27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
After some high dividend exchange traded funds struggled in 2018, the strategy and its related funds are bouncing back this year.
Just look at the SPDR Portfolio S&P 500 High Dividend ETF (NYSE:SPYD), which is higher by more than 11 percent this year.
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What Happened
SPYD follows the S&P 500 High Dividend Index. That index “is designed to measure the performance of the top 80 high dividend-yielding companies within the S&P 500 Index,” according to State Street.
SPYD has a dividend yield of 4.25 percent, according to issuer data. Its status as a high dividend fund — its yield is more than double that of the S&P 500 — underscores why SPYD lost nearly 5 percent last year as the Federal Reserve boosted interest rates four times.
Why It's Important
Amid expectations that the Fed will slow its pace of rate hikes this year or not raise borrowing costs at all, high-yield dividend ETFs such as SPYD are rallying and investors are revisiting the funds. Since the start of this year, SPYD has added $191.21 million in new assets, a sizable percentage of its $1.25 billion in assets under management. Investors were fond of the fund last year too, adding almost $700 million.
In a recent tweet, the ETF Research Center said SPYD has been packing on new assets this year and has become the seventh-most searched ETF on that research platform. The ETF Research Center has a Speculative rating on SPYD.
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The ETF Research Center said the rating is applied to “narrowly focused funds or in industries with structural issues, which may also make them very risky. Nonetheless they may still be useful as part of a well-diversified portfolio.”
SPYD's ALTAR score of 8.8 percent is above the category average of 5.7 percent.
What's Next
None of SPYD's holdings exceed weights of 1.88 percent. While the fund allocates over one-third of its combined weight to the high-yielding, defensive real estate and utility sectors, it features some cyclical exposure as well.
Consumer discretionary and energy names combine for over 26 percent of SPYD's roster, while the financial services and technology sectors combine for 19 percent.
SPYD charges just 0.07 percent per year, or $7 on a $10,000 investment, making it one of the least expensive dividend ETFs on the market.
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This ETF Is Swelling In February
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.