Should I Buy NASDAQ 100 covered call ETF (QYLD)? Finance YouTuber Analysis

The YouTuber advises avoiding QYLD for long-term investors due to its poor price performance, resulting in a low total return despite a high dividend yield. He notes that the covered call strategy limits upside participation while still experiencing losses when the underlying stocks fall, and the dividends are taxed at higher ordinary income rates.

“you see immediately why it's at the bottom of the list here that 22% loss on the price over the Last 5 Years means after accounting for that investors have only made an average 7.6% return a year”

The YouTuber explains that QYLD provides downside protection and a consistent 11.9% dividend yield, making it suitable for investors living off dividends who are less concerned with share price appreciation. However, he cautions that its covered call strategy can lead to underperformance when the NASDAQ surges, and falling share prices may eat into total returns.

“for all its downsides the Q can still be a good investment for someone living off their dividends and not really worried about the price destruction”

The YouTuber strongly advises against QYLD for most investors, despite its high dividend yield, due to two 'fatal flaws.' He explains that its covered call strategy on the NASDAQ 100 leads to significant underperformance compared to the underlying stocks, as it misses out on upside gains. Furthermore, the fund's cash flow has been inconsistent and declining, with the dividend amount continually getting cut along with the stock price, leading to a falling income stream for investors.

“it's not that the QD is a bad fund but it is losing your money compared to the monthly dividend stocks I'm going to show you next in fact the Q returned at just 6.8% a year over the Last 5 Years yes even with the 12% dividend it only returned 6.8% because that share price dropped so much and it's hugely underperformed the stocks it holds.”

The YouTuber ranks QYLD as his least favorite due to its low total return over the last three years, despite a high dividend yield. He notes that the covered call strategy limits upside participation in a rising market and that its dividends are taxed at higher ordinary income rates, reducing the effective yield. The ETF also has the highest expense ratio among those discussed.

“while it does offer the highest dividend yield is produced the lowest Total return over the last 3 years”

The YouTuber advises against investing in QYLD, a covered call ETF, despite its high dividend yield. He argues that QYLD has historically underperformed a simple buy-and-hold strategy for the NASDAQ 100, losing 20% over two years while the index gained. This underperformance is attributed to its monthly call selling strategy, which misses upside and still incurs full downside, along with unfavorable tax treatment of dividends and a significant expense ratio.

“many of these especially the qyld tend to lose money and underperform just a simple Buy and Hold strategy for stocks”

The YouTuber advises against investing in QYLD due to its underperformance compared to other options, higher tax rates on its dividends (taxed as ordinary income), and the drag on performance from its covered call strategy. He demonstrates that over five years, a monthly investment in QYLD yields significantly less total return than other dividend stocks or even growth stocks with a sell-to-generate-income strategy.

“the qyld had some big issues that you're not going to see until it's already in your portfolio”

The YouTuber advises avoiding QYLD due to its persistent history of dividend cuts and its underperformance compared to simply investing in the underlying NASDAQ 100 index. He notes that despite its high dividend, it has not protected investors from risk, losing 16% over the last year, and its strategy of selling options against tech stocks limits upside potential.

“I've been pretty vocal about the shortcomings on that NASDAQ 100 covered call ATF the ticker qyld in the past the 12.7 dividend lures investors in before eating their hard-earned money”

The YouTuber expresses a dislike for QYLD, despite its high dividend yield, because its price has fallen significantly over the last few years and it has underperformed the market on a return basis. He ranks it lower than other covered call ETFs.

“now you will notice I've ranked the NASDAQ covered call ETF the qyl the 9th on our list here I know there are a lot of qild fans out there that probably disagree with me the fund pays one of the higher dividend yields on the list but I just don't like how much the price has fallen over the last few years especially against some of those other monthly ETFs and against the market itself”

The YouTuber advises caution with QYLD, especially if an investor already holds significant tech stocks like Apple and Microsoft. He demonstrates that QYLD, a NASDAQ covered call ETF, has nearly half its holdings in tech and internet stocks, leading to significant portfolio overlap and increased risk if an investor's existing portfolio is already concentrated in these sectors.

“if you were to buy shares of that qyld which again is probably the most popular monthly dividend ETF out there you might think that you have that high dividend fund evens out kind of a portfolio of tech stocks in fact it would double your risk”

The YouTuber advises avoiding QYLD, arguing that despite its high dividend yield, it has significantly underperformed the NASDAQ index over various periods, even when accounting for dividends. He highlights that the dividend growth has been stagnant for years and the expense ratio erodes long-term returns, suggesting better alternatives exist for both income and growth.

“the fund has lost 30 percent of its value over the past five years underperforming those stocks in the NASDAQ index by more than a hundred and twenty percent”

The YouTuber suggests buying this leveraged ETF if one believes a rebound in growth stocks is imminent. It aims for two times the Nasdaq 100's return, and historically has delivered strong performance during uptrends, such as a 12.7% return when the Nasdaq jumped 6% in a week.

“it's one of the best to trade if you think a rebound in growth stocks is coming”

The YouTuber advises most investors to avoid QYLD, despite its high dividend yield, because its share price depreciation has led to an overall underperformance compared to other dividend stocks. He argues that the covered call strategy limits upside potential and that the fund's total return is significantly lower than its dividend yield suggests, making it unsuitable for long-term wealth building for most.

“It's not that the QYLD is a bad fund but it is losing your money compared to the monthly dividend stocks I'm gonna show you right now.”

The YouTuber suggests QYLD for income investors due to its 11.8% yield, generated by a covered call strategy on the Nasdaq 100 index. He explains that it buys Nasdaq 100 stocks and sells call options against them, providing exposure to tech stocks while lowering risk and generating cash flow, though it prioritizes income over capital appreciation.

“The globalx nasdaq 100 covered call etf ticker qyld and its 11.8 percent yield The fund uses a covered call strategy on the nasdaq 100 index that's the 100 largest companies in that tech heavy nasdaq”

The YouTuber suggests QYLD for its high dividend yield, achieved through a covered call strategy on the Nasdaq 100 index. This fund generates cash flow from tech stocks that typically don't pay dividends and offers lower volatility than owning the index outright, though it may underperform in a strong bull market.

“the qld uses a covered call strategy on the nasdaq 100 index that's the largest hundred companies in the tech heavy nasdaq so what it's doing here it's buying those hundred stocks in this index mostly large technology companies and then it's selling call options against those that covered call option strategy helps the fund by doing two things at first by collecting a premium selling those call options to another investor the fund generates immense cash flow in this case most of those tech stocks don't pay dividends so it's a great way to turn a portfolio of tech stocks into an income producing investment”

The YouTuber describes QYLD as a solid fund that uses a covered call strategy on the NASDAQ 100 index, generating cash flow from tech stocks and offering lower volatility than owning the NASDAQ 100 outright. However, it is tech-heavy and will underperform in a rising market due to the covered call strategy.

“This is still a solid fund. The fund uses a covered call strategy on the NASDAQ 100 index.”