JEPI - TSLY: A Very Bad High-Yield Way To Invest In Tesla Stock

2024-03-12 08:15:00 ET

Summary

• High-yielding diversified ETFs with options writing and monthly payouts are rising in popularity among income investors.
• The YieldMax TSLA Option Income Strategy ETF offers investors a chance to own one of the most exciting stocks along with lucrative monthly income.
• However, we believe it is a very bad way to invest in TSLA and share three reasons why it is a Sell.

While we do not think they are entirely worthless, we do not invest in high-yielding diversified ETFs that support their yields through either direct or notional options writing (i.e., the JPMorgan Equity Premium Income ETF ( JEPI ), the JPMorgan Nasdaq Equity Premium Income ETF ( JEPQ ), and the NEOS S&P 500 High Income ETF ( SPYI ), etc.). The reasons for this include:

1. They tend to charge shareholders elevated expense ratios relative to other diversified ETFs.
2. They can lure in investors with high dividend payouts that over the long term end up equating to little more than a return of capital.
3. As a result, they tend to erode shareholder capital over time.

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