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Sunday, January 29, 2023

Meet the Canadian ETF with a 14.25% yield: Hamilton Enhanced U.S. Covered Call ETF (HYLD)

The TSX ended last Friday's trading session at 20,700 points, but my current investments are not as favorable as they were on January 17. Consequently, I won't be making any changes to my investment portfolio this weekend. My non-registered portfolio ended last week at $146,962.46, my RRSP stocks-only portfolio at $64,070.80, my TFSA portfolio at $125,725.53, and my US portfolio at $5,132.81. My margin debt stands at over $46,800.

Following the Bank of Canada's recent interest rate hike, National Bank Direct Brokerage also raised their interest rate for margin accounts to a steep 8%. Although this is a challenging rate, I consider my margin debt to be low at less than $50,000. I have decreased my margin usage from over $100,000 in the past, which has helped me feel more in control. I'm not worried about the 8% interest rate since I have been holding margin debt for many years and declaring the interest as financial fees on my taxes.

I currently have over $15,000 in savings, with a goal to reach over $20,000 by the end of May by following a strict budget. I have taken into account all major expenses, including gifts for my father's birthday in February and mother's in March. I plan on giving my father a Tim Horton's gift card and a few lottery tickets. My mother likes skincare products, so I was thinking about the Caudalie The Rich cream as a gift for her.

I recently came across advertisements for Hamilton ETFs, including Hamilton Enhanced U.S. Covered Call ETF (HYLD), which has a high yield of 14.25%. Despite the appealing yield, I generally avoid investments with high dividend yields and this ETF also has heavy exposure to the volatile US technology sector. Additionally, HYLD has limited history, only trading on the TSX since February 2022. However, its performance has followed the S&P 500. I wouldn't invest a large sum in HYLD, but I am comfortable considering a smaller investment for its US exposure. My current US portfolio includes stocks like Berkshire Hathaway Inc., General Mills Inc., Vanguard Russell 1000 Growth Index Fund, and Pfizer Inc.

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