Stock of the Week

22 Nov 2024 - Investing

This is the third Stock of the Week post, for the week of November 17, 2024. In my Stock of the Week posts, I discuss a security (stock or ETF) that I am currently buying or selling, and will explain my rationale. These are trades I am personally making, so you will either make money with me or lose money with me by entering these trades (ideally the former). Financial Disclaimer

Stock of the Week

The stock of the week this week is $ULTY, the YieldMax Ultra Option Income Strategy ETF. ULTY is an actively managed ETF that seeks to generate monthly income from a portfolio of covered call strategies on multiple underlying securities (typically 15-30), according to its page on the YieldMax website.

This is a high risk ETF, as due to the fund’s investment strategy, ULTY’s exposure to the share price gains of the underlying securities are capped. However, the share price of ULTY is subject to all potential losses of the underlying securities, which may not be offset by income received by ULTY. My goal for my portfolio is to generate weekly cash flow through dividends, with no plan to sell the dividend producing securities at any time unless I see a better cash flow opportunity. Because of my plan to never sell the security, I will be okay with a decline in the share price of ULTY, as long as it continues paying its dividend. If you are not comfortable with the share price potentially declining, this is not the ETF to buy!

As for the dividend of ULTY, it’s current dividend yield is %100.36 at the time of writing and its last payment on November 15 was $0.8313 per share. An investment of $3000 in this ETF, at the current share price of around $10, returns a dividend of around $249 a month! This is a fantastic addition to our portfolio and aptly fits the goal of providing consistent cash flow. I already own a significant number of shares in ULTY, so I only bought another 50 shares today for a little under $500.