Dividend Yield Fans Rejoice! Discover the ETF Offering a Whopping 25% Yield in 2024

New York, NY – Income-focused investors have a plethora of options available to them in today’s market landscape. One of the latest additions to the ETF space is the REX FANG & Innovation Equity Premium Income ETF (FEPI), offering shareholders a high dividend yield. With its inception date in October 2023, FEPI aims to provide current income and capital appreciation by focusing on the tech sector and utilizing covered call strategies.

FEPI stands out with its remarkable dividend yield, currently around 25%, making it an attractive option for those seeking substantial income without requiring a large capital investment. The ETF’s success lies in its option strategy, which benefits from market volatility. Factors such as talks regarding the federal funds rate, upcoming elections, unemployment rates, and inflation levels contribute to the anticipated growth in distributions.

An actively managed fund, FEPI maintains a covered call strategy and a reasonable operating expense ratio of 0.65%. By aligning its top holdings with the Solactive FANG index and emphasizing out-of-the-money call options, FEPI generates income during periods of high volatility. The fund has demonstrated positive returns since inception, closely aligning with the S&P 500 total return.

With 83 individual holdings, FEPI has a significant exposure to the tech sector, with top holdings including NVIDIA Corp., Advanced Micro Devices, and Netflix. While this concentration presents some level of risk due to potential volatility in the tech sector, FEPI’s strategy has so far proven successful. The fund’s main appeal lies in its high dividend yield and monthly distributions, providing investors with a source of steady income.

However, there are considerations to be made regarding the method of distribution and the potential impact on NAV erosion over time. As FEPI’s distributions may consist of returns of capital, there is a risk of diminished NAV and trading price with prolonged use of this strategy. Investors seeking consistent total returns or traditional dividend growth may find FEPI’s fluctuating income and increased downside risk less appealing.

Looking ahead, the outlook for FEPI remains mixed, with the possibility of increased income during times of market uncertainty, offset by the potential for price declines in the face of market volatility. As investors await the Federal Reserve’s decisions on interest rates, FEPI may continue to offer high levels of dividend income amidst market turbulence. Overall, FEPI’s out-of-the-money call strategy sets it apart from peer ETFs and positions it as a valuable option for income-focused investors.