The top five holdings in our first idea are: Apple Inc (AAPL, 11.24% of assets); Microsoft Corp (MSFT, 10.93%); Amazon.com Inc (AMZN, 10.45%); Alphabet Inc Class C (GOOG, 4.88%); and Facebook Inc A (FB, 4.21%). The fund pays a current annual dividend yield of 9.83%, paid monthly. Our second recommendation is a sale of a company that proved to be a disappointment.
Global X NASDAQ 100 Covered Call ETF (QYLD)
From 2 for 1 Stock Split Newsletter
One of my loyal subscribers pointed out that the Global X NASDAQ 100 Covered Call ETF (QYLD) might be nearly as safe as a short- term bond fund while offering an 8% to 10% yield. I have never traded options, but I do know about ETFs, and this appears to be a solid one.
QYLD has almost $1B in assets, it’s less volatile than the market, and has a reasonable 0.60% expense ratio. It is sponsored by Global X, a 10-year old business managing over 70 other ETFs.
The QYLD ETF makes its money by owning the stocks in the NASDAQ 100 Index and then selling call options on the index. Without getting too far into the weeds, this strategy provides a way to earn income from an index that is known as a vehicle for growth while mitigating the down-side risk, all while reducing volatility and maintaining good diversity.
This ETF will be viewed as a proxy for our cash and will not be on the 30-month ladder like our stock positions. If there is a flurry of splits, I won’t hesitate to sell off QYLD to allow us to get back to the “normal” 30 stock portfolio that we have been missing for a while now.
Neil Macneale, 2 for 1 Stock Split Newsletter, www.2-for-1.com, 408-210-6881, January 2020