Dividend Stability in Utility ETFs: Analyzing CI Utilities Giants Covered Call ETF's Resilience

CUTL's Covered Call Strategy and Dividend Resilience

CUTL, managed by CI Global Asset Management, employs a covered call strategy to enhance income generation. By selling call options on its utility sector holdings, the ETF not only captures rental income from options premiums but also maintains exposure to dividend-paying utilities stocks. As of October 15, 2025, CUTL offers a yield of 5.65%, significantly outpacing its U.S. counterparts. For instance, the Vanguard Utilities ETF (VPU) and iShares U.S. Utilities ETF (IDU) have trailing twelve-month yields of 2.46% and 2.07%, respectively, according to PortfoliosLab's ETF comparison tool.

The ETF's recent quarterly dividend of CAD 0.1758 per share-part of a consistent payout pattern-underscores its ability to deliver reliable income. Historical data reveals that CUTL has maintained quarterly dividends since at least 2024, with payouts such as CAD 0.3916 (September 2025), CAD 0.3771 (June 2025), and CAD 0.3285 (December 2024), as shown in CUTL's dividend history. While annualized figures for 2020–2025 are not fully accessible, the ETF's structure and recent performance suggest a disciplined approach to income generation.

Comparative Dividend Stability: CUTL vs. VPU and IDU

VPU and IDU, two of the largest U.S. utility ETFs, have demonstrated varying degrees of dividend stability. VPU, which tracks the MSCI US Utilities 25/50 Index, has maintained a higher yield than IDU, which follows the Dow Jones U.S. Utilities Index. For example, VPU's yield averaged 3.02% in 2024 and 3.49% in 2023, compared to IDU's 2.29% and 2.79% during the same periods, per PortfoliosLab's data. However, both lag far behind CUTL's current yield of 5.65%.

This disparity reflects structural differences. CUTL's covered call strategy generates additional income beyond traditional dividends, amplifying its yield. In contrast, VPU and IDU rely solely on dividends from their underlying holdings. While this makes CUTL's yield more attractive, investors must weigh the trade-off: covered call strategies may limit upside potential if utility stocks rise sharply, as call options could force the ETF to sell shares at predetermined prices, a point noted by CI Global Asset Management.

Sector Tailwinds and Risks

The utilities sector's resilience is bolstered by macroeconomic trends. Data center electricity demand, driven by AI and cloud computing, is expected to double by 2032, creating long-term tailwinds for utility companies, according to the Morningstar report. Additionally, the shift toward renewable energy-particularly solar-positions utilities to benefit from policy-driven decarbonization efforts. For CUTL, which holds a concentrated portfolio of large-cap utilities, these trends reinforce the sustainability of its dividend payouts.

However, risks persist. Rising interest rates could pressure utility valuations, as the sector's low-growth profile makes it sensitive to discount rate changes. Moreover, CUTL's CAD-hedged structure may expose investors to currency fluctuations if they hold USD-denominated assets. VPU and IDU, being U.S.-listed, avoid this risk but face their own challenges, such as regulatory shifts in the U.S. energy sector.

Conclusion: A High-Yield Option for Income Seekers

CUTL's recent CAD 0.1758 dividend and 5.65% yield highlight its appeal for investors prioritizing income reliability. While its covered call strategy introduces complexity, the ETF's performance aligns with broader sector trends, including surging electricity demand and renewable energy growth. Compared to VPU and IDU, CUTL offers a materially higher yield, though investors should assess currency exposure and strategy-specific trade-offs. For those seeking a resilient, high-yielding utility ETF, CUTL presents a compelling case-provided they align with its risk-return profile.