BRKY's Bold Dividend Move: A Game Changer or a Risky Gamble?

The Berkshire Hathaway (BRK) Yield Shares Purpose ETF (BRKY) has made a seismic move in the ETF world: a 50% jump in its monthly dividend from CAD 0.10 to CAD 0.15, effective July 2025. This isn't just a tweak—it's a strategic overhaul. Let's break it down.

The Big Bet on Yield

BRKY's new dividend of CAD 0.15 translates to an annualized yield of 5.5% based on its stock price of CAD 27.32. That's a jaw-dropping leap from its previous 4.43% yield. In a market where bond yields are stabilizing and equity dividends are under pressure, this move positions BRKY as a hybrid: part equity exposure to BRK, part income machine. The fund's active management model—using covered calls and moderate leverage—now has a new edge.

But here's the rub: BRKY's AUM is still modest at CAD 40.16 million, and its expense ratio of 2.03% is a heavy lift for a fund chasing yield.

AUM Recovery: The Double-Edged Sword

The dividend hike is clearly a bid to attract capital. With a 0.12% premium to NAV and an “eligible” dividend (tax-advantaged for Canadian investors), BRKY is casting a wider net. The 11.57% AUM growth in the past month suggests it's working. But let's not ignore the red flags.

Over the last month, BRKY's share price dropped 3.00%, and its NAV fell 2.44%. That's not a sign of confidence—it's a warning. If BRK's stock stumbles, BRKY's ability to maintain CAD 0.15 could be in jeopardy. The fund's leverage and covered call strategy add layers of complexity. If BRK's volatility spikes, so could the strain on BRKY's payout.

The Tax-Advantaged Angle

The “eligible” dividend classification is a masterstroke. In a tax-sensitive market, this feature could lure retirees and income-focused investors. But here's the catch: Eligible dividends are typically tied to corporate earnings, not returns of capital. BRKY's management must prove this payout is sustainable—no easy feat with a 2.03% expense ratio.

Risks vs. Rewards

Let's get real: This move smells like a short-term gimmick. A 50% dividend hike is aggressive, especially for a fund that previously prioritized capital preservation. The question isn't whether the yield is attractive—it's whether the fund can keep it up.

If BRKY's strategy works, it could become a go-to for income seekers. But if BRK's performance falters or the fund's leverage backfires, the CAD 0.15 could vanish faster than a candle in a storm.

The Verdict: Proceed with Caution

BRKY's dividend hike is a bold play in a low-yield world. For investors craving income, the 5.5% yield is tempting. But don't lose sight of the risks. This fund is a high-stakes bet on BRK's performance and the fund's ability to balance leverage with sustainability.

Investment Advice:
- Buyers: Consider BRKY if you're an income-focused investor with a high-risk tolerance and a long-term horizon. The tax-advantaged yield is a plus, but monitor BRK's stock price and BRKY's leverage closely.
- Sellers: If you're risk-averse or prefer stable, low-cost ETFs, stick to the iShares S&P/TSX 60 Index ETF (XIU) or similar options.
- Watch List: Keep an eye on BRKY's AUM growth, expense ratio, and BRK's performance. A 10% drop in BRK's stock could trigger a dividend cut.

In the end, BRKY's gamble is a reminder: High yields come with high stakes. This isn't for the faint of heart—but if you're willing to ride the volatility, the rewards could be worth it. Just don't bet the farm.