For income investors who want to be paid more frequently, a new wave of ETFs has arrived. First came the monthly payers, and now come the weekly payers, which might actually be worth the added price of admission for those who want payouts that come in faster than those biweekly paychecks. With a new slate of Roundhill ETFs that have picked up in popularity, many income investors might be wondering if there’s a passive income option that works for them.
Whether you’re interested in an income-boosting option via covered calls or something a bit more conservative (think an ETF that bets on T-Bills with weekly interest paid out), it’s worth knowing what’s out there.
Of course, if you’re getting paid 52 times every year, things could be a bit tougher to track, especially if we’re talking about a taxable account.
Add the hefty fees into the equation (which can hit 1% on the high side), the added complexity in calculating total returns (that would be distributions and capital depreciation or appreciation), and the added complexity of things going on behind the scenes, and there are trade-offs to consider, especially relative to some of the more popular monthly income ETFs like the JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI).
The big question is, should you buy them, and if you’re in the target audience for such products?
Roundhill Weekly T-Bill ETF
First up, we have the Roundhill Weekly T-Bill ETF (WEEK), which, as the name suggests, invests in ultra-short-term U.S. Treasuries with payouts that come weekly. Indeed, it’s nice to be paid more often, but if you’re putting a minimal amount to work, it might not be worth the while to go for a weekly Wednesday payout over a monthly one.
Either way, I do think this ETF could be a great fit for some of the more conservative retirees out there with considerable sums to put to work. With inflation hovering north of 4%, perhaps a T-Bill ETF with weekly payouts could make the most sense.
With a fantastic distribution rate of around 3.5%, this steady mover is a must-watch, especially for those with too much cash and less desire to invest in equities, given valuations are a bit lofty. Too few stock ideas and too much cash? The Rounhill Weekly T-Bill ETF might be the best parking spot there is. After all, there’s a reason this weekly T-Bill ETF is among the most popular of the Roundhill roster. The low 0.19% expense ratio makes the ETF my favorite of the batch.
Roundhill Magnificent Seven Covered Call ETF
The Roundhill Magnificent Seven Covered Call ETF (MAGY) stands out as the most intriguing, at least in my view, and it’s not just because I’m a big fan of the Mag Seven stocks after they’ve stalled so far this year while the rest of tech has blasted off. The name provides a simple way to bet on the Mag Seven with a covered call options-writing strategy on top. Also, the ETF pays weekly every Thursday or Friday.
Indeed, one major shortcoming of the Mag Seven, at least for the more income-oriented, is the relatively small dividend. The Roundhill Magnificent Seven Covered Call ETF fixes that, with a 25.5% distribution rate, which sounds nice on the surface until you discover shares have been sagging significantly out of the gate.
With a net expense ratio of 0.99%, you’re paying quite a bit to move the return towards the income side. If that’s a worthy trade-off (let’s say you’re a retiree who’s looking for a bit of an aggressive growth jolt), the ETF is interesting, to say the least.
Roundhill TSLA WeeklyPay ETF
It’s clear that the demand for more-frequent payouts is there, and that’s why Roundhill has stepped up to the plate. On the surface, getting paid more often sounds like a winning deal, but, as always, the trade-offs must be considered before one punches their ticket. One of the more aggressive ETFs, which, in my view, looks more like a trader’s vehicle than a long-term investment, is the Roundhill TSLA WeeklyPay ETF (TSLW).
If you’re an Elon Musk fanatic who truly believes in the rise of Tesla (NASDAQ:TSLA | TSLA Price Prediction) Optimus robots but wants a big, fat payout every Sunday or Monday, this ETF might hit the spot. The ETF seeks to “enhance” one’s exposure with single-stock leverage.
Indeed, the target audience might be more limited since it’s tied to a single stock. But, either way, it’s a popular one, and with rumors swirling around a potential merger with Space Exploration Technologies (NASDAQ:SPCX) in the future, perhaps this ETF is worth keeping tabs on.