How many people sold their stocks at the 2009 bottom, went to cash and then bought gold at its 2011 peak?
In my latest Index Investing Show podcast episode, I explain how “double whammy” effect has damaged certain investment portfolios so severely, the losses could be catastrophic.
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For just the fourth time in 50 years, the S&P 500’s (NYSEARCA:IVV) dividend yield was briefly more versus 10-year U.S. Treasuries (ChicagoOptions:^TNX). It’s another testament to the difficult climate facing bond investors (NYSEARCA:BOND) who want to generate a respectable level of income.
For good reason, more people are employing alternative income strategies like selling covered calls.
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The past six years have been brutal for dividend and income investors. Zero percent interest rates have depressed bond yields (NYSEARCA:BOND) and with major stock indexes (^DJI) now trading at all-time highs, dividend yields relative to prices have fallen too.
Last year, the number of S&P 500 (NYSEARCA:SPY) stocks paying a dividend touched a 17-year high (417 or 84% of index components).
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What’s better? A covered call options strategy executed by the individual investor or a covered call ETF or fund that proposes to do the heavy lifting?
Selling covered calls is a popular investment technique used by investors with high income or cash flow as their primary goal.
The investor is “covered” because they own the underlying security or ETF inside their portfolio.
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