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2 High-Yield Dividend ETFs to Buy to Generate Passive Income


Published on 2024-12-11 10:41:17 - The Motley Fool Canada
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  • Here's what you can do: sell one covered call with a $20 strike price. In doing so, you collect a premium - cash paid to you immediately for entering into the contract. In exchange, you're obligated to sell your 100 shares at $20 per share if the stock price exceeds that level by the option's expiration date.

The article from Fool.ca discusses two high-yield dividend ETFs that investors might consider for generating passive income. The first ETF highlighted is the iShares Canadian Financial Monthly Income ETF (TSX:FIE), which focuses on providing monthly income through investments in Canadian financial companies, offering a yield of about 7.5%. This ETF includes major banks and insurance companies, known for their stability and consistent dividends. The second ETF mentioned is the BMO Canadian High Dividend Covered Call ETF (TSX:ZWC), which not only invests in high-dividend Canadian stocks but also uses a covered call strategy to enhance its yield, currently around 7.8%. This strategy involves selling call options on the stocks it holds, which can provide additional income but might cap potential gains if the stocks rise significantly. Both ETFs are recommended for those looking to bolster their passive income streams with relatively low risk, given the stability of the sectors they invest in.

Read the Full The Motley Fool Canada Article at:
[ https://www.fool.ca/2024/12/11/2-high-yield-dividend-etfs-to-buy-to-generate-passive-income-7/ ]