Coming Soon: A New High-Yield ETF on Energy

Energy Investing, ETFs, Funds, Income Investing, Oil
by Tim Plaehn
Subscribe to all of Tim Plaehn’s free investing research

My investment strategies and newsletter recommendations focus on income stocks and funds. Being able to count on the predictable nature of dividends is far better to trying to guess the direction of stock prices and counting on capital gains, which may or may not show up when needed.

I also like commodities because they are the building blocks of everything and provide diversification away from the stock market. Dividend-paying, commodity-focused investments quickly get my attention.

Oil pump jacks extracting crude oil from the ground with hundred dollar bills in the sky.

For a while now, I’ve been recommending the ETRACS Crude Oil Shares Covered Call ETN (USOI) to my subscribers. USOI, which tracks the price and dividends of a covered call strategy employed for the United States Oil Fund, LP ETF (USO), has proven to be a successful investment. Strikes for the short calls are chosen at 6% out of the money. Despite its complexity, it has performed admirably.

Recently, Defiance ETFs launched a USO-tracking, dividend-paying ETF called the Defiance Oil Enhanced Options Income ETF (USOY). This fund uses a very different options strategy.

The USOI portfolio will consist primarily of Treasury securities. Exposure to USO will come from selling at-the-money or in-the-money puts on USO. Fund managers will trade weekly FLEX options, which allow for customized terms.

At-the-money puts will primarily generate cash income but can result in losses if USO is below the strike price at expiration. The in-the-money put values will reflect any changes in crude oil prices as tracked by USO.

The Defiance ETFs operate several funds using short (selling) put strategies. The earliest funds launched last Fall. Results for individual funds have been mixed, with a couple of solid winners and some serious disappointments.

USOY is set to make its mark with its first monthly dividend on July 5. I’m eagerly awaiting the initial yield and will be closely monitoring this fund, providing ongoing updates to subscribers of my ETF Income Edge service.

Imagine having 12 new monthly income checks, carrying the potential of up to 21% yields.

This is possible because of a tested strategy to get paid out regularly, like a paycheck.

For over a decade, I have helped more than 26,000 investors secure 12 new monthly payouts.

Meaning, you know exactly how much you'll make every month...

Because of some stocks that pay us 8%,13.4%, and even 21.6% yields.

See it for yourself here.

 

Author: Tim PlaehnTim is the lead investment research analyst for income and dividend investing at Investors Alley. He is the editor for The Dividend Hunter, an investment advisory focused on creating a high-yield income stream and it's companion service The Dividend Hunter Insiders, Weekly Income Accelerator, a covered call trading service, and for investors looking for long-term total returns from their income investments using stocks with ever-growing dividend payments, he offers Monthly Dividend Multiplier. He co-edits POWR Income with Jay Soloff. Prior to his work with Investors Alley, Tim was a stock broker, a Certified Financial Planner, and F-16 Fighter pilot and instructor with the United States Air Force. During his time in the service he was stationed at various military locations in the U.S., Europe, and Asia. Tim graduated from the United States Air Force Academy with a degree in mathematics. In his free time he tours the United States parks, campgrounds, and wilderness areas in his travel trailer.
Subscribe to all of Tim Plaehn’s free investing research