Getting Paid to Wait: 6 BMO ETFs to Fight Inflation
BMO ETFs presents our top 6 picks yielding 6% or more for investors who are looking for ideas to enhance the level of yield in their portfolios.Mar. 15, 2023
- Utilities and Energy pipeline equities have been in recent demand.
- Volatile geo-political environment lends well to the generation of high income from option premiums.
- Banks have sold off presenting an attractive valuation opportunity.
- Fundamentals continue to be strong with Forward P/E below 10x, and underlying dividend yield in excess of 4%.
- Canadian dividend equities continue to benefit from factor shift from Growth to Value, with Energy, Materials and Utilities benefiting.
- Solid historical dividend growth, and additional income through covered calls.
- Yield harvesting balanced strategy on high-quality U.S. equities, with equity allocation increasing during a market selloff. Well positioned for a recovery.
- The option overlay (put and call selling) generates tax-efficient income.**
- Dividend-oriented equities continue to be well-capitalized and strongly positioned to deliver results amid high inflation
- The U.S. economy is likely to lead the developed world during a period of economic slowdown backed by high-quality U.S. companies
- Also offered in Mutual fund format
- Exposure to a diversified portfolio of Canadian bank financing instruments.
- Gain access to non-traditional securities including bank issue bonds, preferred shares, and limited recourse capital notes (LRCNs).
- An efficient solution to complement fixed income holdings, increase yield while investing in lower duration securities that are currently rated investment-grade.
* Annualized Distribution Yield as of February 28, 2023: The most recent regular distribution, or expected distribution, (excluding additional year-end distributions) annualized for frequency, divided by current NAV.
Source: BMO Global Asset Management.
** As compared to an investment that generates an equivalent amount of interest income.
† Weighted Average Yield to maturity as of February 28, 2023. Weighted Average Yield to Maturity: The market value-weighted average yield to maturity includes coupon payments and any capital gain or loss that the investor will realize by holding the bonds to maturity.
This communication is for information purposes. The information contained herein is not, and should not be construed as, investment, tax or legal advice to any party. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance
The payment of distributions is not guaranteed and may fluctuate. The payment of distributions should not be confused with an Exchange Traded Fund’s performance, rate of return or yield. If distributions paid by the Exchange Traded Fund are greater than the performance of the Exchange Traded Fund, your original investment will shrink. Distributions paid as a result of capital gains realized by an Exchange Traded Fund, and income and dividends earned by an Exchange Traded Fund are taxable in your hands in the year they are paid. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, you will have to pay capital gains tax on the amount below zero. Please refer to the Exchange Traded Funds, distribution policy in the prospectus.
Commissions, management fees and expenses (if applicable) all may be associated with investments in exchange traded funds. Please read the ETF Facts or prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all dividends or distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Exchange traded funds are not guaranteed, their values change frequently and past performance may not be repeated.
For a summary of the risks of an investment in the BMO ETFs, please see the specific risks set out in the prospectus. BMO ETFs trade like stocks, fluctuate in market value and may trade at a discount to their net asset value, which may increase the risk of loss. Distributions are not guaranteed and are subject to change and/or elimination.
BMO ETFs are managed by BMO Asset Management Inc., which is an investment fund manager and a portfolio manager, and a separate legal entity from Bank of Montreal.
BMO Global Asset Management is a brand name under which BMO Asset Management Inc. and BMO Investments Inc. operate.
®/™Registered trade-marks/trade-mark of Bank of Montreal, used under licence.