The appeal for cash cows has been on the rise in recent weeks, given the current stock market volatility and uncertainty. Investors believe that "cash is king" in the current environment of persistent inflation, high interest rate
Amdocs Limited DOX recently announced that Philippines-based PLDT Inc. and its mobile unit subsidiary, Smart Communications, Inc., have selected it to accelerate their cloud modernization on Amazon’s AMZN AWS (“Amazon Web Services
U.S. stock markets remain muted ahead of the Fed’s September FOMC meeting scheduled for Sep 19 and 20. Wall Street has seen a bull run in 2023 after a highly disappointing 2022. However, in the past one and a half months, volatili
Target said on Tuesday it would hire nearly 100,000 employees for the holiday season, a number that has been consistent over the last two years, and offer discounts as early as October to attract inflation-weary shoppers.
What a difference a year makes. Amazon (NASDAQ: AMZN) saw its stock drop 50% in 2022 thanks to rapidly rising interest rates and heightened fears about a recession crushing asset prices. This year, however, the top tech company handsomely rewarded investors.
Looking for broad exposure to the Technology - Internet segment of the equity market? You should consider the Invesco NASDAQ Internet ETF (PNQI), a passively managed exchange traded fund launched on 06/12/2008.
Target said on Tuesday it will hire nearly 100,000 employees for the holiday season and offer deep discounts starting October, as the U.S. retailer braces for the competitive shopping period.
Some workers within Amazon’s once-storied hardware division – responsible for popular devices like the Kindle reader and Echo voice-assistant – say morale within the division has suffered amid staff cutbacks and a pipeline of devices in development that they fear are unlikely to prove hits.
A recent report by The Wall Street Journal claims that the Federal Trade Commission (FTC) is preparing to file a sweeping antitrust lawsuit against tech giant Amazon (NASDAQ: AMZN), perhaps as soon as this month. This isn't surprising as the FTC has battled Big Tech's hold on sev
(RTTNews) - Amazon Web Services, an Amazon.com company (AMZN), announced that Abdul Latif Jameel, an internationally diversified business, has selected Amazon Web Services as its preferred cloud provider to power its digital transformation. Abdul Latif Jameel will use AWS service
Shopify stock (NYSE: SHOP) gained about 10% over the past month and remains up by over 80% this year. This is well ahead of the Nasdaq-100, which remains up by 42%. There have been a couple of positive developments for the stock of late. For one, late last month, Shopify la
Tesla (
NASDAQ:TSLA
) stock doesn’t pay a dividend, but there’s actually a new ETF that’s indirectly based on Tesla stock and offers a terrific monthly
dividend (currently yielding nearly 48% on a forward basis). However, there may be a price to pay for that yield because the
YieldMax TSLA Option Income Strategy ETF (
NYSEARCA:TSLY)
won’t provide complete exposure to the upside in Tesla stock. Still, I am bullish on TSLY stock because I like Tesla and big dividends, so this seems like a great combination.
I’ve been hearing about TSLY stock on social media a lot lately, and I’m excited to discuss this controversial investment avenue. When you find out how much the stock distributes to its shareholders, you might be shocked.
Alternatively, you may be tempted to back up the truck and buy as many TSLY shares as possible. Hold your horses, though, as there are notable benefits and drawbacks to owning the YieldMax TSLA Option Income Strategy ETF. So, let’s dive in without any further ado.
The Pros and Cons of the TSLY ETF
As I mentioned earlier, Tesla stock doesn’t pay a dividend. On the other hand, the TSLA share price has
appreciated greatly over the past few years (though there have been negative years, like 2022).
If you’re more of an income-focused investor, then you might be frustrated that Tesla doesn’t pay a dividend. On the other hand, if share-price momentum is your highest priority, then it’s probably fine to just buy and hold TSLA stock if you like the company.
Let’s back up for a moment, though. What exactly is the YieldMax TSLA Option Income Strategy ETF, anyway?
I won’t get into the complicated details of this, but in a nutshell, the TSLY fund doesn’t actually hold any Tesla common stock shares. Instead, it uses a
synthetic covered call strategy (buying a call option and selling a put option). This strategy seeks to track the performance of Tesla stock as closely as possible while also generating income, and that’s where the capital for the dividend distributions comes from. The fund also holds U.S. Treasury bonds, but that’s only a minor source of capital.
There's a major drawback to this strategy, though. If you know about options, then you’ll know that selling covered calls will bring you some income, much like a dividend (and the TSLY fund actually pays investors the covered-call income in the form of a dividend). However, selling covered calls also caps (i.e., limits) how much money the investor will make from share-price appreciation.
This explains why TSLA stock has more than doubled year-to-date (up 153%), while TSLY stock is "only" 76%. Capping your share-price upside potential with TSLY could incur a substantial opportunity cost if Tesla stock rockets higher. At least you’ll collect some nice dividends along the way, though. Just bear in mind that TSLY’s dividends are subject to change and, in a worst-case scenario, could be eliminated altogether.
For instance, the YieldMax website admits that distributions aren't guaranteed with TSLY stock. However, I doubt that the TSLY ETF will suddenly stop paying dividends, as many investors would probably get angry and sell their shares.
Another drawback is that TSLY’s gross expense ratio is 0.99%, which is moderately high. On the other hand, owning TSLA stock does not bring an expense ratio with it since it's not an ETF.
TSLY isn't the only ETF of its kind. YieldMax does this with other stocks as well. One example is the
YieldMax NVDA Option Income Strategy ETF (
NYSEARCA:NVDY)
, which loosely follows Nvidia (
NASDAQ:NVDA
) stock and pays a 50.84% annual dividend yield, according to YieldMax.
Is TSLY Stock a Buy, According to Analysts?
There are no ratings on TSLY stock, but there are plenty of analysts with forecasts for TSLA stock, which TSLY is based on. On TipRanks, TSLA comes in as a Hold based on 11 Buys, 12 Holds, and five Sell ratings assigned by analysts in the past three months. The
average TSLA price target is $270.80, implying 2.1% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell TSLA stock, the most accurate analyst covering the stock (on a one-year timeframe) is
Daniel Ives of Wedbush, with an average return of 14.76% per rating and a 70% success rate. Click on the image below to learn more.
Conclusion: Should You Consider TSLY Stock?
Only a very specific group of investors ought to consider TSLY stock. For one thing, you have to like Tesla since TSLY would almost certainly drop if TSLA stock plummets. Also, you should prioritize dividend income over capital gains if you’re considering TSLY. Finally, you’ll definitely want to have at least a basic knowledge of how covered calls work (it’s not as complicated as you might think). If you meet those three requirements, then TSLY could be worth considering.
Disclosure
Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in Amazon.com Inc (Symbol: AMZN), where a total volume of 323,931 contracts has been traded thus far today, a contract volume which is representative of approximat
The U.S. Justice Department on Monday objected to removing the public from the court during some discussions of how Google prices online advertising, one of the issues at the heart of the antitrust trial under way in Washington.
The growth of an economy is a function of just two factors: the growth in the labor force and the growth in productivity. This article will explore how these two factors may lead to an acceleration of disruptive technologies.
Microsoft's Yusuf Mehdi, who oversees its consumer marketing efforts, is taking over the firm's Surface and Windows businesses with the external PC makers and retail partners, as longtime product chief Panos Panay steps down.
Wall Street's main indexes rose on Monday in choppy trading as energy stocks tracked higher crude oil prices, while investors awaited the Federal Reserve's interest rate decision later this week.
The U.S. Justice Department on Monday questioned a Verizon executive about the company's decision to always pre-install Google's Chrome browser with Google search on its mobile phones, as the government sought to show that Alphabet's Google broke antitrust law to maintain its dominance in online search.
Amazon AMZN is leaving no stone unturned to bolster its e-commerce business on the back of its deepening focus on sellers. It continues to strengthen its seller-focused offerings in a bid to sustain its momentum among sellers.The