► Subscribe for new videos every day!: http://bit.ly/dai_youtube ► Dave Van Knapp's Top 30 Dividend Growth Stocks for 2021: https://DaveVanKnapp.com/ ► Dave Van Knapp's Dividend Growth Portfolio: https://dailytradealert.com/dave-van-knapps-dividend-growth-portfolio/ ► Prefer to Read? https://dividendsandincome.com/2021/10/01/dividend-growth-stock-of-the-month-for-october-2021-11-5-yield/ We all know by now that there are three reasons that the dividends from a dividend-growth portfolio grow over time: (1) The companies themselves raise their dividends. (2) We can manage our portfolio to increase its yield or dividend-growth rate. (3) We can reinvest dividends to buy more shares that generate new dividends. What if we own a stock or a fund that is not a dividend-growth fund? The first method is gone: The investment doesn’t raise its dividends. And the second method may apply or not depending on circumstances. But the third method – reinvesting dividends – certainly applies. In fact, the higher the yield of the stock or fund, the more dividends there are to reinvest. Which brings us to our fund this month: QYLD, whose formal name is NASDAQ-100 Covered Call ETF. This is an ETF offered by a company called Global X, which offers many products of this type. I read recently that if you are looking for high yield in today’s markets, one of the first things to consider is funds that are based on selling covered calls. These funds hold a basket of stocks and then sell call options against those stocks. The premiums on the options generate high income. The NASDAQ-100 Covered Call ETF (QYLD) was launched on December 11, 2013. It has become a very popular fund among retail investors. QYLD is the largest covered-call ETF, with $4.5 B in assets. That’s about two-thirds the combined value of all 20 covered-call ETFs. QYLD pays a monthly dividend (or distribution) from the income generated by selling call options against the NASDAQ-100 index. Therefore, QYLD offers investors a simple way to participate in a covered-call income strategy based on securities in the NASDAQ-100. The investor just owns QYLD. The ETF takes care of everything else. The big attraction is the income return: QYLD provided investors a gross distribution yield of just over 12% over the past 12 months. A secondary attraction is QYLD’s monthly distributions. Some investors like monthly payouts. (Personally, I don’t care if dividends come to me quarterly or monthly.) Most dividend-growth investors understand that high yields usually accompany slow growth. For example, Verizon (VZ), which is high-yield as dividend-growth stocks go (4.7%) has slow dividend growth (2% per year over the past five years). Its price doesn’t grow very much either. But high yields have the obvious charm of the copious dividends themselves. That money can be used to reinvest back into the stock or fund that pays it, which turbo-charges portfolio growth by adding more shares even without adding new money. Similarly, one can reinvest that dividend money into other stocks that have high quality, decent yields, better growth rates, and other attractive characteristics. If one needs the income for living expenses – which may be the case with some retirees – the attractiveness of the high yield expands. In that case, you are not reinvesting the dividends, you are living off them. The concept of “converting” some of the fund’s total return into regular dividends can be very attractive, because you don’t have to sell shares to generate cashflow for living expenses. It is hard to value an ETF, because of all the moving parts. At the current time, Morningstar values QYLD’s current price as fair, with a valuation ratio of 1.05 (meaning 5% overvalued). QYLD has generally traded in the $20-25 range for the past several years except for the Covid crash last year. Yield and price are inversely related, so the lower the price you buy QYLD at, the higher the yield (orange line) you’ll get on the purchase. For a rule of thumb, you might want to limit purchases to when QYLD’s yield is 11% or 11.5% or above. If you were to buy $10,000 worth of QYLD at 11.5% yield, that would produce $1150 in dividend income in a year, assuming the payments stayed relatively steady. FOLLOW US: ► Website: http://www.dividendsandincome.com/ ► YouTube: http://bit.ly/dai_youtube #ETF #MonthlyDividends #DividendGrowthInvesting $QYLD LEGAL DISCLAIMER: Please consult with a licensed investment professional before investing any of your money. Never invest in a security or idea featured on this channel unless you can afford to lose your entire investment. If your money is not FDIC insured, it may decline in value. Dave is not a licensed financial advisor, tax professional, or stockbroker and he does not purport to be. Links above may include affiliate commissions paid to the owners of Dividends and Income and help support this channel.