Mirae Asset Management has introduced an investment strategy that leverages dividends and option premiums to secure cash flow throughout the month, particularly in a volatile stock market. This approach combines investments in dividend growth stocks through the 'U.S. Dividend Dow Jones' with a covered call strategy to pursue regular distributions.
According to Mirae Asset Management, the 'TIGER U.S. Dividend Dow Jones ETF' tracks the U.S. Dividend Dow Jones Index, aiming for stable dividends and diversified investments amid market fluctuations. As of September 27, the fund's net assets totaled 4.2842 trillion won, making it the largest among domestic ETFs related to the U.S. Dividend Dow Jones.
By incorporating a covered call strategy, the fund seeks to generate additional cash flow through option premiums in addition to dividends. The 'TIGER U.S. Dividend Dow Jones Target Daily Covered Call ETF' aims for an annual option premium of around 10% by utilizing daily option sales, distributing dividends in mid-month.
Similarly, the 'TIGER U.S. Dividend Dow Jones Target Covered Call 2 ETF' reduces the proportion of option sales to enhance participation in the underlying asset's appreciation while also targeting an annual distribution of about 10%. With a monthly distribution structure, utilizing both products allows for cash flow to be structured around mid-month and month-end distributions.
Reinvesting dividends is also an option. Regularly distributed dividends can be used as additional purchasing power during market corrections, ensuring consistent cash flow while maintaining a long-term investment strategy.
The U.S. Dividend Dow Jones differs from simply including companies with high current dividend yields. It comprehensively evaluates factors such as a history of continuous dividends for over ten years, five-year dividend growth rates, return on equity (ROE), and debt ratios relative to cash flow to select companies with sustainable dividends and strong financial health.
By focusing on long-term dividend growth and mitigating the risks of 'dividend traps,' where declining company performance or stock prices lead to greater capital losses than dividend income, the strategy aims to reduce risk. It also features diversified investments across various sectors, including energy, consumer staples, and healthcare, to lower dependence on specific industries.
Lee Jeong-hwan, head of the Strategy ETF Management Division at Mirae Asset Management, stated, "In a market with increased volatility, it is crucial to have a strategy that allows for consistent investment regardless of short-term price movements. By combining the dividend growth of the U.S. Dividend Dow Jones with the option premiums from covered calls, we can pursue regular cash flow while responding to market changes."
* This article has been translated by AI.
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