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By Hamilton ETFs
(Sponsor Blog)
Last month marked the fifth anniversary of the launch of the Hamilton Enhanced Canadian Covered Call ETF (HDIV), Canada’s very first modestly levered (or “enhanced”) covered call ETF, and there are many reasons to celebrate this marriage of income and growth strategy.
The idea for HDIV was born out of one question: can covered call ETFs be improved? Designed to provide higher monthly income, covered call ETFs have been a rapidly growing segment of the ETF market for several years, but the reality is the strategy does cap your potential upside in exchange for the tax-efficient income it provides.
We thought of a game-changing way to help mitigate this yield/return trade-off: add modest 25% leverage to generate higher monthly income and participate in more upside growth potential.
HDIV Growth and Performance
HDIV has grown to assets under management (AUM) of ~$1.8 billion since inception in July 2021, making it our second-largest ETF after the Hamilton Canadian Financials YIELD MAXIMIZER™ ETF (HMAX).
HDIV’s growth in assets has been impressive, and the fund has also delivered strong performance. Since inception, HDIV has delivered an annualized total return of 19.3%, outperforming the S&P/TSX 60 and the S&P 500 index over the same period[1].
HDIV Performance Highlights:
- Annualized total return (including dividends) of 19.3%, versus 15.2% for S&P/TSX 60 and 15.6% for S&P 500 (CAD).
- Outperformed the S&P/TSX 60 in calendar years 2022, 2023, 2024 and 2025 by 3.7%, 1.8%, 2.1% and 4.7%, respectively[2].
- 14 distribution increases for a total distribution increase of 64% since inception[3].
- Attractive yield, currently 9.99% — versus 2.29% for S&P/TSX 60[4].
What does $100,000 invested in HDIV since day 1 look like?
If you invested $100,000 in HDIV at launch, your investment would be $244,000 with reinvested distributions, as seen in the chart above. Assuming you did not reinvest your distributions, your invested capital grew from $100,000 to $144,875 and you received $56,950 in cash. The chart below shows your total annual income from HDIV and capital growth over five years. So you did not just receive cash flow; your capital appreciated as well.
What has driven HDIV’s performance?
Every aspect of our ETFs is carefully thought-out and tested with the intention that they be long-term responsible investments, and HDIV is no exception. Two structural features have been central to HDIV’s success: modest leverage and broad sector diversification.
Enhanced Structure
HDIV has an enhanced structure with modest leverage of 25%, achieved by borrowing at relatively lower institutional rates. How does this work? For every $100 you invest, HDIV borrows an additional $25, investing a total of $125 in its portfolio and amplifying the fund’s overall yield and growth potential.
Of course, investors should keep in mind that leverage can work both ways, amplifying growth during market rallies as well as losses during downturns. While leverage does add risk and volatility to your portfolio, HDIV only has a modest amount.
Broad Sector Diversification with Blue-Chip Holdings
HDIV is an ETF made up of 10 sector-focused, blue-chip covered call ETFs from our YIELD MAXIMIZER™, Enhanced Growth and DayMAX™ suites. Their weightings have been chosen with the aim of giving HDIV a sector mix broadly similar to that of the S&P/TSX 60.
HDIV’s focus on high-quality stocks is clear when you examine its underlying holdings, which are primarily leading large-cap companies with strong fundamentals. Around 44% of HDIV’s underlying holdings are the largest Canadian financial stocks like the Big Six banks and Canada’s largest insurance company by total assets, Manulife Financial[6]. Energy and technology giants account for over 30% of the fund[7].
We also believe HDIV’s underlying holdings are an improvement in the breadth of the S&P/TSX 60 index. Certain Canadian sectors, like energy and technology, are heavily concentrated in a very small number of large-cap stocks. HDIV addresses this lack of diversification by including leading U.S. companies. For example, HDIV holds market leaders like Apple and Microsoft through the Hamilton Technology YIELD MAXIMIZERTM ETF (QMAX) and the Hamilton Enhanced Technology DayMAXTM ETF (QDAY).
The Hamilton ETFs advantage with covered call strategies
As a member of the Hamilton ETFs line-up, HDIV’s underlying covered call strategy is managed by our options team, which has 60+ years of combined experience and is led by Chief Options Strategist Nick Piquard.
Five years in
Five years after HDIV’s launch, we believe the results provide a tangible answer to our original question: can covered call ETFs be improved? HDIV has paired strong total returns with growing monthly distributions and broad diversification, clearly resonating with investors who have helped grow the ETF to more than $1.8 billion in assets. Its first five years have, in our view, demonstrated how an enhanced covered call structure can combine capital growth with a stream of monthly income.
Trivia
The AI investment boom is so big, it’s reshaping economies. What 19th century technological breakthrough triggered an even greater U.S capital spending spree (as a percentage of GDP)?
Hint: The two biggest holdings in Hamilton Utilities YIELD MAXIMIZER™ ETF (UMAX) are involved in this industry.
Answer: Railways.
Disclaimer
Certain statements contained in this article may constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “anticipate”, “believe”, “intend” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Hamilton ETFs undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law. The S&P 500 Index and the S&P/TSX 60 Index (“Indices”) and associated data are a product of S&P Dow Jones Indices LLC, its affiliates and/or their licensors and have been licensed for use by Hamilton ETFs © 2026 S&P Dow Jones Indices LLC, its affiliates and/or their licensors. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices, please visit www.spdji.com. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Neither S&P Dow Jones Indices LLC, SPFS, Dow Jones, their affiliates nor their licensors (“S&P DJI”) make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and S&P DJI shall have no liability for any errors, omissions, or interruptions of any index or the data included therein. Commissions, management fees and expenses all may be associated with investments in exchange traded funds (ETFs) managed by Hamilton ETFs. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in per unit value and reinvestment of all dividends or distributions and does not take into account sales, redemptions, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Only the returns for periods of one year or greater are annualized returns. ETFs are not guaranteed, their values change frequently, and past performance may not be repeated.
[1] Based on total annualized returns since inception on July 19, 2021. As at July 31, 2026. Source: Bloomberg
[2] Source: Bloomberg
[3] Distributions are not guaranteed, may fluctuate and are subject to change and/or elimination.
[4] Current annualized yields as at July 31, 2026. The yield calculation excludes any additional year end distributions and does not include reinvested distributions. Source: Bloomberg, Hamilton ETFs.
[5] Source: Solactive AG, Bloomberg, Hamilton ETFs. Data from July 19, 2021 to July 31, 2026.
The graph illustrates the growth of an initial investment of $100,000 in HDIV vs the S&P/TSX 60 Index with annual compounded total returns. The graph is for illustrative purposes only and is intended to demonstrate the historical impact of the compound growth rate. It is not a projection of future performance, nor does it reflect potential returns on investments in HDIV. Investors cannot directly invest in the index. All performance data assumes reinvestment of distributions and excludes management fees, transaction costs, and other expenses which would have impacted an investor’s returns.
[6] As at July 31, 2026
[7] As at July 31, 2026
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