Global X ENCL: A High-Yield Energy Play with a June Dividend Opportunity

The energy sector's resurgence has created fertile ground for income-focused investors, and the Global X Enhanced Canadian Oil and Gas Equity Covered Call ETF (ENCL) stands out as a compelling option. With an annualized distribution yield of 17.12%, monthly payouts of $0.255 per unit, and a strategy designed to enhance income while dampening volatility, ENCL offers a unique opportunity for those seeking both yield and exposure to Canadian oil and gas equities.

The Covered Call Advantage

At its core, ENCL employs a covered call strategy, which involves writing call options on its holdings to generate premium income. This dual-income stream—dividends from underlying equities plus option premiums—fuels its high distribution yield. Unlike traditional energy ETFs, ENCL's strategy caps upside participation in exchange for steady cash flows, making it less volatile during market swings.

The ETF's 125% leverage further amplifies returns by borrowing cash to invest more in its portfolio. While this increases risk, the covered call structure provides a cushion by limiting downside exposure. As of May 22, 2025, 79.83% of options were out-of-the-money, meaning the ETF benefits from premium income without overexposure to price declines.

The consistency of its payouts—from $0.265 in early 2025 to the current $0.255—reflects the strategy's stability, even amid energy sector volatility.

Performance and Valuation

Despite a challenging 2025, ENCL has delivered 6.86% total returns since its October 2023 launch, outperforming broader energy benchmarks. While its YTD performance (-5.00%) lags slightly, its -11.18% one-month drop in April was offset by the covered call premiums, which stabilized distributions.

The ETF trades at a slight discount to its NAV (-0.06% as of May 22), offering investors a price advantage. The current NAV of $17.87 also supports the case for long-term capital appreciation, especially if energy prices rebound.

June Dividend Details: Act Before June 30

The ETF's June distribution of $0.255 per unit (annualized to 17.12%) will be paid on July 8, 2025, with an ex-dividend date of June 30. This is the 12th consecutive monthly payout, underscoring management's commitment to income consistency.

Investors targeting this distribution must own shares by June 28, 2025 (the record date). With a 12-month trailing yield of 20.05%, ENCL's income potential remains robust, especially compared to traditional energy ETFs with yields below 5%.

Risks to Consider

• Leverage Exposure: The 125% leverage amplifies gains but also magnifies losses during downturns.
• Energy Sector Volatility: Oil prices and geopolitical risks remain key risks.
• Return of Capital: Distributions may include a return of capital, reducing tax-adjusted cost bases.

Investment Takeaways

For income-focused investors willing to accept moderate risk, ENCL is a high-conviction pick. Its covered call strategy and leverage create a rare blend of income and growth potential in an energy sector primed for recovery.

Action Items:
1. Buy Before June 30 to secure the June dividend.
2. Monitor premiums: The ETF's success hinges on robust option pricing, which could rise if energy markets stabilize.
3. Diversify: Pair ENCL with broad energy ETFs (e.g., XLE) to balance volatility.

In a world hungry for yield, ENCL's 17.12% distribution yield and monthly payouts make it a standout option—especially before the ex-dividend date.

Data as of June 19, 2025. Past performance does not guarantee future results.