The Dividend Machine That Could Pay You 12% in a Rising Rate World

The Evolve US Banks Enhanced Yield Fund UnHedged Units USD ETF (CALL.U) just declared a $0.14 dividend per share, payable on June 6—a move that could make this fund a must-own for income seekers. With a trailing 12-month yield of 12.07%, this ETF isn’t just kicking out cash—it’s doing it in an environment where the Federal Reserve has kept rates elevated at 4.25-4.5%. Let’s dissect why this could be a golden opportunity—and why you shouldn’t wait.

Why Banks Are Cash Machines Right Now

The Fed’s decision to hold rates near 4.5% isn’t just about fighting inflation—it’s a lifeline for bank profitability. Banks thrive in high-rate environments because their net interest margins (NIM) expand. Loans get priced higher, while deposits? Banks can afford to pay less on them. The ETF’s portfolio is laser-focused on the largest U.S. banks, which are the best positioned to capitalize on this.

But here’s the kicker: CALL.U doesn’t just hold bank stocks—it enhances yield with a covered call strategy. By selling call options on up to 33% of its holdings, the fund locks in extra income. This strategy also acts as a hedge, capping downside risk if markets turn sour. That’s why this ETF isn’t just about dividends—it’s about sustainable income even if the stock market stumbles.

The Numbers Are Unmissable

Let’s crunch the cold, hard data:
- Monthly distributions: $0.14 per unit adds up to $1.68 annually, a 12% yield at the current NAV of $14.30.
- Expense ratio: A mere 0.45%, meaning you’re not getting fleeced in fees.
- Historical resilience: Over five years, this ETF has averaged a 2.14% annualized return, but that’s before accounting for those juicy dividends.

The chart shows consistent payouts, even during market dips. That’s the power of covered calls at work!

But Wait—What About the Risks?

Critics will point to the ETF’s recent struggles. Its YTD return is -8.78%, and technical analysts are warning of a potential 8.4% decline over the next three months. The price is already trading at a discount to NAV ($13.85 vs. $14.30 NAV), which some see as a red flag.

But here’s the truth: Income investors don’t care about short-term volatility—they care about cash flow. Even if the ETF’s price dips, those monthly $0.14 checks keep coming. And with the Fed’s rate hikes likely done (they’re signaling two cuts by year-end), now is the time to lock in this yield before rates drop.

The Fed’s Playbook Is in Your Corner

The Fed’s 4.25-4.5% rate isn’t going anywhere until inflation cools. But here’s the twist: Even if the Fed cuts rates later this year, bank stocks could still shine. Lower rates mean mortgage refinancing booms and higher loan demand, keeping banks’ profit engines humming.

This ETF’s strategy is a win-win:
- Rising rates: Banks profit, boosting stock prices and call option premiums.
- Falling rates: Covered calls cushion the downside while refinancing boosts bank revenue.

Why You Should Buy Now

This isn’t just about dividends—it’s about outsmarting the market. The ETF’s discount to NAV creates a safety net. If the Fed’s rate cuts materialize, the NAV could rise faster than the market price. And with a five-year track record of averaging 10.96% annual returns (despite recent slumps), this fund has shown it can rebound.

See how it thrives when rates are high? That’s your signal to act now.

Final Call to Action

Evolve’s CALL.U is the rare ETF that delivers 12% income in a yield-starved world. Yes, there are risks—every investment has them. But with monthly distributions, a covered call hedge, and a Fed-friendly strategy, this could be the income engine your portfolio needs.

Act now: Buy shares before the Fed’s next move pushes yields lower. This dividend machine isn’t going to wait for you—you’ve got to move first.

Disclosure: This analysis is for informational purposes only. Always consult a financial advisor before making investment decisions. Past performance does not guarantee future results.