, banks and technology dominate the sector ETF space.
ZWB (BMO Covered Call Canadian Banks) remains the benchmark. It’s the most established bank covered call ETF, built on Canada’s Big Six. With an outstanding 23.32% 1-year return and a solid 14.24% over five years, ZWB shows why Canadian banks are still considered dividend aristocrats. This fund is a strong core holding for anyone looking for long-term stability in income.
For those prioritizing maximum cash flow, HMAX (Hamilton Enhanced Canadian Bank ETF) is hard to beat. With a massive 13.84% yield and 21.11% 1-year return, it uses 50% call coverage and leverage to squeeze out the highest possible distributions from Canadian banks. The trade-off is less long-term growth, but for retirees or income-focused investors, HMAX is a powerful monthly income generator.
On the technology side, HTA (Harvest Tech Achievers) continues to shine. Even with call-writing capping some upside, it has delivered an impressive 17.55% over five years while still yielding 8.83%. For investors who want to capture growth from tech leaders like Microsoft, Nvidia, and Apple, but with more stability and steady income, HTA is the best option in its category.
Lastly, ZWK (BMO Covered Call U.S. Banks) offers targeted U.S. financial exposure. With a 7.16% yield and decent 1-year returns (15.18%), it’s more volatile than ZWB but can serve as a complement for investors who want to diversify banking exposure beyond Canada.
Verdict – Sector ETFs:
Best Canadian bank play: ZWB for stability and long-term track record.
Best high-yield bank play: HMAX for maximum monthly income.
Best technology play: HTA for growth plus income.
Final Takeaways
If you want maximum yield, look at HMAX, HYLD, and HDIV, but be aware they rely on leverage and aggressive call-writing.
If you want stability and tax efficiency, ZWC and ZWB are the safer bets.
If you want long-term growth with income, HTA and HDIV stand out.
📌 The best strategy for Canadian income investors is to blend diversified funds (HDIV, HYLD, ZWC) with sector-focused ETFs (ZWB, HMAX, HTA). This way, you capture steady monthly distributions, broad diversification, and exposure to sectors that drive performance.
How had Covered call ETF’s performed historically?
In historical contexts characterized by bear markets, range-bound markets, and moderate bull markets, a covered call strategy has typically demonstrated the ability to outperform its underlying securities. However, during robust bull markets, when the underlying securities experience frequent rises beyond their strike prices, covered call strategies have historically exhibited slower growth. Nevertheless, even in these bullish phases, investors typically realize moderate capital appreciation alongside the accrual of dividends and call premiums.
How writing a call option works?
Options make it possible to hedge a possible decline in a security and thus limit its loss through a gain on the option. To apply this hedging strategy, you have to take a short position on a call option, in other words sell a call.
The sale of calls achieves two objectives:
· Set the sale price of these securities (exercise price) and therefore set an acceptable loss.
· Collect a premium, i.e. additional income, or limit losses if the strike price is reached.
The option seller will be obligated to deliver the securities if exercised at the price fixed in advance. In this case the market will have evolved contrary to these expectations, it will have appreciated. The option investor will sell his securities for less than the market price.
Covered call options protect against downside risk. This being said, the covered call strategy provides limited downside protection. Also, when you write a covered call, you give up some of the stock’s potential gains. Covered call ETFs will tend to have a higher yield and a lower performance.
Popular Covered Call ETFs in Canada
ETF
Focus / Objective
Sectors / Geography
Investor Appeal
ZWB – BMO Covered Call Canadian Banks
Canadian banks + call premiums
100% Canadian Big 6 banks
Stable, income-focused play on Canadian banks
ZWC – BMO Canadian High Dividend CC
Broad Canadian high dividend portfolio
Financials & Energy = ~53%
Conservative, tax-efficient, steady monthly income
ZWP – BMO Europe High Dividend CC
European dividend payers + options
Switzerland, Germany, UK, France
Diversifies income outside North America
ZWH – BMO U.S. High Dividend CC
U.S. large-cap dividend names
Broad U.S. exposure, ~23% Tech
U.S. exposure with yield + lower volatility
ZWK – BMO Covered Call U.S. Banks
U.S. banking sector
100% U.S. banks (~38 names)
Higher yield (~6%), targeted U.S. financials
HTA – Harvest Tech Achievers
Global tech leaders + covered calls
Heavy in semis + software
Tech growth exposure with reduced volatility
HBF – Harvest Brand Leaders
20 global “top brands”
~20% Financials, 20% Tech, 15% Comm. Services
Blue-chip global exposure, monthly distributions
ZWB – BMO Covered Call Canadian Banks
The ZWB aims to provide exposure to a portfolio of dividend-paying securities (Canadian Banks), while collecting premiums related to call options. The portfolio is chosen on the basis of the criteria below:
• dividend growth rate; • yield; • payout ratio and liquidity.
ZWB holdings
Name
Weight
BMO Equal Weight Banks ETF
27.2%
Bank of Montreal
12.9%
Canadian Imperial Bank of Commerce
12.7%
Royal Bank of Canada
12.1%
National Bank of Canada
11.9%
The Toronto-Dominion Bank
11.9%
Bank of Nova Scotia
11.4%
Please visit issuers’ website for up-to-date figures – Best Covered Call ETF Canada
ZWC –BMO CDN High Div Covered Call
The BMO Canadian High Dividend Covered Call ETF (ZWC) has been designed to provide exposure to a dividend focused portfolio, while earning call option premiums. The underlying portfolio is yield-weighted and broadly diversified across sectors.
The fund selection methodology uses 4 factors: – Liquidity; – Dividend growth rate; – Yield and payout ratio.
ZWC is an excellent option for conservative investors looking for a steady income and low volatility. It’s tax-efficient because the dividends are all coming from Canadian companies. The financial sector and Energy represents 53% of the total overall sector allocation.
ZWC ETF Holdings
Company Name
Allocation
Canadian National Railway Co
5.4%
BCE Inc
5.2%
TELUS Corp
5.1%
Enbridge Inc
5.0%
Royal Bank of Canada
5.0%
Canadian Imperial Bank of Commerce
4.9%
Bank of Nova Scotia
4.7%
The Toronto-Dominion Bank
4.6%
Manulife Financial Corp
4.3%
Please visit issuers’ website for up-to-date figures – Best Covered Call ETF Canada
ZWP – BMO Europe High Dividend Covered Call ETF
The BMO Europe High Dividend Covered Call ETF (ZWP) has been designed to provide exposure to a dividend focused portfolio. These dividend paying companies are selected based on:
dividend growth rate,
yield,
payout ratio and liquidity.
ZWP Dividend ETF Holdings
Company Name
Allocation
Roche Holding AG
4.0%
Nestle SA
4.0%
Novartis AG
4.0%
GlaxoSmithKline PLC
4.0%
Sanofi SA
3.8%
TotalEnergies SE
3.7%
Unilever PLC
3.7%
Enel SpA
3.7%
Please visit issuers’ website for up-to-date figures – Best Covered Call ETF Canada
Geographic allocation
Countries
Weight
Switzerland
23.66%
Germany
24.24%
United Kingdom
18.76%
France
16.72%
Other (multiple countries)
16.62%
Please visit issuers’ website for up-to-date figures
Sector allocation
Type
Fund
Information Technology
6.22
Industrials
12.18
Consumer Discretionary
11.56
Consumer Staples
11.78
Health Care
16.56
Financials
14.79
Materials
9.48
Communication
8.10
Energy
3.89
Utilities
3.66
Please visit issuers’ website for up-to-date figures – Best Covered Call ETF Canada
ZWH – BMO US High Dividend Covered Call ETF
ZWH has been designed to provide exposure to a dividend focused portfolio, while earning call option premiums. The underlying portfolio is yield-weighted and broadly diversified across sectors. The Fund utilizes a rules-based methodology that considers the following criteria:
dividend growth rate,
yield,
payout ratio,
liquidity.
ZWH Dividend ETF Holding
Company Name
Allocation
Apple Inc
4.2%
Microsoft Corp
4.2%
Coca-Cola Co
4.1%
AbbVie Inc
4.1%
The Home Depot Inc
4.1%
Procter & Gamble Co
4.1%
Pfizer Inc
4.0%
Please visit issuers’ website for up-to-date figures
Geographic allocation
Country
Fund
USA
100.0%
Please visit issuers’ website for up-to-date figures
Please consult issuers’ website for up-to-date figures
ZWK -BMO Covered Call US Banks
The BMO Covered Call U.S. Banks ETF (ZWK) is professionally managed by BMO Global Asset Management. The fund has been designed to provide exposure to a portfolio of U.S. banks while earning call option premiums.
The fund invests in 38 US Banks. It’s ideal for investors looking for dividend income. The dividend yield on November 24th was 6.19%!
The fact that the fund uses call options accomplishes two things:
increases the dividend yield;
reduces volatility but also growth potential. So, it’s something to keep in mind.
HTA is an ETF that invests in an equally weighted portfolio of 20 large-cap technology companies (globally). In order to generate an enhanced monthly distribution yield, an active covered call strategy is engaged.
Covered call strategies are great as they generate additional income for investors (in the form of premiums). The strategy is somewhat conservative and aims at preserving the capital invested primarily. On the other hand, the strategy limits potential growth.
Name
Weight
Sector
NVIDIA Corporation
6.9%
Semiconductors
Advanced Micro Devices, Inc.
6.5%
Semiconductors
QUALCOMM Inc
6.5%
Semiconductors
Intuit Inc.
5.5%
Software
Apple Inc.
5.3%
Technology Hardware
Applied Materials
5.2%
Semiconductors
Keysight Technologies
5.2%
Electronic Equipment
Broadcom Inc.
5.1%
Semiconductors
Microsoft Corp
5.1%
Software
Adobe Inc.
5.0%
Software
HBF – Harvest Brand Leaders Plus Income
HBF is an equally weighted portfolio of 20 large companies selected from the world’s Top 100 Brands. The ETF is designed to provide a consistent monthly income stream with an opportunity for growth. In order to generate an enhanced monthly distribution yield, an active covered call strategy is engaged.
HDIF is a relatively new fund from Harvest ETFs (created on Feb 2022). It’s a covered call ETF and its main target audience are income/dividend investors.
HDIF is a fund of funds. It means this ETF invests in other ETFs to provide investors with diversification across various sectors of the economy ( Healthcare, Global Brands, Technology, Utilities, and US Banks). The primary objective is to provide a higher yield than traditional dividend ETFs by using a covered call strategy.
Additional facts about HDIF:
– The portfolio is reconstituted and rebalanced quarterly (minimum);
– The covered call strategy is applied on up to 33% of each equity securities held in underlying portfolios.
Sector allocation
Sector
% Allocations
Financial Services
31.8%
Healthcare
21.8%
Technology
23.4%
Comm. Services
15.0%
Utilities
13.7%
HDIF ETF review: Portfolio
ETF
Allocation
HUTL Harvest Equal Weight Glbl Utilts Inc
20.5
HHL Harvest Healthcare Leaders Inc
20.3
HBF Harvest Brand Leaders Plus Inc
20.7
HUBL Harvest US Bank Leaders Income Cl A
20.7
HTA Harvest Tech Achievers Gr&Inc
20.7
HLIF Harvest Canadian Equity Income Leaders ETF
23.3
Cash and other Liabilities
(26.2)
Please visit issuers’ website for most up-to-date data
HDIV -Hamilton Enhanced Multi-Sector Covered Call
HDIV is a passive covered call ETF. It’s ideal for investors who seek high dividend income and low volatility. HDIV invests in a basket of 7 covered call & sector focus ETFs. The fund manager uses also cash leverage of 25% to enhance yield and growth potential. The index tracked is The Solactive Multi-Sector Covered Call ETFs Index TR x 1.25.
The ETFs held within HDIV invest primarly in large corporations. In addition to using the covered call strategy, the funds ensure diversification of your investments across various sectors. See below the list of the 7 ETFs that make up HDIV:
All the funds that make up HDIV are covered call ETFs offered by various issuers such as: Harverst, BMO, CI Financial and Horizons.
Video HDIV overview
HMAX – Hamilton Canadian Financials Yield Maximizer
HMAX ETF is a new fund offered by Hamilton ETF. The fund invests in the Canadian banking sector. This fund aims to provide an attractive dividend yield (target 13%) using a covered call strategy. The strategy consists of writing call options on (50% of the portfolio) to collect premiums and maximize monthly distributions.
Objective: Designed to provide attractive monthly income by investing in a diversified portfolio of U.S. equity covered call ETFs and applying modest leverage (25%) to enhance yield and growth potential.
Strategy:
Invests primarily in U.S.-focused covered call ETFs across different sectors (technology, healthcare, financials, etc.).
Uses covered call writing to generate option premiums.
Adds 25% cash leverage to boost distributions.
Investor Appeal: Suitable for Canadian investors seeking high monthly distributions from U.S. equities, while accepting capped upside and slightly higher risk due to leverage.
Q&A
Do covered call ETFs pay dividends?
Yes, Covered call ETF’s offer an excellent dividend yield. Their dividend yield is usually superior to ‘regular’ dividend ETF’s. Thanks to premiums collected issuing covered calls, the manager boost the fund distributions (Dividends plus Premiums), thus the dividend yield is usually high.
Some Covered Call ETFs use leverage to enhance returns even higher.
Do covered calls beat the market?
During market corrections, the answer would be probably yes. In essence, the covered call strategy is a convervative strategy that tends to forego profits for stability and income.
In a bull markets, covered call ETFs would have a lousy performance. A ‘regular’ dividend ETF would definitely perform better in bull market that a Covered call ETF.
If you are retired or close to retiring, a covered call ETF could be a better option for you. For young investors building wealth, covered call ETFs are not a good choice because they deprive their holders of growth perspective.
How risky is covered calls?
Covered call ETFs are generally low to medium risk funds. However, if the fund manager uses leverage, the fund would be considered medium to high risk.
Introduction: A strategy to turn your portfolio around
Investing in the stock market is more than just buying and selling stocks. For investors looking for additional income, options can offer attractive opportunities — provided they understand the risks and mechanisms.
Among the strategies available to retail investors, the wheel strategy is becoming increasingly popular. It combines two types of options — puts and calls — in a logical cycle, aimed at acquiring shares at a good price and generating recurring revenue.
Let’s take a step-by-step look at how this strategy works, its benefits, its risks, and some concrete examples tailored to Canadian investors.
What is the wheel strategy?
The wheel strategy is an investment method based on covered calls and puts. It is based on a simple idea:
Buy a stock at a good price, then sell call options to generate income for as long as you own that stock.
It’s a passive income strategy that can work on quality stocks that you’d be willing to hold for the long term.
Conditions for applying the policy:
Be willing to buy 100 shares of a security
Use an account that allowsCovered Options Trading(e.g.:Questrade, Interactive Brokers, etc.)
Understanding how cash-secured puts and covered calls work
The three phases of the wheel
Step 1: Sell a put (cash-secured)
You start by selling a put option on a stock you want to own. This means that you commit to buying 100 shares at a given strike price if the stock falls.
Example:
You sell a $50 put on XYZ stock, expiring in 30 days.
You receive a bonus of $1.50, or $150 (1.50 × 100).
You must have $5,000 in cash available in case you need to buy the shares.
Two possible scenarios:
The stock stays above $50 → you keep the premium, and you start over.
The stock falls below $50 → you buy 100 shares at $50 (contract obligation).
Step 2: Sell a covered call
Now that you own all 100 stocks, you move on to the next phase: writing a covered call option. This commits you to selling your shares at a set price if the stock goes up.
Example:
You hold 100 shares of XYZ purchased at $50.
You sell a call at $55 for a premium of $1.00 → you cash in another $100.
Two possible scenarios:
The stock stays below $55 → you keep your shares and the premium.
The stock exceeds $55 → your shares are sold at $55 → you cash in a capital gain + the premium.
Step 3: Start the cycle again
Once your shares are sold via the call exercise, you return to step 1: sell a new put. And so on.
This is why it is called a “wheel strategy“: a continuous cycle of selling puts and calls, which can generate regular income.
Why use the wheel strategy?
Benefits:
Regular passive income thanks to the premiums collected
Ability to buy shares at a discount
Suitable for stable and liquid stocks (e.g., Canadian banks, large corporations)
Great strategy for long-term investors looking to accumulate capital
Disadvantages and risks:
You must have enough capital to buy 100 shares
If the stock falls sharply, you may incur an unrealized loss
You limit your gains with calls if the stock goes up too quickly
Premiums can vary greatly depending on volatility
The wheel strategy combines the selling of put options and call options to generate passive income while buying and selling stocks. It attracts investors who are looking for a disciplined and potentially profitable method.
Among the advantages, we note first of all the bonuses collected regularly, which bring an interesting income stream. Secondly, selling puts allows you to buy shares at a discount, under certain market conditions. This strategy is particularly suitable for stable and liquid stocks, such as large Canadian banks or TSX companies. It fits well into a long-term approach, focused on capital accumulation.
But the wheel also carries risks. You need to have enough capital to buy 100 shares per position. If the stock falls sharply, the investor can suffer a significant unrealized loss. In addition, the gains are limited if the stock rises quickly, since the call sets a sell price. Finally, income varies according to volatility: in quiet periods, premiums are lower.
It is therefore an interesting strategy, but one that requires rigour and understanding of the options.
A concrete example with a Canadian action
Let’s take a fictitious example with TD Bank (TD. TO):
Current Price: $102
You sell a put with a strike price of $98, 30-day expiration, and you receive a premium of $1.50→ You cash out $150 ($1.50 × 100 shares)
If the stock drops below $98 at maturity → you are assigned and you buy 100 TD shares at $98→ Total cost: $9,800, but your net cost is $9,650 (thanks to the premium received)
You now own the shares. You sell a covered call at $105 with a premium of $1.20→ You cash in another $120
Two possible scenarios:
If TD exceeds $105 at maturity, your shares are sold at $105→ Capital gain of $700 ($105 – $98) + $120 premium = $820 total gain
If TD stays below $105, you keep your shares and can sell another call
Tips for using the strategy well
Choose strong stocks with good fundamentals
Avoid stocks that are too volatile or highly speculative
Use short maturities (7 to 30 days) to maximize premiums
Always monitor your available capital to meet your commitments
Keep a logbook of your transactions (premiums received, strike price, maturity)
If you apply the wheel strategy, whether in the Canadian or American market, there are some best practices that are still essential. Start by selecting quality stocks with good fundamentals, stable profitability and good liquidity. In Canada, securities such as banks (TD, BMO) or Enbridge are often used. In the United States, we find Apple, Coca-Cola and Pfizer.
Avoid highly volatile or speculative stocks, often found on the NASDAQ or Canadian small caps. They offer high premiums, but the risk is also greater.
Use short maturities (7 to 30 days) to maximize premiums and be able to react quickly if the market moves. This is true on both sides of the border.
Always watch your available capital, especially with the CAD/USD exchange rate if you operate in both markets. It is important to have enough cash to buy 100 shares if you are assigned.
Finally, keep an accurate logbook of your trades in both markets. Record the premiums collected, the strike price, the maturity dates and the results. This will help you better assess your overall performance.
Useful tools for Canadian investors
Canadian exchanges: TSX, TSXV (use an option-eligible account)
Compatible brokers : Questrade, BMO InvestorLine, Interactive Brokers, Desjardins Courtage en ligne
Position tracking: Excel, Google Sheets, or specialized software
In short
Stage
Action
Objective
1
Sell a put
Trying to buy the stock at a good price + cashing in a premium
2
Sell a covered call
Generate income from the shares held
3
Recommence
Repeat the cycle for regular income
Conclusion: A simple strategy, but not without risks
The wheel strategy is not a “sure shot,” but it can be a great tool for patient and disciplined investors. It allows you to turn market volatility into income, while remaining exposed to stocks you’d be willing to hold.
Before using it, make sure you understand the options, assess your financial goals, and start small, with something you’re familiar with.
CIBC Investor’s Edge is a division of CIBC Investor Securities Inc., a subsidiary of Canadian Imperial Bank of Commerce (CIBC). With relatively low transaction fees and discounts for students and active traders, this is a service worth considering.
Current Offer
Why choose CIBC investors’ edge
If you want a one-stop-shop for your banking and investing needs, CIBC Investor’s Edge might actually be the best choice for you.
Overall, it offers:
Brokerage service offered by a major Canadian bank
Lower trading fees than other major banks
All account options available
Easy access from mobile and desktop devices
Commitment to updates and innovation
One-Stop Financial Service Center
List of qualifying accounts
RRSP, TFSA, RESP, RRIF, LIRA, LRIF and non-registered accounts qualify. The first qualified account of each type that is opened will receive the cash credit. For the purposes of the offer, joint accounts do not qualify as a different account type, thus any rebate will only be paid to one joint or individual account of each kind, not both.
CIBC investor-friendly Fees and commissions
The CIBC Investor’s Edge trading platform is not only competitive with other major banking brokerages in Canada, it is considerably cheaper when it comes to daily trading fees, reaching a flat fee of $6.95 per online transaction on stocks and ETFs.
This is lowered to $5.95 if you are still under a student account And $4.95 if you reach the ‘active trader’ threshold of 150 trades per quarter.
Although not quite on par with the leading low-cost (non-bank brokerage firms) like Questrade, Qtrade and Wealthsimple Trade, CIBC’s online discount brokerage beats all other major bank brokerage firms in this regarding trading fees.
Video (Take a tour)
Type of accounts offered
You can open all major investment accounts using CIBC Investor’s Edge, including:
That means you can transfer as much as you want and get started. This is especially useful if you are just learning trading and investing.
Security
CIBC is one of the largest banks in North America and one of the top five in Canada. Also, CIBC Investor’s Edge is a division of CIBC Investor Services Inc., a subsidiary of CIBC.
Note: CIBC Investor Services Inc. is a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC).
Fee per transaction below average
$6.95 per stockand ETF trading is lower than most of the big 5 banks. The savings here can be significant.
If you have a CIBC Smart™ account for students, you get $1 off every equity stock and ETF trade , making it a little easier to discover and learn.
Discount on transaction fees for active traders
If you make more than 150 trades per quarter, you can register as an “active trader”, which gives you an additional discount on fees, up to $4.95 per trade.
The CIBC Investor’s Edge mobile app offers users a convenient way to monitor account balances and trade stocks, ETFs and options anytime, from anywhere. Users can also stay informed about important investment news, such as new IPOs, so they can take advantage of new opportunities as they arise.
Users will also have access to charts and tables to help them analyze their entire portfolio in one easy-to-read view, or review different investment accounts separately.
FAQs (CIBC Investor’s Edge Review)
Does CIBC Investor’s Edge offer trading fee rebates?
They do. If you have a CIBC Smart account for students, you’ll pay $5.95 per stock and ETF trade instead of the usual $6.95 per equity trade .
If you make more than 150 trades per quarter, you can register as an “active trader” and get an additional $1 rebate, paying only $4.95 per trade.
I’m new to investing, is CIBC Investor’s Edge the right choice for me?
CIBC services offer a lot of support, information, and educational material for new traders. Please note, it does not offer practice accounts.
Is there a minimum investment required to start using CIBC Investor’s Edge?
There’s none. You can start with as much or as little money as you want.
Ticker: AAPL (NASDAQ) Market Cap: ~$2.8 trillion (as of May 2025) Sector: Information Technology
Apple released its Q2 FY2025 earnings on May 2, 2025. The company beat expectations on earnings per share, grew its services segment, raised its dividend, and announced the largest stock buyback in U.S. corporate history. Yet, not everything was perfect — sales in China declined, and investors are still waiting for Apple’s big AI moment.
Let’s break it all down for Canadian investors.
🔢 Q2 2025 Financial Highlights (vs. estimates)
Metric
Reported
Expected
Revenue
$90.8B
$90.0B
Earnings per Share
$1.55
$1.50
iPhone Revenue
$48.6B
$47.9B
Services Revenue
$23.9B
$23.5B
Mac Revenue
$7.1B
$6.9B
✅ Strengths
Despite an uncertain global economy, Apple delivered resilient performance across its core businesses, demonstrating why it remains one of the world’s most valuable companies.
Strong iPhone and Services Performance
Apple’s iPhone sales grew 2% year-over-year, reaching $48.6 billion. This is a major positive in a mature smartphone market where many competitors are seeing flat or declining unit sales. The launch of the iPhone 15 lineup has proven sticky, and Apple’s ability to command premium pricing remains unmatched.
The services segment continues to be a standout performer, with revenue hitting a record $23.9 billion. This includes the App Store, iCloud, Apple Music, Apple TV+, and more. Services now make up over 26% of total revenue, and margins in this segment exceed 70%, significantly higher than hardware margins.
Recurring Revenue and Ecosystem Strength
Apple’s strategy to build a closed, sticky ecosystem is paying off. With over 2.3 billion active devices globally, the company has a massive installed base to monetize. More users are subscribing to multiple Apple services, increasing ARPU (average revenue per user) and improving predictability of future cash flows.
Apple’s move toward recurring revenue gives it more stability and valuation strength, especially during hardware cycles or slower macroeconomic conditions.
Capital Return to Shareholders
Apple announced a 4% dividend increase to $0.26 per share and launched a $110 billion stock buyback program — the largest in U.S. corporate history. This reflects management’s confidence in the long-term health of the business and provides direct value to shareholders.
Canadian investors holding AAPL in USD or CAD (via a CDR) also benefit from this capital return strategy, though dividend income is subject to U.S. withholding tax unless held in an RRSP.
Financial Discipline and Balance Sheet Strength
Apple maintains over $55 billion in net cash and continues to generate strong free cash flow. This financial strength allows the company to invest in future innovations (like AI, chips, or wearables) while still returning capital and weathering downturns.
Overall, Apple remains a high-margin, high-return business, with a brand and ecosystem that’s nearly impossible to replicate.
⚠️ Weaknesses
While Apple’s headline numbers were strong, several underlying concerns could limit growth or weigh on valuation going forward.
Weakness in China
Perhaps the most significant red flag was a sharp drop in revenue from China, down 8% year-over-year. This is worrying because China has long been a crucial growth market for Apple, often contributing 15–20% of total revenue.
What’s driving the decline?
Huawei is making a comeback with competitive 5G smartphones, winning back local consumers.
Geopolitical tension between the U.S. and China is intensifying. Reports suggest government agencies in China are restricting iPhone use, especially in official settings.
Slower consumer spending in China is weighing on premium electronics sales.
Apple’s premium pricing model is facing resistance in a region where national brands are gaining momentum. If this trend continues, it could drag down international growth.
Innovation Concerns
Another growing concern is the lack of perceived innovation. While Apple refines its products consistently, the iPhone has not seen a game-changing update in years. The Vision Pro, Apple’s mixed-reality headset, is seen more as a long-term bet and remains a niche product due to its $3,499 price tag.
Analysts and tech observers are increasingly comparing Apple’s pace of innovation unfavourably to rivals like Microsoft and Google, who are rapidly integrating AI into cloud, productivity, and search tools.
Without a compelling AI story or breakout new hardware, Apple risks being seen as a late adopter rather than a leader in the next wave of tech.
Overdependence on iPhone
More than 53% of Apple’s revenue still comes from iPhone sales. That level of concentration poses a risk. If upgrade cycles slow down — due to economic uncertainty or lack of innovation — overall revenue growth could stall.
This dependence also puts pressure on Apple to consistently deliver hits in a single product category, limiting diversification.
Regulatory Pressures
Apple faces increased regulatory scrutiny, especially in Europe. Under the Digital Markets Act (DMA), Apple is being pushed to open up its ecosystem — including allowing third-party app stores and alternative payment systems.
If enforced, these rules could impact the high-margin services segment, particularly App Store commissions, which are a key driver of growth.
Regulatory risks are mounting in the U.S. as well, with antitrust investigations targeting potential monopolistic behaviour.
AI Strategy Still Unclear
Unlike Microsoft and Google, Apple has yet to clearly articulate its vision for generative AI. While leaks suggest that iOS 18 will feature new AI tools, investors remain uncertain about Apple’s positioning in this space.
Without a compelling AI roadmap, Apple may risk falling behind competitors as AI reshapes user experience, devices, and cloud platforms.
🔮 Outlook and Growth Potential
Apple remains a long-term compounder, but it needs to address several challenges to maintain investor confidence. The most critical factors to watch over the next 6–12 months include:
China revenue recovery
The strength and rollout of iOS 18 AI features
Performance of Vision Pro and future product launches
Evolution of regulatory restrictions, especially in Europe
Despite near-term headwinds, Apple’s balance sheet, brand power, and service-driven margin profile make it one of the most defensive large-cap tech stocks available today.
🇨🇦 How Canadian Investors Can Buy Apple Stock
1. Buy AAPL on NASDAQ (USD)
Canadian investors can purchase AAPL directly in USD via brokerages like Questrade, Wealthsimple, RBC Direct Investing, etc.
⚠️ Currency conversion fees apply unless you hold USD in your account.
2. Buy Apple CDR on NEO Exchange (CAD)
Ticker: AAPL.NE
Traded in Canadian dollars
Built-in FX hedge
Fractional exposure = more affordable
CDRs are an accessible way for Canadians to own U.S. stocks without worrying about currency fluctuations or full share prices.
Apple’s Q2 2025 results show strength in core products and services, strong free cash flow, and shareholder discipline. But the company is under pressure to prove its AI strategy, recover from China market weakness, and avoid becoming too reliant on the iPhone.
For Canadian investors, Apple remains a foundational stock — but staying informed about regulatory shifts and competitive dynamics will be key.
Ticker: GOOGL (NASDAQ) Market Cap: ~$2.1 trillion (as of May 2025) Sector: Communication Services
Q1 2025 Highlights
Alphabet delivered a strong Q1 on April 25, 2025, beating both revenue and earnings expectations. This was a breakout quarter for the tech giant, which also announced its first-ever dividend and a $70B stock buyback.
Key Numbers (vs. expectations)
Metric
Reported
Expected
Revenue
$81.4B
$78.6B
EPS (GAAP)
$1.89
$1.53
Operating Margin
32%
27%
Google Cloud Revenue
$11.5B
$10.9B
YouTube Ads Revenue
$8.3B
$7.9B
✅ Strengths
Alphabet’s Q1 2025 earnings revealed several clear strengths that highlight the company’s evolution from a high-growth tech firm into a more mature, balanced business. These strengths span profitability, core advertising resilience, and an important shift toward rewarding shareholders.
Google Cloud Turns Profitable
For years, Google Cloud was seen as Alphabet’s “catch-up” segment — a division investing heavily to close the gap with Amazon Web Services (AWS) and Microsoft Azure. In Q1 2025, that narrative changed.
Google Cloud delivered $11.5 billion in revenue, up 20% year-over-year. More importantly, it posted $900 million in operating profit. That’s a big shift from prior quarters where the segment was barely breaking even. This performance also marked the third consecutive quarter of profitability for the cloud division.
What’s driving this improvement? First, enterprise customers are adopting Google’s AI-driven tools, like Gemini for business and Vertex AI, as cloud becomes the backbone of digital transformation. Second, Google has been improving its operational efficiency, cutting excess costs while expanding margins.
For investors, this means the cloud is no longer a cost centre. It’s a high-growth, high-potential revenue stream that is becoming a pillar of long-term profitability.
Search and Ads Still Lead
Despite rising competition from platforms like TikTok and AI-powered search alternatives, Alphabet’s core ad business remains robust. In Q1, Google Search ad revenue grew 13% year-over-year, showing resilience in a tough macro environment.
The driver here is twofold. First, demand from retail advertisers remains strong, especially in sectors like e-commerce and travel. Second, Alphabet is leveraging artificial intelligence to improve ad targeting and user experience. Features like Search Generative Experience (SGE) are already being tested to show AI-enhanced answers with ads integrated natively.
This segment continues to deliver strong operating margins, supporting Alphabet’s overall margin expansion to 32% in Q1. Even as newer AI products emerge, Alphabet’s traditional business remains a reliable cash flow engine.
Shareholder Returns Begin
Perhaps the most significant strategic shift this quarter was Alphabet’s decision to initiate a dividend and expand its share buyback program.
The company declared its first-ever dividend of $0.20 per share, a signal that Alphabet is entering a more mature phase of its lifecycle. While small in size for now, it opens the door to recurring income for investors — especially attractive to Canadian retirees or dividend-focused investors holding U.S. stocks.
In addition, Alphabet announced a $70 billion stock repurchase plan, one of the largest buybacks in the tech sector. This helps boost earnings per share (EPS) by reducing the share count and reflects the company’s confidence in its long-term value.
Combined, these actions show that Alphabet is no longer just reinvesting for growth — it’s also returning capital to shareholders, making it more attractive to a broader base of investors.
⚠️ Weaknesses
YouTube Still Facing Competition
Despite 20% growth, YouTube is under pressure from TikTok. Monetization of Shorts is still lagging, and engagement from younger demographics is shifting.
Ongoing Antitrust Risks
Alphabet faces several antitrust lawsuits in the U.S. and Europe, targeting its dominance in search and advertising. Regulatory pressure could impact long-term margins.
Rising AI-Related CapEx
Capital expenditures rose to $12 billion (up 40% YoY), driven by data centres and custom AI chips. Heavy investment is necessary but impacts free cash flow.
📈 Key Financial Ratios
Ratio
Value
Notes
Price/Earnings (P/E)
~24x
Reasonable for a mega-cap tech
Operating Margin
32%
Highest in several quarters
Return on Equity (ROE)
28%
Very strong
Free Cash Flow Margin
21%
Supports dividend + buyback
Debt-to-Equity
0.05
Very low leverage
🔮 Outlook and Prospects
Alphabet is balancing growth with profitability. Its AI-first strategy—from Gemini to Google Workspace—is gaining traction. Cloud and advertising are both benefiting from AI innovation.
Key Growth Drivers
Enterprise AI adoption through Google Cloud
AI-enhanced search and advertising
Recurring shareholder returns through buybacks and dividends
That said, investors should watch out for regulatory actions, TikTok competition, and rising AI costs.
🇨🇦 How Canadian Investors Can Buy Alphabet Stock
Canadian investors have multiple ways to invest in Alphabet, depending on their goals and preferences.
Buy Directly on the NASDAQ (USD)
You can buy GOOGL or GOOG shares directly through most Canadian brokerages (Wealthsimple, Questrade, RBC, etc.) in U.S. dollars.
GOOGL = Class A (voting rights)
GOOG = Class C (no voting rights)
Note: Currency conversion fees may apply.
Invest via Alphabet CDR in CAD
Alphabet is available as a Canadian Depository Receipt (CDR) on the NEO Exchange under the symbol GOOG.NE.
Trades in Canadian dollars
Built-in currency hedge
Lower share price (fractional exposure)
CDRs are a convenient way to hold U.S. stocks without worrying about FX or high share prices.
Buy ETFs That Hold Alphabet
For broader exposure, Canadians can buy ETFs that include Alphabet:
Alphabet’s Q1 2025 results were strong across the board—cloud is now profitable, search ads are stable, and AI investment is beginning to pay off. The introduction of dividends and buybacks marks a shift toward mature tech leadership.
For Canadian investors, the stock is accessible in multiple formats, whether you’re looking for direct ownership, CDRs, or ETF exposure.
The energy sector has long stood as an enduring force, shaping economies and influencing markets across the globe. For Canadian investors seeking exposure to this vital industry, Energy Exchange Traded Funds (ETFs) offer a strategic gateway. In this post, we delve into the best Canadian energy ETF s in Canada, spotlighting the most robust contenders. We are limiting our analysis to fund with over $100 million in assets under management.
We will discuss in this post their objectives, historical performance, Management Expense Ratios (MER), and portfolio breakdown.
XEG – iShares S&P/TSX Capped Energy (Best index ETF for the energy sector)
The goal of the iShares S&P/TSX Capped Energy Index ETF (XEG) is to let Canadian investors tap into the energy sector. It aims to mirror the S&P/TSX Capped Energy Index, which showcases how the Canadian energy market is doing.
This ETF includes companies involved in various energy-related activities, like searching for oil, producing energy, and distributing it. By investing in XEG, you can easily and affordably get a mix of different energy companies.
If you’re a Canadian investor interested in the energy industry, including both traditional energy and newer green energy companies, considering XEG could be a smart move. Keep in mind that XEG’s performance closely follows the underlying index, so how the energy sector does will affect how the ETF performs.
NNRG is managed by Ninepoint Partners. It’s one of Canada’s leading alternative investment management firms overseeing approximately $8 billion in assets under management and institutional contracts. Ninepoint offers mutual funds and ETFs targeting various sectors. The Ninepoint Energy fund is offered in two versions: a Mutual fund and an ETF.
NNRG ETF invests primarily in mid-cap companies involved directly or indirectly in the exploration, development, production and distribution of oil, gas, coal, or uranium.
NNRG is an active ETF. The fund does not replicate an index. On the contrary, the portfolio manager selects stocks that best fit the funds’ stated objective. NNRG is suited for investment with high-risk tolerance.
NXF CI First Asset Energy Giants ETF Unhedged and NXF-B CI First Asset Energy Giants Cov Call ETF
NXF operates as an actively managed exchange-traded fund (ETF) with a focus on the energy sector. Its investment strategy centers around the 15 most significant energy companies listed on the North American stock exchange. The core objectives of the fund encompass several key aspects:
This ETF aims to generate regular cash distributions to its investors on a quarterly basis. Additionally, it seeks to achieve capital appreciation by employing an equally weighted approach to investing in a diversified portfolio of equity securities. These securities belong to a minimum of the 15 largest energy companies, as determined by their market capitalization.
One of the key advantages that NXF strives to offer is the reduction of investment volatility. By carefully selecting and managing its investments, the fund aims to provide a level of stability in returns.
It’s important to note that NXF distinguishes itself as a currency-hedged ETF. This means that it employs strategies to mitigate the potential impact of currency fluctuations on its returns. On the other hand, its counterpart, NXF-B, does not incorporate such hedging mechanisms and is exposed to currency risk.
The primary objective of the BMO Equal Weight Oil & Gas Index ETF (ZEO) is to closely mimic the performance of the Solactive Equal Weight Canada Oil & Gas Index. The fund achieves this by investing in and retaining the same Constituent Securities as the Index.
ENCC – Horizons Canadian Oil and Gas Equity Covered Call
ENCC is specifically crafted to cater to Canadian investors. Its central mission encompasses:
a) Providing an avenue for Canadian investors to access the performance of an index comprising domestic companies operating within the crude oil and natural gas industry. The current representation of this index is the Solactive Equal Weight Canada Oil & Gas Index.
b) Delivering monthly distributions that encompass dividend earnings and call option income, while factoring in expenses.
To effectively manage and potentially mitigate downward market risks while simultaneously generating income, ENCC will employ a dynamic covered call option writing strategy tailored to the preferences and needs of Canadian investors.
When it comes to investing in U.S. markets, the S&P 500 is often the go-to index for Canadian investors. Two popular ETFs for tracking this index are Vanguard S&P 500 Index ETF (VFV) and iShares Core S&P 500 Index ETF (XSP). While both ETFs give you exposure to the 500 largest U.S. companies, there are key differences that might influence your choice. Let’s break it down!
What Do VFV and XSP Offer?
VFV: Vanguard S&P 500 Index ETF
VFV tracks the U.S. S&P 500 index, offering exposure to 500 of the largest U.S. companies like Apple, Microsoft, and Amazon. It does not use currency hedging, meaning your returns are impacted by fluctuations in the USD/CAD exchange rate. If the U.S. dollar strengthens relative to the Canadian dollar, VFV investors benefit, but if the Canadian dollar strengthens, returns could decline. VFV’s low MER of 0.09% makes it a cost-effective choice for long-term investors. This ETF is ideal for those comfortable with currency risk and who believe the U.S. dollar will remain strong over time.
XSP: iShares Core S&P 500 Index ETF
XSP also tracks the S&P 500 but includes currency hedging, which aims to neutralize the impact of USD/CAD fluctuations. This results in steadier returns tied closely to the S&P 500’s performance, regardless of exchange rate changes. With a MER of 0.10%, XSP is a good choice for short-term investors or those seeking reduced currency risk.
Key Similarities and Differences
Feature
VFV
XSP
Underlying Index
S&P 500 (Large-cap U.S. stocks)
S&P 500 (Large-cap U.S. stocks)
Currency Hedging
No
Yes
MER (Management Fee)
0.09% (slightly lower)
0.10% (slightly higher)
Impact of CAD/USD
Exposed to exchange rate changes
Minimized by hedging
Diversity
Broad exposure across sectors: technology, healthcare, finance, etc.
Same broad exposure across sectors
Currency Hedging
The biggest difference is currency hedging.
VFV does not hedge against USD/CAD fluctuations. If the U.S. dollar strengthens against the Canadian dollar, your returns may increase, and vice versa.
XSP uses currency hedging to reduce this risk. Your returns are tied more closely to the performance of the S&P 500 itself, not the exchange rate.
Example: Imagine the S&P 500 rises by 10% in a year. During the same period:
The U.S. dollar strengthens by 5% against the Canadian dollar.
VFV investors would see a total return of approximately 15% (10% from the S&P 500 + 5% from currency gains).
XSP investors, due to hedging, would see 10%, as currency changes are eliminated.
If the Canadian dollar strengthens by 5%,
VFV’s total return would drop to approximately 5% (10% from the S&P 500 – 5% currency loss).
XSP investors would still see 10%.
This illustrates how VFV’s returns are influenced by exchange rates, while XSP offers steadier performance tied purely to the index.
Performance Differences
Currency hedging can affect your returns. For example:
In years when the Canadian dollar weakens relative to the U.S. dollar, VFV may outperform XSP because it benefits from the exchange rate.
In years when the Canadian dollar strengthens, XSP may have an edge because it eliminates this currency risk.
Performance Comparison: VFV vs. XSP (Annualized Returns)
The performance numbers clearly show that VFV (unhedged) has outperformed XSP (hedged) across all timeframes.
When to Choose VFV
You’re Comfortable With Currency Risk: VFV can benefit if the U.S. dollar strengthens over time. Historically, the USD has often been stronger than the CAD.
You Want Lower Costs: With a slightly lower MER, VFV saves a little on fees.
When to Choose XSP
You Want to Avoid Currency Fluctuations: If you don’t want your returns to be affected by exchange rate movements, XSP is the safer choice.
Shorter Time Horizon: If you’re investing for the short term, currency fluctuations can significantly impact returns. Currency hedging reduces this volatility.
What About Dividends?
Both VFV and XSP provide exposure to dividends from S&P 500 companies. However:
Dividends paid by U.S. companies are subject to a 15% withholding tax for Canadian investors, even if you hold the ETFs in a TFSA.
In an RRSP or RRIF, this withholding tax is typically waived under the Canada-U.S. tax treaty.
If dividends are a key part of your strategy, VFV may be slightly more efficient for RRSP investors since it holds U.S. stocks directly, avoiding an extra layer of fees.
Which One Should You Choose?
The choice between VFV and XSP depends on your investment goals, risk tolerance, and view on currency fluctuations:
Long-Term Investors: VFV may be the better option if you’re willing to accept currency fluctuations, especially if you expect the U.S. dollar to remain strong.
Short-Term or Conservative Investors: XSP is ideal if you want less exposure to currency risk.
Final Thoughts
Both VFV and XSP are excellent ETFs for gaining exposure to the S&P 500.
Choose VFV for simplicity, lower costs, and long-term U.S. dollar exposure.
Choose XSP for stability and reduced currency risk.
No matter which you choose, both ETFs offer a low-cost, diversified way to invest in some of the largest and most successful companies in the U.S.
Got any questions about these ETFs? Let me know in the comments below!
