When I spoke a few weeks ago at the Las Vegas MoneyShow, I was bombarded with questions about single-stock, covered-call ETFs, especially the ones from YieldMax. These ETFs sport massive dividend yields, and the YieldMax success at gathering assets is spawning competition from other ETF sponsors.

YieldMax has several dozen single-stock ETFs. Kurv ETFs currently have six funds covering the most popular tech stocks. Meanwhile, the yields on comparable YieldMax and Kurv ETFs are very different, even though they employ very similar covered call strategies.

Covered call trading involves selling call options to generate cash income. Here is an example. The NFLX Option Income Strategy ETF (NFLY) has a current distribution rate of 77.53%. (Note: reported yields vary a lot from month to month). The Kurv Yield Premium Strategy Netflix (NFLX) ETF (NFLP) shows a current yield of 27.62%.

However, when you compare total returns, the numbers end up quite close.

You can see that the NFLY share price has been relatively flat, with the bulk of returns coming from option trading. The NFLP return has been a combination of share price appreciation and option-selling income.

With that lengthy lead-in last week, another ETF company announced single-stock ETFs with weekly dividends but a very different investment strategy. Roundhill Investments launched five new single-stock ETFs.

The announcement email stated this:

Roundhill WeeklyPay™ ETFs represent the next generation of income-oriented strategies, combining weekly distributions with amplified exposure to select stocks (NVDA, TSLA, AAPL, COIN, and PLTR).

NVW, TSW, AAPW, COIW, and PLTW each employ a strategy designed to pay weekly distributions and provide calendar week returns, before fees and expenses, equal to 1.2 times (120%) the return of their respective underlying stocks.

The portfolios of these funds consist of weekly pay private party swaps equal to 100% of the ETF’s portfolio and owning the underlying stock equal to 20% of the portfolio. It appears that whatever gains the swaps generate will be paid as weekly distributions.

These new Roundhill ETFs are designed to capture more of the underlying stock price upside than a covered call strategy. My partner says there is no free lunch, so he doesn’t think the funds will do well. We own other Roundhill ETFs in our ETF Income Edge service that have performed nicely. The ones we own do use covered call trading.

There is no reason to jump on the new ETFs from Roundhill immediately. I will be watching and tracking to see how they perform.

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