DIVO - DIVO: Higher For Longer And Elevated Volatility Make It A Buy Now (Rating Upgrade)
2024-04-10 11:41:12 ET
Summary
- Since the publication of my article back in mid-2023, the Amplify CWP Enhanced Dividend Income ETF has performed in line with other dividend-focused vehicles.
- Yet, as I indicated in the article, DIVO has failed to register alpha relative to the S&P 500 due to the limitations stemming from its covered call strategy.
- Now, the rise in the VIX and increased market volatility provide a more sustained base for option richness, allowing DIVO to generate more sizeable cash flows.
- The current environment of lower interest rates and increased financial risk makes DIVO's focus on high-quality, stable dividends and earnings durability more attractive for conservative yield-seeking investors.
- Given these recent market dynamics, DIVO has become a more attractive investment to consider among yield-chasing investor portfolios.
More than half a year ago, I wrote an article on the Amplify CWP Enhanced Dividend Income ETF ( DIVO ), outlining a rather bullish thesis on how the combination of relatively relaxed covered call strategy (i.e., distant option strikes from the prevailing market price) and exposure to large-cap names provides an opportunity for investors to capture enticing yields without sacrificing too much on the upside potential....
DIVO: Higher For Longer And Elevated Volatility Make It A Buy Now (Rating Upgrade)