May. 28 at 4:40 PM
Covered Call ETFs have the potential to immediately boost the yield of your portfolio.
But I will warn you, there are plenty of bad covered call ETFs out there.
Want to know if a covered call ETF can provide sustainable high yield?
Look for growing NAV.
Here's why: 👇
Covered call ETFs generate income by selling call options on stocks they hold.
But here's the catch:
If the NAV shrinks over time, the ETF has fewer valuable assets to write calls on.
Less valuable assets = lower call premiums = declining income.
A growing NAV means the ETF can consistently generate strong premiums and maintain (or even grow) its distributions.
Distributions are only one part of the return picture.
Many covered call ETFs trade sideways or slowly decline in NAV because they cap their upside by selling calls on 100% of their portfolio.
Some (like
$QYLD) show chronic NAV decay, which erodes long-term total returns.
A growing NAV helps ensure that you’re not just getting your own money back via distributions you’re actually building wealth.
If an ETF’s NAV is declining while still paying high distributions, it often means...
You're funding today's yield by slowly liquidating the portfolio.
That’s not sustainable.
📉 Declining NAV = future cuts to the dividend or capital losses when you sell.
📈 Growing NAV = healthier, more durable strategy.
Growing NAV means the ETF is generating income without eating itself alive.
It signals a higher-quality, more sustainable strategy for income investors.
Example of an Covered Call ETF growing NAV?
$QQQI from Neos.
NAV is up around 10% over the last year.
I recently built out an entire spreadsheet with details on 65+ covered call ETFs.
You can download it for free here: https://dividendology.ck.page/a708619754
