Don’t misunderstand me — I am not complaining about this. Instead, I’ve noticed that this provides an opportunity for folks that are observant. Wall Street and the market are slow to react to:

1. Products bought mostly by women and minorities. When I say minorities, I don’t only mean of race. I also mean diversity of income level.

2. Businesses that have customers in regions outside of major cities.

It’s a structural gap in the market and it’s a persistent theme over the last 30 years. I’m just a dude that sits at my computer 14 hours a day researching the market. Even with that kind of effort, I cannot realistically out-research a Goldman analyst on AI companies. I simply don’t have the resources, reach, and access.

HOWEVER, we have a specific power as retail investors that Wall Street doesn’t have. This would be the power of observation outside of the metropolitan bubble. I believe I’ve identified 3 different companies with large upside growth potential, supported by fundamental analysis of the latest earnings and long-term trends.

Interestingly, two positions have outperformed against the S&P 500 over the last twelve months, despite being uncorrelated to technology. One of the positions have underperformed but this provides us with any opportunity to accumulate. We can refer to the performance on the chart below.

I’ll cover all three of these businesses and their recent strength. I’ve provide some commentary on the first stock for free because I believe that it’s a business you’ve almost certainly bought from. If you want to stay updated on my articles, please subscribe so you don’t miss anything.

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The Data Doesn’t Explain The Why

When Wall Street builds a forward-looking thesis, they generally analyze data that supports consumer metrics. This includes analyzing data like credit card spending, app downloads, foot traffic in the markets they specifically sample.

Having been an analyst myself, I use a lot of the same data for my own research. However, there’s a caveat to this style of analytics.

The data doesn’t actually explain why people are spending or consuming the way that they are. For instance, the data can’t determine why someone will buy a $350 air fryer over a $120 traditional toaster oven. The data doesn’t explain why spending happens the way that it does. Typically, the data only estimates at which pace the spending will accelerate or decelerate and what catalysts will influence those changes.

You’ll see analysts issue reports on a similar group of companies because the data is generally skewed towards a specific sector. That’s why there’s such an abundance of reports on different technology and AI companies.

The silver lining is that there’s only a small window of time before Wall Street eventually sees the value that you do. This is exactly the period you want to start accumulating a stock. When it is out of favor or out of the spotlight, this is when the riches can be built.

That’s legit what’s happening with and right now. Everyone is focused on these other AI businesses and now the potential risks have taken over the narrative. As a result, both of these companies are on massive sales and I’ve been accumulating shares.

Stock #1: SharkNinja (SN)

While it isn’t exclusive to women, the data clearly supports that women are the main consumer of things like Air fryers, robot vacuums, multi-cookers, blenders, coffee systems, hair tools, across more than 36 household sub-categories that SharkNinja services .

I bet you regularly use an Airfryer now instead of your oven.

I bet you have a nice coffee maker in your house.

I bet you have some sort of air purifier.

Perhaps you have a robo-vacuum.

recently reported its Q2 earnings for 2026 and the results were solid. Net sales for the business were strong and landed at $1.77B. The business operates across tons of different segments and this represents an increase of 22.2% year over year and is the fastest growth rate since 2024.

International sales jumped 36.6% as well, which means that SN is growing its revenue globally, not only in the U.S. Additionally, the Cooking and beverage segment grew 36.5%. This represents the thirteenth consecutive quarter of double digit sales growth for the company.

Management is so confident in their outlook that they raised full year guidance to 16% to 17% sales growth. Double digit revenue growth will likely be accompanied by double-digit earnings per share growth.

Interestingly, SN also collected a $247.1M tariff refund, which admittedly inflated earnings by a bit. However, this was offset by the fact that management bought back $100 million of stock in the quarter. Management will only buy back its own stock for one reason: they think it will continue to go up!

In the performance chart I originally provided, SN was the stock that outperformed the S&P500 with a wide margin. I believe this outperformance can continue over the next twelve months.

SharkNinja also has incredible profitability metrics, as we can see below:

Here’s the kicker, the company only sits at a market cap of $26B. I believe this is a $80B+ market cap company just through the brand loyalty alone. Brand loyalty is strong with SharkNinja and I’d argue that it carries the same appeal that Apple does with smartphones. If you buy a SharkNinja airfyer, it become hard to buy any other brand after that.

Stock #2…

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I think this is very achievable and it’s why I plan to double my AMZN position. For reference, here is my current position:

Getting there means the stock roughly triples from here, which works out to about an 18% annualized return per year, for seven years. For a company this size that sounds absurd until you look at what’s actually inside it. That’s why I wanted to provide an in-depth analysis on why I think AMZN will be worth $10T.

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Whoever Owns The Distribution Wins

The AI models themselves are commoditizing fast and now it’s at the point where everyone can build one. I built one for Founding members and I use it all of the time to digest earnings data. Therefore, I think we’ll see AI lose some value from the perspective of a software tool. AI will likely disrupt a ton of industries but what it cannot disrupt is distribution.

The models are getting commoditized but the distribution network isn’t.

So as agentic shopping becomes normal, and it will, the AI does the choosing and somebody else does the fulfilling. Every one of those transactions has to land on physical infrastructure that took decades and hundreds of billions to build. Amazon owns the best version of that infrastructure in the world and it cannot be easily replicated by peers. AMZN has been improving this process for decades now.

Earlier this year they got a court injunction blocking an outside AI shopping agent from placing orders on their platform, arguing it accessed customer accounts without authorization. Whatever you think of the legal merits, the message is obvious.

Amazon intends to own the agent layer sitting on top of its own distribution, not rent it out to whoever builds the best chatbot.

That’s why I keep coming back to the idea that Amazon has more AI leverage than the market gives it credit for. Most AI companies have one exposure. Amazon has the:

1. Compute

2. The chips

3. The ad engine

4. The fulfillment network

5. A large stake in one of the leading model labs that also happens to be a giant AWS customer.

With this in mind, I expect AMZN’s net sales to continue expanding over the next decade at a rapid pace.

You’re Buying Four AI Companies With Amazon

Most people look at Amazon and see a retailer with a cloud business bolted on. That framing is about five years out of date. What you’re actually buying is four distinct AI businesses that feed each other, and any one of them would be a significant public company on its own.

The first is AWS, which is the compute layer. It sells training and inference capacity to everyone else building AI, and it just did $42.2 billion in a quarter at a 39.4% operating margin. That margin expanded 650 basis points in a year, and the segment is now running at a $169 billion annualized rate.

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It’s a calculated method that allows you to generate extra income within your portfolio.

For the monthly of August, I’ve already collected $726 in option premiums from covered calls.

Here’s how it works:

You already own 100 shares of something. You believe the stock will be worth more in the future, so you simply hold and remain patient.

There’s a way to get paid a second time on those exact same shares. A covered call is an options strategy where you sell call options on a stock you already own to make cash (a premium), but you agree to sell your shares at a set price if the stock goes up.

In ideal conditions, you don’t sell those shares but you keep the income paid.

That’s the covered call process I am describing. And it’s the thing I get asked about more than anything else I write, usually right after somebody opens an option chain for the first time and immediately closes the tab. I don’t blame them. It looks complicated for no reason.

So let’s get you started and help you understand how easy the process is. In this article, I’m going to take one real setup and walk it line by line, and by the end you’ll know how to pick a strike, how to pick an expiration, what happens if your shares get called away, and what this trade actually costs you when it goes against you.

No options experience needed. If you’ve never placed one, you’re exactly who I’m writing this for.

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What You’re Actually Selling

A covered call is just an agreement between you and somebody else.

You own 100 shares. Somebody pays you cash today for the right to buy those shares off you at a set price, before a set date. That’s it. That’s the whole trade.

What if the stock stays below that price you selected? Nothing happens. You keep the cash AND you keep your shares. Stock goes above it? You sell at the price you agreed to, and you STILL keep the cash that was paid to you.

Before getting started, there are 5 terms that you need to know.

Five terms and you’re done:

However, there’s an important requirement for this process. In order to write covered calls, you need 100 shares of one stock. If you own 250 shares you can write two contracts and the leftover 50 shares just sit there. If you only have 25 shares, you aren’t capable of initiating a covered call strategy.

If you don’t have 100 shares of any position you hold, that’s your first goal before you worry about any of the rest of this.

To make it simpler, there are a ton of ETFs that WRITE OPTIONS FOR YOU. You can collect income on a weekly basis from option ETFs. I compiled a list of 10 funds below.

Let’s Look At A Real Example

Here’s an actual scan on . Say you own 300 shares and you want to know what a covered call would pay you.

Here’s a snippet from the Covered Call Dashboard that guides you:

Look at the cash column. $960 at the top, $195 at the bottom, and the only thing changing is the strike price going up.

That’s basically the tradeoff: a higher strike price means you collect less premium income and more upside. A lower strike price means more premium income but less upside growth.

The $45 strike pays the most because you’re agreeing to sell at a price the stock could actually hit in two weeks. The $52 strike pays $195 because you’re agreeing to something that probably won’t happen.

Why The Biggest Number Is A Trap

Most newbies tend to pick the strike price that provides the largest premium. It’s understandable since it’s the one sitting closest to where the stock trades right now, and it pays the most by a wide margin.

Here’s the problem.

A strike close to today’s price is a strike the stock can actually reach. So you collect the fattest premium on the board, hand over your shares at a price barely above where they already were, and then watch the thing keep climbing without you.

Ideally, you want to collect the premium AND keep your shares without losing upside growth. Trading potential upside for income generation isn’t always the right trade, especially on rapid growth companies that can rally significantly higher, such as , , or .

That’s why the scanner within the Covered Call Dashboard flags the closest strikes as outside criteria. They pay great but they’re also the ones most likely to take your shares.

The one it stars sits further up the board. It pays a fraction of what the closest strike pays, and here’s the logic behind it:

• Far enough above the current price that you probably aren’t getting assigned before it expires

• If you DO get assigned, you sold at a price you were happy with anyway

• The premium is smaller, but it’s real money for two weeks of doing absolutely nothing

So start with the price you’d be happy selling at. Write that number down, go find the strike that matches it, and only then look at what it pays. In that order, every time.

Expiration Date: Shorter Pays Better

Your second decision is how long you’re locking yourself in for.

Referring to the same example from the table above, investors would have the decision to select another expiration date that is further out. But in exchange, this means that you will be locking up your shares for an extended period of time, which may lead to more of a chance for the stock price to reach your selected strike price.

The value decays faster the closer you get to expiration, so the last stretch of a contract is worth far more per day than the early stretch. When you write short contracts back to back, you’re capturing that fast-decay window over and over. Write one long contract and you capture it once, then sit through weeks of slow decay to get there.

That’s why all nine of my contracts last month were weekly or close to it. Same shares, four different expirations, premium coming in four separate times instead of once.

The tradeoff is your attention. One long contract is one decision. Four weekly contracts is four decisions, four order tickets, and four chances to get it wrong. If you already know you’re not going to check your account every week, take the longer date and the lower daily rate. There’s no shame in that. A trade you actually manage beats a better trade you forget about.

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What If You’re Wrong

Let’s say you write a covered call and select a strike price of $50. For that covered call, you might receive a premium of $100. There’s always the chance that the selected stock rips higher past your selected strike price and goes to $65.

In this scenario, your shares would get called away, meaning you’d lose them. However, you would be able to keep the initial premium that was collected.

But notice what didn’t happen here. You didn’t lose money. You sold at a price YOU picked, and you got paid an extra $90 for the trouble. What you lost was the upside past your strike. This isn’t necessarily a bad thing — it is just very situational.

That’s the real cost of every covered call, and it’s exactly why I don’t write them on stuff I think is about to run. For instance, AMZN rallied higher after its last earnings call and ripped right through my selected strike price. So I was forced to roll that out further. Selling calls on a stock you believe doubles this year is how you get paid $90 to miss a double.

Don’t do that to yourself.

If you want out before expiration, you’ve got two options:

Where I Don’t Do This

Covered calls work best on shares you’d be happy to sell at a certain price. That sounds obvious until you’re staring at a potential $500 premium on your favorite holding. It gets tempting! For instance, I am able to write a covered call on with a strike price a few bucks out, which would yield a premium of $150 per contract.

If I write 3 contracts, that would result in a premium of $450 instantly. Quite tempting.

However, I would suggest there are three places I’d tell you to stay away:

1. Your highest conviction growth position. Capping the upside on the one stock you own FOR the upside kind of defeats the purpose.

2. Anything under 100 shares. You can’t write a contract. Build the position first.

3. Stocks nobody trades options on. For instance, many ETFs don’t offer the ability for covered calls to be written against them. This is standard.

The best candidates are usually positions you like but wouldn’t mind selling at a profit.

I think high volatility holdings would be the best option for investors looking to maximize option premiums. These are the companies that have the potential to rally or decline by double-digits within a single session.

The other thing worth making a note of is that assignment has tax consequences. Option premiums collected are typically classified as ordinary income. Of course it all depends on what type of account you utilize this strategy within. Inside an IRA it doesn’t matter.

Six Steps To Summarize

1. Pick a position where you own 100+ shares.
   Don’t do this with your favorite holding — only something you’d happily sell.
   

2. Decide your sell price BEFORE you look at any premiums.
   The premiums will only tempt you. It makes the most sense to pick a strike price ABOVE your cost basis.
   

3. Find the strike at or above that price
   This ensures that it’s a win-win, no matter the outcome.
   

4. Pick an expiration you’ll actually keep an eye on
   A weekly expiration comes quick. A month out is a bit more flexible.
   

5. Sell to open, one contract
   Your broker calls it “sell to open” or just “write.” Use a limit order at or near the bid. The cash shows up in your account that same day.
   

6. Write down what you did and why you did it
   Strike, expiration, premium, reasoning. After ten trades you’ll start seeing your own patterns, and that’s worth more than any strategy somebody hands you.

How I Run This Every Week

Everything above, you can do by hand. I did for a long time.

Then I was checking a dozen positions every week and it stopped being realistic, so I built something.

The Covered Call Dashboard does four things:

• Opportunity Scanner. Type in any ticker you own and it shows you every strike and expiration, what it pays, the odds of getting assigned, and whether it’s a setup worth taking. That’s the table you looked at earlier in this article.

• Position tracking. Log what you write and watch your premium income stack up over time.

• My watchlist. The tickers I’m personally looking at right now for calls.

• Trading journal. Every trade saved, your win rate tracked. Step six up there, done for you.

There’s also a Learn section that covers every term in this article, so you’re not opening a second tab to Google what delta means in the middle of placing a trade.

It’s a founding member tool.

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The covered call writing made up the entire difference and then some, producing $1,882.57 in net premium against June's $1,145.59, a 64% jump.

A few months of rotation out of the weaker option income positions has pulled the monthly number down by design. The offset shows up on the other side of the book in terms of performance:

My portfolio is up 32.72% year to date against 10.49% for US stocks YTD.

If that shape looks familiar, it should. I ran the same trade in February, when income fell and performance climbed, and the reason was identical: capital moved from funds paying a large distribution against a shrinking share price into businesses I expect to compound.

This is why I’ve initiated a few different articles for companies that do not pay a dividend.

Despite this, the underlying process has not changed. I still collect income from dividends and from the covered calls I write against shares I already own, then I decide every month whether that cash buys more income or buys equity in something the market has mispriced. It’s very situational based on market conditions and I share all of the alerts here for subscribers.

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July was another rotation month and the breakdown below shows exactly where each dollar landed.

Here is what this report covers:

1. Every position that paid me in July, with the June figure next to it so you can see what moved.

2. Covered call premiums and which underlying positions generated them.

3. New capital deployed and any positions I exited/added.

4. Where the income engine goes from here.

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Top Holdings

There is a new addition to my top positions. It is the…

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Well, it looks like that process is being sparked by the latest earnings season. Investors enthusiastically rewarded the capex of Microsoft and Amazon because their cloud driven AI demand is easy to model.

Conversely, when Meta Platforms reported, the market reacted with an 8% sell-off. The mainstream financial media assumes Meta is falling behind. The underlying data shows the exact opposite and I want to explain why META is actually the king of AI right now.

Here are the segments of AI simplified for you.

1) Distribution Through Software: This includes the consumer-facing apps that we are all familiar with. Think Microsoft Office, Google Workspace, Meta family of Apps.

2) The Actual AI Models: Gemini, Claude, ChatGPT

3) Infrastructure: Encompasses the chips, data centers, power, and networking systems.

I like to hold the companies that have a stake in ALL the layers. Right now the narrative and momentum has been driven by companies in one of these layers. META has a direct stake in all of these layers.

Over the last six months, we can see how the momentum has played out for these large-cap leaders. META is trailing behind peers but I think this provides us with an opportunity to accumulate.

META is one of my largest positions. Here’s what it looks like:

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Discount Code

Monetization Without the Cloud

The hyperscaler business model is simple for analysts to track. Microsoft Azure and Amazon AWS buy GPUs, and analysts model the resulting rental revenue from enterprise clients.

The issue has been that META does not sell public cloud computing like its competitors. However, when Meta buys GPUs the actual monetization path is integrated directly into its consumer ecosystem instead. This is achieved through its massive ecosystem and family of apps. However, this argument won’t hold up for much longer as META explores ways to monetize its AI infrastructure.

The market is pricing META as if Zuckerberg is stupid and doesn’t have a plan.

Meta Platforms Chief Mark Zuckerberg said the company is considering building a cloud business to offer access to its artificial intelligence infrastructure, Bloomberg reported, citing an exclusive interview.

Zuckerberg said Meta was evaluating whether some of its AI infrastructure could be used for external customers, including through renting out computing capacity or providing access to AI models hosted on Meta’s systems.

“The offers that you get for using the compute are so high that it may make sense, in some cases, to rent out or consider those kind of deals instead of your own internal uses,” Zuckerberg told Bloomberg. He also said Meta does not have excess computing capacity and is currently using all of the computing power available to the company. However, he added that a cloud business was “certainly there any time we want to build it.”

The hardware supercharges content recommendation algorithms, dynamic ad targeting, and internal infrastructure. Critics argue Meta is hiding the return on investment of its AI spend because there is no isolated AI revenue line item on the balance sheet.

That argument ignores how Meta actually generates revenue though. Meta is monetizing its AI investments faster and more effectively than anyone else right now and that narrative is being clouded by incorrect assessments.

The primary reason Meta’s advertising segment is growing faster than Google’s is its AI integration. AI directly drives growth by:

1. Lowering campaign friction for advertisers through automated creative generation.

2. Increasing advertiser ROI via predictive targeting.

3. Driving user engagement to record levels through curated video algorithms.

The proof is the top line revenue. Meta hit $60.8 billion this quarter, representing a 28% year over year increase. Adding more ad revenue in a single quarter than any other company is the ultimate proof of AI monetization.

Okay so if earnings are strong, then why the hell did the share price tank?

Well, I think it can be mostly summed up the same as it was last quarter: one-time expenses clouding earnings per share.

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Deconstructing the Earnings Miss

The catalyst can simply be explains by a 14% miss on Earnings Per Share data. The media headlines will milk this and make the entire picture seem a lot worse than it really is. But here’s the reality:

META had to allocate capital towards legal settlements and these were one-time expenses. Additionally, they had severance costs related to all of the layoffs that were initiated over the last few months. Lastly, depreciation of its assets were lumped into this.

When you adjust for these one time hits and accounting choices, Meta’s operational profitability remains completely intact and actually met expectations.

With these costs, it caused META’s overall costs and expenses to increase 55% YoY. The market seems fixated on the one-time costs, rather than the income that is being produced.

The Flaw in the Peak Social Narrative

Financial bloggers have pushed a “Peak Social Media” narrative for years. They routinely extrapolate temporary dips in Meta’s user base as a permanent structural decline. For instance, a popular narrative would be that Facebook is only for old people.

But META isn’t only for old people. The latest earnings report disproves that thesis. Meta’s family of Daily Active Users reached an all time high of 3.6 billion. The trend has continued to rise over the last two years, which means that a lot of the narratives are completely false. As more people are within META’s ecosystem, the business is better ablet to monetize and expand earnings over time.

Engagement metrics increased across all applications. Facebook is seeing 10% increases in video consumption, which easily outpaces traditional streaming growth. Meta is successfully building an ecosystem where businesses can launch and scale without leaving the platform.

Value & Outlook

We currently have an opportunity to accumulate these businesses at attractive valuations. The main reason the hyperscalers sold off initially is because their management continued to raise forward capex guidance. On a forward price to earnings basis, many of these businesses trade at some of the most attractive levels in years.

• Meta Platforms: Trades at a forward P/E of 17.97x, which is well below its 5Y-average of 22.28x.

• Microsoft: Trades at a forward P/E of 22.42x, which sits below the sector median of 30.98x.

• Alphabet: Trades at a forward P/E of 15.87x, which sits below its 5Y-average of 23.39x.

For reference, META is much cheaper than the S&P 500 Index’s forward price to earnings ratio of 20.81x.

CFO Outlook Commentary

The Bottom Line

The market is mispricing Meta because its AI infrastructure does not mirror an enterprise cloud provider. Wall Street is treating Meta’s capex as a liability rather than a competitive moat.

If critics are correct and the AI spend is not driving this growth, it implies Meta has a core business organically growing at 28% entirely on its own. That would make the billions in AI spend discretionary cash flow waiting to be unlocked. Either way, the math heavily favors the long term holder. Meta has record user numbers, accelerating revenue, and an advertising system successfully scaled by artificial intelligence. This sell-off provides an ideal entry point to exploit the market’s misunderstanding.

Most dividend paying companies will provide a yield between 1% to 4%.

However, dividend investing isn’t limited to 3% yields. In fact, there are corners of the market where double digit payouts are the norm. The catch is that you have to understand how they work and the risks involved.

This is how I am able to collect more than $44,000 in dividends per year within my portfolio. My portfolio’s average yield sits closer to 8% at this time.

If I had $100K to work with today, here’s how I’d structure it to potentially generate $1,000 a month, or $12,000 a year, in dividends, WHILE still growing my capital over time.

The idea is that creating an extra stream of cash flow uncorrelated to your job is how you improve the quality of your life. I spent a month in Japan and collected $3,000 in dividends while there. The dividends effectively offset the cost of the trip, meaning I didn’t need to pay for travels with the money I earned from my labor.

In this article, we will consider a hypothetical $100,000 income sleeve built from just four funds.

Four funds is all you need to get exposure across hundreds of different companies that can provide risk-adjusted returns. Admittedly, there is one risky fund included that is tied to commodities.

On a more positive note, one of these funds has a history of providing an average yield of ~7%, while crushing the Nadsaq-100 and S&P 500 in total return over the last decade. We will dive into why I believe the fund remains attractive today and for the next decade.

If none of that income is spent and all of it is swept into a variety of growth positions, then after ten years at a 10% annual return, the sweep alone would build a $204,200 position while the original $100,000 remains intact and continues paying.

In plain English, this means you would be able to fund brand new growth positions with the income collected, rather than using your own money.

I believe we’ve reached a crossroads in the market. Equities are fatigued because of elevated capex spending. However, I think that we’ll see a recovery through 2027 once a deceleration in capex spending happens. While the rest of the market is fighting the volatility, this income portfolio continues to produce cash flow regardless of what’s happening on a macro level.

Hyperscaler capital spending has been growing at rates between 60% and 90% year over year since early 2024, and consensus expects that growth rate to collapse toward single digits by late 2027. When this happens, I think we’ll see much higher optimism in the market. Companies including Amazon , Microsoft , Alphabet , and Meta Platforms sit inside two of the three funds in this illustration.

What this piece covers

• The overlap problem that breaks this structure, and how to detect it in any portfolio.

• 👉 Four example funds, why overwrite style decides the outcome, and the one whose falling yield is evidence the thesis is working.

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The Reality Check

$1,000 a month in dividends is equivalent to $12,000 a year. On $100,000 that requires a 12% blended dividend rate.

No traditional dividend stock gets you there.

Even the highest-yielding quality dividend ETFs top out around 4% to 5%, and the ones paying 30% or more are handing back capital faster than they earn it.

The 12% zone sits in between, and it is populated almost entirely by option-income funds and a handful of technology closed-end funds. These funds will generate cash by selling call options against equity portfolios, which converts market volatility into monthly distributions.

So the higher the volatility, the higher the income we can collect. While we write our own covered calls here, the funds in this article makes it much easier for you.

The $100K Four-Fund Blueprint

The allocation below is built around one idea: three funds generate the cash, and the fourth exists to buy back some of the upside the other three sold away. It’s a fine-tuned balance that allows you to generate massive income levels, while also participating in the upside growth of the market over time.

Each step lists the position size, the current distribution rate, and what that produces in annual and monthly income.

STEP 1: Create The Cash Engine ($40,000 Allocation)

The Amplify CWP Growth & Income ETF holds a concentrated book of large-cap US growth names and writes calls tactically against part of the position rather than overwriting the whole thing. They key concept here is that the fund only writes options on a portion of its portfolio. This means that QDVO can experience uncapped growth over time.

The fund is also quite tech-heavy, which means that you are getting exposure to some of the highest quality businesses in the world. You are getting exposure to companies like Apple , Nvidia , and Microsoft .

Historically, the returns of this fund has sat somewhere in between SPY and QQQ. There are periods where the fund has outperformed, but over a longer holding period I expect QDVO to fall behind QQQ.

QDVO’s dividend yield sits near 11%. So $40,000 invested is likely to generate a little over $360 a month in income.

STEP 2: Index-Linked Income ($20,000 Allocation)

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I think my call was right last week because capital has finally begun to rotate out of technology and investors are taking gains off the table. For instance, Micron dropped 8% in a single session this month while capital rotated out of the chipmakers like ASML Holding . Even companies like Alphabet fell 7% after raising its AI capital spending forecast.

The trend is clear. The markets are fatigue around AI. Investors are sick of hearing about capex spending and now the growth momentum has effectively ended.

For a dividend investor this rotation is familiar territory. The sectors catching the bid are the ones we already own for the income: the oil majors, the staples, the utilities, the banks. You can use this volatility to your benefit with the 4 ETFs listed in the article below.

I think we’ll likely see this rotation continue through the remainder of 2026. I want to propose a way for investors to navigate these uncertainty markets by focusing on the stocks with the highest momentum scores.

Looking at all the sector ETFs, we can get a quick glimpse of which sectors are out of favor.

👉 By the end of this article, you will have the knowledge and tools on how to limit downside risk, while participating in a greater level of upside movement.

The process is simple and back tests prove its success.

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The Strategy: Momentum Investing

Momentum investing is one rule: stocks that have been going up tend to keep going up for a while. The same works in the other direction: one something trends lower, it usually needs a positive catalyst to reverse it. It is one of the only return factors that has survived a century of scrutiny, and it persists because investors underreact to new information and then chase it. Similarly to how investors are currently chasing the AI and memory hype.

I want to share a fund that captures this momentum and has a history of rewarding shareholders. It holds the 100 stocks in the S&P 500 with the strongest volatility-adjusted price performance over the trailing 12 months, excluding the most recent month. The fund is incredibly cost-efficient as it only charges 0.13% of assets per year. The fund effectively screens for whatever stock is winning and then buys it.

The fund I want to highlight today has massively outperformed against the S&P 500 Index , as we can see on the purple line in the graph below.

Going forward, I think this fund will continue to outperform.

Sentiment and momentum go together and we’ve already seen how power this can be. The same screen that allowed this fund to load up on AI chipmakers when they were the trade will sell them without hesitation the moment the trailing numbers say something else is working.

The point of this article is for me to walk through exactly how its September rescore works to out advantage, show what it owns today, and why that portfolio is about to be forced toward the dividend sectors that can benefit the rest of out portfolio. Additionally, this fund can be the growth engine within a diversified income generating portfolio. I plan to replace my index tracking positions with this fund at some point in the near-term.

For instance, $10,000 invested in this momentum fund has grown to $53k over the last ten years. This significantly outpaces the growth of the S&P 500 over the same time frame.

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Discount For Readers

The Fund We Can Utilize

The fund is the..

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The 4% rule is the first option and it is the default advice nearly every retiree receives. The rule is to basically save 25x your annual expenses, then withdraw 4% in year one, and the historical data says the money should last thirty years.

So if you have $1,000,000, you would be required to live off $40,000 a year (4%).

However, data from Fidelity says that the average retiree is far off from the level it needs to be.

However, the idea of selling shares of your portfolio always seemed a bit backwards to me. People are essentially selling the very same thing that compounds their wealth over time.

This is why I love the idea of dividends.

Dividends create cash flow and prevents you from ever needing to sell your shares. If you can avoid touching your invested capital, this means that your portfolio can live on far after you die.

Your family can inherit your cash-generating portfolio and have an established income stream. If you have kids, this is a power tool that gives them some flexibility and a cushion of safety in their life. Imagine handing your children a portfolio that’s generating $5,000 n dividends every month. Therefore, I wanted to provide some insights into the two approaches and why I think dividends are the superior route.

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Need help getting started? 👉 Here’s how I would start with $1,000.

Case Study: The Two Approaches Side By Side

For this scenario, let’s imagine a retiree has a $1,000,000 portfolio and $70,000 of annual expenses.

If we follow the 4% rule, the retiree would only be able to withdraw $40,000 a year, which falls short of the annual expenses. For the income side I am using the iShares U.S. Large Cap Premium Income Active ETF , which BlackRock lists at a 7.68% distribution rate.

👉 A hypothetical $1M in BALI would produce $76,800 in annual income.

The gap between those two columns is $36,800 a year on identical capital, which works out to 92% more income. The best part is that BALI still allows investors to participate in the upside growth of the market over time. As we can see below, BALI provides direct exposure to some of the highest quality businesses in the world.

I’ve also issued a 4-star rating on BALI within the High Yield Database.

BALI covers the entire $70,000 with $6,800 left over. At $6,400 a month it also clears the inheritance figure I mentioned earlier, and the shares producing that income are still sitting there to hand down. This is a very simplified version of course but you get the idea.

On the surface the second column simply pays more, and that is true. But the number is not the reason I run it, because a bigger payout is easy to find and usually comes with something ugly attached.

The real difference is what each approach does to the portfolio in the years the market goes against you. That is where the two columns stop being close. Want a list of income funds rated by quality instead of headline yield? Paid subscribers get access to the High Yield ETF Database, 120 funds grouped by risk tier.

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Where The 4% Rule Breaks Down

A withdrawal is a fixed dollar amount, so the number of shares it consumes depends entirely on the share price that year.

Price sits in the denominator, which means a falling market automatically increases how many shares you have to sell. To raise $40,000 at $100 a share you sell 400 shares. To raise the same $40,000 at $50 a share you sell 800. Naturally, those extra shares do not come back when the market recovers. Once you sell it, they’re gone forever.

As we can see below, this is what a bad first year actually costs on that same $1,000,000 portfolio, using a starting price of $100 a share.

The bottom row is the one that made me stop defending the 4% rule. A retiree who withdrew through a 50% decline is permanently short $24,000 even after the market returns to where it started. Now of course, these sort of large declines have been historically rare.

The dividend investor sitting through that same decline sold nothing. Whether the markets up or down, a dividend investor would be able to collect their income regardless. Their share count on the other side is identical to what it was going in, and every one of those shares participates in the recovery.

The Income Can Actually Rise In A Selloff

There is a second advantage that most comparisons miss entirely. Option premium is priced off implied volatility, and volatility rises when markets fall. Simply put, more volatility will lead to more income.

More volatility = more option premium collected.

In February 2020 the VIX went from the low teens to above 80 in a matter of weeks. A fund writing calls into that environment was collecting several times the premium it had the month before. The share price still fell and I am not going to pretend it did not, but the income line moved up while the price line moved down.

For reference, the market has generally remained more volatile than average over the last three years. We can use this to our benefit.

A Closer Look At BALI

BALI holds a large cap U.S. equity portfolio and writes options against it to generate income. BlackRock lists the distribution rate at 7.68% as of March 2026, with a 0.35% expense ratio, roughly $1.25 billion in assets, and a beta near 0.84.

A beta below 1 means that the fund will demonstrate less volatility against the S&P 500.

Similarly, BALI has outperformed against peer dividend ETFs that take a more traditional approach, including , , and .

The 0.35% expense ratio is worth pointing out because it undercuts most of the covered call category. Plenty of competing income funds charge 0.55% to 0.99% for a similar structure, so BALI is not asking you to pay a premium for the payout.

The Same $1,000,000 Through A 30% Drawdown

During market declines, a dividend approach provides better flexibility. Having extra income and cash flow also means that investors can reinvest that capital at suppressed prices.

• 4% rule: selling shares gives you income needed but now you have fewer shares generating income on your behalf.

• BALI at 7.68%: pays roughly $76,800 with zero shares sold. Covers the full $70,000 budget with about $6,800 left over to reinvest at depressed prices.

One approach arrives at the bottom having permanently destroyed inventory while still failing to cover the budget. The other arrives with the share count fully intact and surplus cash to put back to work. Furthermore, the volatility that drove the decline is the same volatility feeding the option premium on the way down.

Position sizing still matters here. BALI would not be the entire portfolio in my own allocation, for reasons I get into in the risks below and in the $500K portfolio breakdown.

4 Rules I Follow For An Income Floor

1. Fixed expenses get covered by distributions, never by sales. Housing, insurance, food, and utilities come out of the income line. Discretionary spending can come from anywhere.

2. Keep twelve months of expenses in cash. This is what guarantees you are never a forced seller in a month the distribution comes in light. I know that some folks only suggest 3-6 months, but I like to have a bigger cushion so that I feel more secure.

3. Own the counter-cyclical income source, not only the highest yield. High yields can translate to NAV erosion over time.

4. Size the concentrated fund smaller than the diversified one. BALI carries a top ten worth about 34.5% of assets, so it gets the smaller weight for that reason alone.

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Risks

BALI launched in September 2023, so its entire history sits inside a rising market. Therefore, the fund hasn’t been thoroughly time tested yet. To be fair though, this was just meant to be an example. There are plenty of different high yield funds that are available to investors to choose from. There is no data showing how the strategy handles a prolonged decline.

With such a high yield like this that is mostly dependent on option premiums, the reality is that BALI may not always generate income that can support distributions.

When volatility collapses, premium shrinks and the monthly payment falls with it. Therefore the same property that helps during a crash works against you in a quiet, grinding bull market, and a retiree budgeting to the last dollar off a 7.68% figure is going to be disappointed in some months.

Concentration is the third issue. BALI’s largest positions are Nvidia, Apple, Microsoft, Amazon, and Alphabet, with the top ten running about 34.5% of assets. We’ve already seen how reactive the market has been to the unprecedented capex spending by the hyperscalers. Thankfully, the large option premiums collected allowed the fund to outperform the S&P 500 on a YTD basis.

Additionally, this is effectively a large cap core with an income overlay, so anyone already holding an S&P 500 index fund is doubling down on the same names rather than diversifying away from them.

Finally, an options overlay caps upside by construction. Every dollar of premium is a dollar you were paid to give away appreciation, so this fund is not going to keep pace with the index in a strong rally. I run every income fund through the screen in 5 Numbers That Tell You If A Stock Is Actually High Quality before it earns a position, and the same discipline applies here.

Takeaway

The 4% rule is a popular approach for retirement but I don’t believe it is as attractive as using dividends as a way to support your lifestyle expenses. However, the 4% rule is a but flawed because it was never built to answer how much income the portfolio can produce right now, which is the question a retiree is actually asking.

On a $1,000,000 portfolio the 4% rule produces $40,000 and asks you to sell shares to collect it, which still leaves this retiree $30,000 short of their own budget. BALI produces $76,800 on the same capital, pays it monthly, covers the entire budget with room to spare, and leaves the share count alone. That is 92% more income from identical money.

You give up upside to the option overlay, the payment moves around, the concentration is real, and the fund has not been tested through a downturn. But I would rather manage those tradeoffs than build a thirty year plan around selling shares into whatever the market hands me that year.

While I did eventually achieve that goal, life priorities shifted and I know try to focus on maximizing total returns. Therefore, I’ve been trying to refine my use of leverage and minimize exposure to the riskier funds.

It almost felt like free money. The basic concept is that you can borrow money at a 5% interest rate, but buy an asset that pays you 15%. That 10% spread is your profit, before including all interest paid. This concept has helped me expand my annual dividend income above the $44k mark.

I want to walk through why I no longer think about it that way, and how I have refined the approach for a market that is being pulled higher by AI and could just as easily slow down.

A small group of AI-driven names are carrying the index and the cost of borrowing is nowhere near where it sat a few years ago. In fact, I think that interest rates are likely to trend higher by the end of 2026.

All of the richest people in the world use leverage to their advantage and that’s why I think we should as well. What matters is how disciplined you are when using it, the asset you borrow against, and whether you have a plan for the day the market stops with your original plan. So I want to lay out the framework I use now, which is built around surviving a slowdown rather than squeezing the most out of a bull market.

I'm also going to use the Kurv Technology Titans Select ETF as the working example, because it fits this structure well. It pays a monthly dividend, it currently distributes at a rate that clears the borrowing cost several times over, and it keeps direct exposure to the technology names carrying the index.

$40,000 invested into KQQQ can effectively generate an income of $473 a month in passive dividend income. This unlocks the potential to implement your own income wheel and increase the pace of your wealth building.

As we can see below, KQQQ has outperformed other high yield funds I’ve talked about here in the past. I believe this outperformance can continue against funds like YMAX, TOPW, and even QQQI. While these funds aren’t the most efficient way to participate in a rally, they work as accompanying positions.

The Math Can Change

The appeal of margin for an income investor is pretty simple. You borrow at one rate, you buy something that yields a higher rate, and you keep the spread. This is basically the universal model for many businesses across the world: out-earn the cost of your borrowing. When the Fed raises interest rates, this directly impacts the cost of margin that brokerages offer you.

When margin cost 1.5% back in 2020, it was a lot easier to make this strategy work. Times are changing and we have to make sure we evolve the strategy as well to focus more on quality.

Here are some of the margin rates by brokerage. As we can see, the rate varies by how much capital you actually borrow. Robinhood still has some of the best rates out there, making it the best choice for investors looking to use this income spread method.

If you borrow at 5% to hold a 9% yield, you still clear a four point gross spread, and that's a workable trade. But if you're borrowing at 11.33% against that same 9% yield, you are paying more than two points a year for the privilege of holding the position, which frankly doesn’t make any sense.

While it is possible to use leverage to buy growth positions, I prefer to take this calculated approach of KNOWING the cash flow can support the paydown. When you buy a growth position, you are speculating and putting your capital at risk of declining further.

4 Important Rules For Margin

High-yield assets tend to be the most sensitive part of the market. BDCs carry credit risk, REITs carry rate and spread risk, and leveraged or option-based income funds tend to fall harder than the broad market when volatility spikes. These are exactly the positions a yield-focused investor is most likely to borrow against.

When a slowdown hits, three things happen at the same time and they compound each other.

1. The value of your collateral drops, which shrinks your equity cushion.

2. The distributions you were counting on to service the loan can get cut, because the same stress that pushes prices down also pressures the payouts.

3. If the drawdown runs deep enough, your broker issues a margin call and forces you to sell into the decline at the worst possible prices.

That last part is what turns a bad year into a permanent loss, which is why I follow a specific set of rules to ensure that I am never at the risk of a margin call. The leverage that amplified your income on the way up amplifies your losses on the way down, and it does it at the exact moment you can least afford it.

My collateral is the stable, lower-volatility part of the portfolio. Quality dividend growers and broad index exposure that hold their value far better in a drawdown, and that keeps my equity cushion intact when it matters most. So while I talk about individual companies, I hold plenty of ETFs like QQQM, CGDV, and VTI across different accounts. The rules I try to implement is as follows:

The main goal is to limit exposure to a margin call. I never want to be forced to pay down these loans before I want too. A margin call fires when your equity falls below the maintenance requirement as a share of the position value. Working that backward gives you the exact drawdown each utilization level can absorb, and the answer depends heavily on what you pledged in the first place. Here’s a helpful guide that can serve as a reference point:

These are only estimates and can vary based on brokerages, but it an serve as a basic guideline to follow. Like I said, I personally try to keep my margin use below the 20% use of my total portfolio value. This is just my own personal safety preference but your own risk tolerance may vary. At 30% utilization against stable collateral, you can absorb a 57% decline before anything gets forced. Just to be clear, different funds will have different margin maintenance requirements. Therefore, it is important to pay attention to what your broker lists for each security.

If you want a filter for what belongs in that stable collateral bucket, I went through the specific metrics I screen for in 5 Numbers That Tell You If A Stock Is Actually High Quality. The same fundamentals that make a business worth owning are the ones that keep its share price from collapsing when the market turns, which is exactly what you need from collateral.

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KQQQ Is An Efficient Fund

You need a distribution high enough to clear the interest with real room to spare, a payment schedule that lines up with how margin interest accrues, and an asset you’re willing to hold through a rough stretch. The Kurv Technology Titans Select ETF is the position I would use for this, and the distribution rate and strategy are the reasons why.

KQQQ is classified as low risk within the High Yield Database. Paid subs get access to the database full of different funds. Let’s dive into why KQQQ is generally considered to be low-risk.

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I have been watching the semiconductor rally with a fair amount of skepticism lately. Chips have led the market for most of 2026 on the back of AI demand, and for a long time the earnings backed up the move. Over the past few weeks, though, the price action has started to pull away from the fundamentals, and in my experience that gap is worth paying attention to.

I was quick lucky with the timing but I initiated a buy alert on at the market bottom. Since then, CHPY has outperformed the S&P 500 at a wide margin. As we can see below, the semiconductor sector has crushed the rest of the market.

However, I believe we are at the beginning stages of a market shift. Money is still pouring into the sector, valuations are stretched, and the group is priced for everything to go right. At the same time, the stocks have started to shrug off strong earnings, which is usually one of the first cracks to appear in a crowded trade.

ASML Holding reported strong earnings, but the stock sold off.

Broadcom crushed their earnings, but the stock sold off.

Taiwan Semiconductor Manufacturing delivered strong earnings, but the stock sold off.

See the trend?

When capital eventually leaves a trade like this, it tends to rotate rather than exit the market entirely, and it usually favors large, profitable businesses that were ignored during the run. A lot of those names are trading at valuations we have not seen in a while.

👉 This is the basis around my latest buy alert.

This piece walks through three things. First, the fund flow and price data that tell me the chip trade is topping. Second, where that capital is most likely to rotate. And third, the two funds I would pair together to collect income while positioning for it.

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The Fund Flow Data

Here is the data that got my attention, with the sources linked so you can check it yourself. In April, money was flowing into US semiconductor ETFs at a normal pace. Through late June, roughly $12 billion poured in over a single month, a 1,200% jump from the April rate.

The single-day numbers are the part that stands out most. A haul of $5.4 billion in one session, the largest for that fund since 2001, is the mark of a crowd rushing the same door at once rather than steady, patient accumulation.

The volatility says the same thing. Thirty-four separate days of 4%-plus moves in a single year is the churn of a crowded position changing hands, which is why a BTIG analyst flagged it as a record worth watching.

As we can see below, the market has consistently provide more volatility than the average over the last three year period. Investors are simply CHASING returns at this point.

Here is the part worth sitting with. Buying like this clusters at moments of peak enthusiasm, and large inflows at the top have historically been a contrarian signal that the easy part of the trade is already priced in. Pair that with a market that has stopped rewarding strong chip earnings, and you have the profile of a top forming. It does not guarantee a crash, but the easy money in chips has almost certainly been made.

Where The Capital Rotates Next

When money leaves an overheated group, it rotates toward quality that got left behind. Right now, two of the largest names in the market fit that description, and their valuations have compressed while everyone focused on chips.

The first trades at a forward P/E of roughly 18. That is below its own ten-year average and about 35% under the average technology stock. For a business with its margins and cash generation, that is a price the market usually only offers during a scare.

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That is the setup behind the REIT I want to walk through today. It pays monthly. It yields roughly 5.1% at the current price. And it has raised that payout for 32 straight years, which is a streak almost nothing else in the income world can match. Over the last twelve months, the share price is up close to 10%, and total return with distributions included lands north of 16%.

Here is what makes this one worth a fresh look right now. For most of its history, this company was a retail landlord. It leased freestanding buildings to businesses that stay busy in any economy, like drug stores, dollar stores, and grocery chains. That foundation still anchors nearly 80% of the portfolio. But over the last few quarters, management has started pushing into a market that could reshape the entire growth story.

The company is moving into data centers. It just formed a joint venture built on seed assets worth more than $6 billion, and it is positioning that portfolio to serve the exact tenants pouring capital into AI infrastructure. This is a landlord that spent decades collecting rent from convenience stores now setting itself up to collect rent from the facilities that power artificial intelligence. The total addressable market management is now chasing is valued at around $14 trillion.

That is a different company than the one income investors got comfortable with. Higher interest rates have masked these shifts, which is exactly why I think the setup is interesting. Below, I break down the full thesis: the specific data center deals, the dividend math, the valuation gap I believe the market is missing, and where I personally come down on it.

3 Ways To Get Paid By Real Estate

Before I go further, it helps to step back and look at the whole menu. There are really three ways to turn real estate into income, and each one carries a different set of tradeoffs. Knowing where a given pick sits on that menu is half the work.

The first way is to own physical property directly. You buy the building, you find the tenants, and you keep whatever the rent throws off after expenses. The upside is control. The downside is that your money is locked up, the work never really stops, and your outcome rides on one or two buildings in one or two zip codes.

The second way is to buy a broad real estate index fund. Something like the Vanguard Real Estate ETF hands you the entire sector in a single ticker. That solves the diversification problem, but it also means you inherit every weak corner of the sector alongside the strong ones. The income tends to run lower and less predictable than what a focused payer delivers.

The third way is to own individual net-lease REITs built around income. These companies lease buildings to tenants on long contracts, push most of the operating costs onto those tenants, and send the rent back to shareholders. Done well, this route gives you monthly or quarterly checks, exposure to hundreds or thousands of properties, and none of the landlord headaches. The REIT I am breaking down today sits squarely in this third bucket, and I think it is one of the more interesting names in it right now.

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Buy an S&P 500 index fund and most people believe they now own a slice of 500 different companies, spread across every sector of the economy. That belief was roughly true in 1990. It is not true today. The top 10 holdings now make up around 43% of the index, the highest concentration ever recorded, and most of those 10 names sit in the same sector chasing the same AI theme.

Run the numbers further out and it gets more extreme. The top 25 names account for over half the index. NVIDIA alone is close to 8% of the entire S&P 500. If you own a plain index fund, nearly half your money already rides on a small group of companies that all rise and fall together when sentiment on one theme shifts.

This didn’t happen overnight. In 1990, the 10 largest companies in the index, names like IBM, Exxon, and General Electric, made up about 19% of it, spread across totally unrelated industries. That balance held for two decades before the platform economy and now the AI buildout concentrated the index into a small number of correlated mega-caps, nearly doubling in the last ten years alone.

The index is still a reasonable investment. But the word "diversified" stopped accurately describing it a while ago, and pretending otherwise is how people end up more exposed to a handful of stocks than they realize.

Concentration by Accident vs. on Purpose

Once you accept that the index is already concentrated, the real question changes. It’s no longer “should I diversify or concentrate.”

You’re concentrated either way the moment you buy the index. The actual question is whether that concentration was chosen on purpose or assigned to you by a formula that has nothing to do with quality.

Market-cap weighting doesn’t select for the best companies. It selects for the biggest ones, and being the biggest isn’t the same thing as being the best risk-adjusted holding. How else do we explain why Tesla is a large holding in the S&P 500?

Worse, there’s a feedback loop built into it: money flowing into index funds automatically buys more of whatever is already the largest, which pushes those names higher, which makes them an even bigger share of the index, regardless of whether their fundamentals still justify the weight.

That loop is exactly why I don’t just buy the index and call it a day. I’d rather own a smaller set of large-cap companies, selected for specific, measurable traits, than own whatever the market happened to bid up the most this cycle. Same size companies. Different reason for owning them.

👉 This is how you outperform the market.

Large caps still have the balance sheets, the cash flow, and the staying power that make them the right foundation for most portfolios. The fix here has nothing to do with abandoning them for small caps or exotic sectors. It’s about choosing which large-caps on purpose instead of letting a formula choose for you.

What “Risk-Adjusted” Actually Means

Two stocks can both return 15% in a year and still be completely different investments. If one of them got there by swinging up and down 40% along the way and the other climbed in a straight line, they are not equally good holdings, even though the return on paper looks identical. Risk-adjusted return measures how much return you got for how much volatility you had to sit through to get it, not just the return number by itself.

Academic research on this goes back decades, and one finding shows up over and over: less volatile stocks have historically delivered better risk-adjusted returns than highly volatile ones.

In one long-running global study, a low-volatility approach posted the highest Sharpe ratio of any major factor tested, meaning the smoothest return per unit of risk taken, while a quality-focused approach (profitable companies with strong balance sheets and low debt) showed a meaningfully smaller maximum drawdown than the broader market during selloffs.

5 Traits To Look For

Quality comes down to a short list of numbers sitting in every company’s financial statements, free for anyone to pull up. Here’s what I actually check.

Factor strategies go through real stretches of underperformance, sometimes for years, and low volatility in particular can lag hard during a raging bull market concentrated in a few names, which is exactly the environment we've been in. This is a long-term tilt, not a way to beat the index every single quarter.

Want to make it easy? Unlock access to CainAI — Ask for the companies that have healthy metrics! Plug in the latest earnings data and analyze a company’s strength in seconds.

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2 Examples: Reading the Checklist

Both of these sit in the S&P 500’s top holdings. Both get lumped together as “mega-cap tech.” Run the actual checklist on each one and you get two completely different quality profiles, which is the whole point: the index treats them as interchangeable weight.

Meta is close to a textbook example of the checklist working the way it’s supposed to. Roughly 82% gross margin and 41% operating margin means the advertising business keeps most of every incremental sales dollar. ROE near 30% and debt-to-equity near 0.3 means it’s generating that profit without leaning on borrowed money. Free cash flow around $46-48 billion over the trailing year means the profit on paper is showing up as real spendable cash, not just an accounting number.

Amazon looks weaker on the surface and is actually the more interesting read once you open the hood. The company-wide operating margin of ~13% just hit a record high, and it’s a blended number covering three very different businesses. AWS alone runs at close to a 38% operating margin, in the same neighborhood as Meta’s entire company, and just posted its fastest growth in 15 quarters on a $150 billion annualized revenue base. The advertising segment is smaller but growing 24% a year at a similarly high margin. Retail and logistics are the low-margin piece dragging the blended number down, and they’re also the piece funding the buildout of the other two.

👉Here’s 5 companies that fit the specific growth profile for the next twelve months!

You’re Already Concentrated. Choose It.

The comfortable story about index investing is that it spreads your risk across the whole market. At 43% concentration in 10 names, that story is no longer accurate, whether or not the fund’s marketing still says so. You are already making a concentrated bet. The only open question is who’s making the selection, a market-cap formula with a feedback loop built into it, or you, using criteria that actually measure quality.

Know what you actually own, and consider putting new capital toward large-cap names chosen for risk-adjusted strength instead of assuming size alone did the work. The index will keep concentrating as long as the formula rewards size. Your own selections don’t have to.

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His number was $300,000. This article works the same math on $500,000, but the framework does not care about the size of the account. It cares about the percentage, the fund selection behind it, and the tax treatment on top. Scale it up or down and the logic holds. My answer was to basically compile those funds into three different positions, which I will share with you here.

That is exactly the kind of question a single article can only answer in general terms. Your number, your tax bracket, your timeline, and your other holdings change the specific allocation. If you want the version built around your actual account instead of a hypothetical $500,000, that is what the calls are for.

I am at max capacity for the next few weeks, but I can complete written portfolio reports for your holdings.

Book A Written Portfolio Report

The 4% Rule Was Never Built for This

Most retirement math starts with the 4% rule, and most retirement math disappoints people who actually run the numbers. Apply it to $500,000 and you get $20,000 a year. That covers property tax and groceries in most parts of the country. It does not cover a retirement.

The 4% rule was built to answer one question: how much can you withdraw without running out of money in thirty years. It was never built to answer the question retirees actually ask, which is how much income can this portfolio produce right now. Although there are a lot of great resources out there to make you a better investor, some people don’t want to actively manage positions.

20 Financial Terms That Make You A Better Investor →

The income-focused answer looks completely different. Instead of slowly selling shares and hoping the math holds for three decades, you build a portfolio engineered to pay you in cash, every month, without touching the principal. The target shifts from a withdrawal percentage to a yield percentage, and $500,000 yielding a blended 10% pays close to $50,000 a year without selling a single share.

For instance, I collected $3,628 in dividends in June. Only a third of that income is actually taxable.

Three Funds, Three Different Tax Advantages

Every fund in this engine earns its spot for two reasons, not one. The yield gets you interested, but the tax treatment is why it stays in the portfolio. Ordinary income from a job gets taxed at your full marginal rate plus payroll tax. Almost nothing in this engine gets taxed that way, and that difference is worth thousands of dollars a year on its own.

Fund #1 has outperformed the S&P 500 and the Nasdaq-100, all while offering an average yield of 7%.

Fund #2 offers 100% return of capital distributions, meaning tax-deferred.

Fund #3 takes a value approach and allows investors to get a double-digit yield.

Want a list of funds rated by quality? Paid subscribers get access to the high yield database.

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How $500,000 Divides Across the Three

STK carries the smallest weight on purpose, it’s there for growth, not the paycheck. SPYI and ICAP carry the bulk of the income. This split targets a blended yield near 10%.

The 10% and $50,000 used earlier in this article were round numbers for the general framework. Run the actual math on these three specific funds today and the blend comes in at 10.1%, just over $50,600 a year. Close to the round example this time, but that will not always be the case, which is exactly why yields need to be checked at the time you actually invest, not copied from an article.

Every yield in that table moves with the market. Check the current numbers in the database before you put real money behind this. Scale the same 20/40/40 split to your own number and the math holds the same way it held for $300,000.

Columbia Seligman Premium Technology Growth Fund

• Yield~7%

• Expense Ratio:~1.1%

• Structure: Closed-End Fund

What it holds. Around 60 to 70 US technology names, picked stock by stock rather than tracking an index. Recent top contributors to performance include Bloom Energy, Lam Research, Broadcom, NVIDIA, and Western Digital, spanning chips, semiconductor equipment, storage, and AI infrastructure. This has been actively managed by Columbia’s tech team since 2009.

The strategy. STK writes rules-based covered calls on the Nasdaq-100 index against a portion of the portfolio, not against the individual stocks it holds. It writes more calls when volatility, measured by the VXN index, runs high, and fewer when it’s low. On top of that, a managed distribution policy targets 9.25% of the fund’s original $20 IPO price every year, regardless of where the share price sits today.

Tax efficiency. This year’s distributions are classified 100% long-term capital gains, not ordinary income. That means they’re taxed at the lower capital gains rate instead of your income bracket, and for some retirees that rate can drop as low as 0% depending on total taxable income.

NEOS S&P 500 High Income ETF

• Yield~11.8%

• Expense Ratio: 0.68%

• Structure: ETF

What it holds. Roughly 500 stocks replicating the S&P 500 itself. Top weights are NVIDIA, Apple, and Microsoft. If you’ve seen the S&P’s holdings, you’ve seen this fund’s holdings, there’s nothing exotic in the equity sleeve. Launched in 2022, it’s grown into one of the larger option-income ETFs on the market.

The strategy. SPYI sells, and sometimes buys back, call options on the S&P 500 index itself, not on the individual stocks it holds. That single structural choice is what drives the tax treatment below. The mix of sold and purchased calls is designed to keep some upside alive instead of capping it completely, which is what separates it from a plain covered call fund.

Tax efficiency. Index options like these are Section 1256 contracts by law: a 60% long-term / 40% short-term blend no matter how long you personally hold the fund. Part of the monthly payout is also classified as return of capital, which defers the tax bill further instead of taxing it as income the year you receive it.

Infrastructure Capital Equity Income Fund ETF

• Yield: ~10%

• Expense Ratio: ~2.5%

• Structure: ETF

What it holds. Around 200 dividend-paying US equities. Recent top positions include Amazon, Global Net Lease, McDonald’s, Freeport-McMoRan, and Apollo Global Management, a genuine mix of large caps, REITs, financials, and materials rather than a single-sector bet. Run by Infrastructure Capital Advisors since 2021.

The strategy. Bottom-up stock picking aimed at growth at a reasonable price, layered with a selective covered call overlay on individual positions and modest leverage, roughly 15 to 30%, to push the yield higher than the underlying dividends alone would produce.

Tax efficiency. As an ETF, its in-kind creation and redemption process limits the capital gains the fund has to distribute in the first place, compared to a mutual fund that’s forced to sell holdings to meet redemptions. The honest tradeoff is the fee: the expense ratio runs close to 2.5%, high for the category, the cost of the active management and the monthly check.

Your Number Isn’t $500,000

The subscriber who started this article had $300,000 and a life in Mexico that cost $2,500 a month. Run his number through this same framework and he lands close to $30,000 a year, more than enough to cover it, without selling a single share. The dollar figure changes. The three-part process doesn’t: pick the percentage you need, choose funds where the tax treatment does real work, and check that the yield is coming from somewhere real before you commit to it.

That process is also the limit of what one article can do for you. It can hand you the framework and three funds that pass the test. It cannot know your tax bracket, your state, your timeline, or what else sits in your portfolio already, and those are exactly the variables that turn a general framework into a specific allocation.

I am at capacity for calls the next few weeks, but a written portfolio report gets you the version built around your actual account instead of a hypothetical $500,000.

Growing up middle class, I had to do things that were efficient. I picked the cheapest college, picked a major based on how much money I could make, I had to buy a Honda or Toyota because of reliability, I chose food from restaurants that had the most value, and I played video games because it was cheap compared to other hobbies.

I was repeating the cycle of the poor and I’m sure that you have done the same in some capacity. How you talk is one of the biggest indicators of how you view money. You have likely heard these sentences. It’s the language of the poor that keeps you aligned with the perspective that money is limited.

“Everything is so expensive.”

“The system is rigged against people like me.”

“Investing is just gambling for people with money to lose.”

“I’ll start saving when I earn more.”

“Must be nice.”

“I work hard, I deserve to treat myself.”

“I’ll never be able to retire anyway.”

I grew up listening to most of the folks around talking like this. As you gain a little more life experience out of your circle, you learn that money isn’t so limited for everyone. While you may be out there complaining about the price of eggs, some people aren’t.

I was fortunate to learn this from my first corporate job. I worked with sales people that brought in $50k a month in commissions. So naturally, these people owned a lot of nice shit. Nice cars, watches, and frequent travel —all of the cliche materialistic stuff. They spoke about life in a way that was so optimistic and it stood out to me. Meanwhile I viewed life through a negative lens at the time — one that believed things and opportunities were limited. My coworkers had the option to live a life that wasn’t focused around efficiency and that fascinated me at the time.

Here is the uncomfortable part, and I am saying it because nobody profits from telling you. The payment vocabulary was installed in you on purpose. Every financed phone, every 72-month car loan, every buy-now-pay-later checkout is an industry translating your future income into their present income.

👉 Your debt payments are someone else’s passive income.

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Scarcity Is False: Become An Owner

The language of the poor is built on one false belief: money is scarce. It feels scarce because the only money most people ever see arrives through a paycheck, rationed out twice a month by someone else. But zoom out. Companies paid out hundreds of billions of dollars in dividends last year alone. Cash is everywhere. It just flows to owners, and it always has since the beginning of time.

Money earned with time has a hard ceiling.

You have one body, limited hours, and finite energy, and every dollar of salary spends a piece of all three.

Money earned with money has no ceiling at all.

A dollar you invest works 24 hours a day, never gets tired, never calls in sick, and never asks for a weekend off. It even works while you are at your job earning more dollars to send in behind it.

Dividends are the simplest bridge between those two worlds. Buy a share of a quality payer once and it pays you again and again, no timing, no charts, no skill required after the purchase. The first deposit hits your account and something permanent clicks. Your money just earned money without you. That single moment kills the scarcity belief faster than any book ever could.

And you do not need to be rich to trigger it. You need a first position and a plan, and I already wrote that plan down to the exact dollar.

Investing With Scraps Is The Language of the Poor

Here is the habit that keeps most people on the wrong side of the divide, and almost nobody talks about it.

They treat investing as a leftover.

Whatever survives the month after the bills, the subscriptions, and the weekend gets invested, maybe. Some months that number is $50. Most months it is zero. Investing sits last in line for their money, and then they wonder why it never grows.

The disappointment arrives right on schedule. Eight months of scraps produces a tiny balance, the tiny balance feels like proof that investing does not work for people like them, and the search for a shortcut begins. Sports betting. Day trading. Whatever crypto-coin is loud that week. A parlay can hit tonight, and that speed feels merciful compared to the truth nobody wants to hear: $500 a month into boring ETFs for five years will change your life, and it will be uneventful the entire time.

The fix is a one-line change in the order of operations. The language of the poor invests what is left after spending.

The language of the rich spends what is left after investing.

Pay the portfolio first, on a fixed date, like a bill with your name on it.

The other reason people stall at the starting line is simpler: they have no idea what to buy, and the fear of picking wrong feels heavier than the cost of never starting. So I removed that excuse. Free subscribers get my beginner ETF list, the handful of long-term funds I would tell any first-timer to build those sixty deposits around. No cost, no catch, one click below.

👉 Free Subscribers Get The Beginner ETF List

The long-term ETFs I would hand any first-time investor, with what each one does and why it earns a spot. Subscribe free and it lands in your inbox.

The Milestones That Rewire You

Nobody quits their job at milestone one, and nobody needs to. Each milestone exists to change your vocabulary a little more, and each one arrives faster than the last because reinvested dividends buy more shares that pay more dividends. The snowball works even when you stop pushing.

The gap between milestones shrinks as you go. Climbing from $0 to $100 per month can take longer than climbing from $500 to $1,000, because by then the portfolio itself contributes alongside you. You gain a silent partner who never calls in sick and never asks for a day off.

A portfolio paying $500 per month today, growing payouts at 8% with reinvestment, roughly doubles its income every six to seven years without one new dollar added. Add fresh capital and the timeline compresses hard. Time in the snowball is the only input you cannot buy back later, which makes starting small this month worth more than starting big next year.

Tracking is what keeps the new vocabulary alive during the boring stretch. Watching forward income tick up every month does for investors what a scale does for dieters. I built Yieldly for exactly this job, and paid subscribers use it to watch their crossover date pull closer in real time.

👉 Yieldly Estimates That I Will Collect More Than $44k In Passive Dividend Income.

The Three-Layer Income Engine

The engine has three layers and each one solves a different problem. Layer one is the foundation: pure growth. This layer holds:

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I went down a rabbit hole on this and it turns out it is not a fluke. AI visibility trackers show Reddit getting cited in AI-generated answers roughly three times as often as Wikipedia.

Three times.

Wikipedia has been the internet’s fact-checking backbone for two decades, and Reddit just lapped it because AI models want real human opinions, not polished encyclopedia entries.

As an investor, that stopped me in my tracks. Reddit stumbled into a second business hiding inside the first one. Ads still pay the bills today, but the data licensing angle is what made me actually want to dig into this stock.

How Reddit Makes Money

Reddit makes money two ways.

Advertising is the larger piece and it behaves like a normal internet ad business, tied to impressions, pricing, and how well the company can target intent.

Data licensing is the smaller piece and it behaves like a royalty stream, where AI companies pay Reddit for access to its corpus of human conversation.

The first business funds today. The second business is what the market is trying to price for tomorrow.

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Q1 2026 Earnings

Reddit’s daily active unique users grew 17% year over year to 126.8 million in the first quarter of 2026. Revenue climbed 69% year over year to $66M, with net income of $204M, representing a 31% net margin. That is extremely impressive numbers here, considering most people don’t even know how they make money.

Diluted EPS landed at $1.01, which analysts pegged as a beat of somewhere between 63% and 74% depending on which consensus estimate you use. I care less about the exact beat percentage and more about the trend line underneath it. This marks the third straight quarter of meaningful outperformance, and management has now delivered seven consecutive quarters of revenue growth above 60%.

Guidance for the second quarter calls for revenue between $715M and $725M, with adjusted EBITDA between $285M and $295M. Both figures sit ahead of where analysts had modeled the quarter before the print.

Valuation

As of this week, RDDT trades around $200 per share, putting the market cap at roughly $37.5B on about 192.5 million shares outstanding. The stock is down meaningfully from its 52-week high near 283 dollars and well above its 52-week low near 119 dollars, which tells you plainly how volatile the sentiment swings have been on this name over the past year.

A PEG ratio under 1 usually signals that growth is undervalued relative to the multiple being paid, and that is the core bull argument here. A 37 times forward earnings multiple looks expensive in isolation, but next to a company still compounding revenue near 70% a year and expanding margins at the same time, it reads differently.

Free cash flow over the trailing twelve months sits around $869M against essentially no debt, which gives management room to keep reinvesting without touching the balance sheet.

Wall Street’s average price target sits somewhere between 225 and 235 dollars depending on the source, which implies meaningful upside from current levels. The consensus rating leans Buy.

But I want to flag something that does not show up in a single headline number: the spread between the most bearish and most bullish price targets on this stock is one of the widest in large cap internet, with bear cases near 75 dollars sitting next to bull cases above 300 dollars.

The AI Licensing Business

This is the part of the thesis that gets the most hype and the least clarity, so let me lay out what is actually known. Reddit’s existing licensing agreements with Google and OpenAI together generate somewhere around $130M a year, which is roughly 10% of total revenue.

1. The Google deal was struck near 60 million dollars annually

2. OpenAI deal near 70 million dollars annually.

Those contracts come up for renewal in 2027, and management has been explicit on earnings calls about wanting to move away from flat annual fees toward usage-based, dynamic pricing, where Reddit gets paid more as its data proves more essential to the answers a model gives. CEO Steve Huffman has argued that every variable has changed since the original deals were signed.

International ARPU Gap

Reddit’s user base is now majority international, but its revenue is not. International daily actives grew 26% year over year to 73 million in Q1, while international revenue jumped nearly 75% to 138 million dollars on the back of international ARPU rising 51% to 2.02 dollars. Compare that to US ARPU of 9.63 dollars in the same quarter and the gap becomes the whole story.

Management has been explicit that international ARPU does not need to match US levels to matter. It just needs to keep closing the gap. Live machine translation now covers 30 languages, and Huffman has pointed to markets like the UK, Germany, and France as places where Reddit is growing daily actives faster than the overall platform average. This is the slowest-moving catalyst on this list, but it is also the one with the longest runway.

Search And Retention

A large share of Reddit’s traffic still arrives through Google search, which is both an opportunity and the risk I flag later in this piece. Reddit’s response has been to build its own on-platform search and answer tools, aiming to keep users inside Reddit for the follow-up questions that used to send them back to Google. Every query that resolves on Reddit instead of bouncing to a search engine is a query Reddit can eventually monetize directly, whether through ads or through a future AI product of its own.

My buddy also brought up a good point. can easily copy Reddit’s ecosystem at some point.

2027 Licensing Renewal

I covered the mechanics of this earlier, but it belongs in the catalyst list because of the scale of the potential outcome. The existing Google and OpenAI deals generate roughly 130 million dollars a year combined today. Management is negotiating for usage-based, dynamic pricing on the 2027 renewal, and at least one sell side estimate has modeled this line reaching close to 400 million dollars annually if the renegotiation lands well.

Stack all four catalysts together and the pattern becomes clear. Three of them, international ARPU, ad stack efficiency, and search retention, are already showing up in the reported numbers every quarter. The fourth, the licensing renewal, is a binary event still more than a year away. That is why I keep coming back to the same conclusion: the first three justify the growth investors are already paying for, and the fourth is the one that could justify the multiple.

Risks

Where I Land

I am not going to hand you a price target and call it a day. What I will say is this. Reddit has become one of the few internet businesses that gets paid twice for the same content, once through ads and once through licensing. That is a rare setup, and it is the reason I keep this name on my watch list even at a premium multiple.

The next 18 months come down to two things. Does advertising keep compounding while Meta’s competing product ramps up, and does the 2027 licensing renewal actually reprice the data business the way management is signaling. I will be tracking both closely in future updates, alongside how this fits next to the income names I already hold.

This is not investment advice. I hold positions in various dividend and income names discussed elsewhere on Dividendomics, and my views on RDDT are observational, not a recommendation to buy or sell. Do your own research and size any position to your own risk tolerance.

Funding The Position With The Wheel

RDDT does not pay a dividend, so it will never sit in my portfolio the way a covered call ETF or an MLP does. But that does not mean my income strategy has nothing to do with it. Here is how I think about using the wheel to build a position in a name like this without writing a fresh check.

The wheel works in two stages. First, I sell cash-secured puts on RDDT at a strike below the current price, funded with cash that is already sitting in the account from dividend and distribution income. If the stock stays above my strike, I keep the premium and repeat the process. If it drops below my strike, I get assigned shares at an effective cost basis lower than where the stock traded when I sold the put, since the premium collected reduces my basis.

Second, once I own shares, I start selling covered calls against the position at strikes above my cost basis. That generates ongoing premium income on top of any price appreciation, and it turns a non-dividend payer into something that behaves a lot more like the income names I already track.

The part I want to be direct about: this only works with cash I am comfortable losing to assignment, and RDDT's volatility cuts both ways. Higher volatility means richer premiums on both the puts and the calls, but it also means bigger swings against me if I get the strike wrong. I fund this approach with income already generated elsewhere in the portfolio, not with new capital, which is the same rotation logic I laid out in my last income report.

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Frequently Asked Questions

Is Reddit stock a buy in 2026?

Wall Street consensus currently leans Buy with an average price target above the current share price, though the range of individual targets is unusually wide. The decision depends heavily on how you weigh the 2027 AI licensing renewal against the current premium valuation.

How much money does Reddit make from AI companies?

Reddit’s existing licensing agreements with Google and OpenAI generate roughly 130 million dollars combined per year, close to 10% of total revenue. Both contracts are up for renewal in 2027.

Why do AI models cite Reddit so often?

Reddit’s threads capture authentic human conversation and firsthand experience in a way polished articles do not, which makes the content valuable for training and for grounding AI answers in real opinions.

What is Reddit’s biggest risk as a stock?

Competition from Meta’s new forum app and Reddit’s continued dependence on Google search traffic are the two risks most likely to show up in engagement numbers before they show up in earnings.

👉 Return Of Capital.

Two funds are at the center of this. One is already in my portfolio, and I gave it a buy rating months ago. Since that post, the position is now up 14%. With the estimated growth of the AI Data Center market, I think this first position will continue to do very well.

Since its inception, fund #1 has outperformed the S&P 500 index by a wide margin. However, the fund’s history here is VERY short so keep that in mind.

The second fund is brand new, and I am watching it closely before deciding whether to add it. This second fund offers a 13.5% dividend yield, while issuing those payouts on a monthly basis.

Today I want to walk through how both of them actually work, why the IRS treats their payouts differently than a normal dividend, and why that distinction is worth understanding before you chase any high yield fund.

• Both funds classify most of their monthly distributions as return of capital, not ordinary income.

• One fund has years of real distribution history behind it, and it is the one I actually own. The other launched in May 2026 and was engineered for this outcome from day one, but I have not added it yet.

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Return Of Capital

Return of capital is a tax classification and it get’s a bad rep. Traditionally, return of capital is usually defined as when a fund fails to produce enough income to support dividends, so it pays you that dividend by returning your capital back to you.

A fund can generate plenty of real economic income and still have some or all of a distribution classified as ROC, because of how that income is treated for tax purposes rather than how much of it actually exists. Depreciation on physical assets, the tax treatment of certain option contracts, and timing differences between when income is earned and when it is recognized for tax reporting can all push a distribution into ROC territory even when the fund’s underlying earnings fully support the payout.

When any portion of a distribution gets classified this way, the IRS treats it as a return of your own invested capital instead of taxable income, and lowers your cost basis instead of taxing you on it right away.

Here is the simple version. You buy shares at $10. The fund pays you $1 classified as ROC. Your cost basis drops to $9. You owe nothing on that dollar today. When you eventually sell, your gain gets calculated against that lower basis, which means the tax bill shows up later, and potentially at the more favorable long term capital gains rate instead of your ordinary income rate.

That is the entire mechanism. Cash in your account today, tax bill deferred, sometimes for years, sometimes permanently if the shares get passed to an heir and receive a stepped up basis at death.

The part most people get wrong is assuming ROC means the fund is quietly handing back your own money because it has nothing else to pay you with. Sometimes that is true, and it is worth checking. But in the two funds I am covering today, the ROC comes from the structure itself, not from a shortfall.

I am going to name both funds below and break down exactly how each one earns its ROC treatment. Paid subscribers get the tickers, my actual entry price in the fund I own, and the specific reason I have not added the second one yet.

Fund #1: The One With A Track Record

NEOS MLP & Energy Infrastructure High Income ETF holds a portfolio of North American MLPs and energy infrastructure names, layered with a call option overlay to generate monthly income. The ROC treatment here is not just an options trick. MLPs generate return of capital naturally, through depreciation on the underlying pipeline and infrastructure assets, which shields a large portion of the cash flow from being classified as taxable income in the first place. The options overlay adds another layer of income on top, and much of that gets swept into the same ROC treatment.

The fund launched December 17, 2025, and has already grown to roughly $682 million in net assets. Its current distribution rate sits at 14.7%, but its 30-day SEC yield is only 3.44%. That gap is worth sitting with for a moment. The distribution rate measures what the fund is actually paying out. The SEC yield measures income the underlying holdings generate on their own.

The wide spread between the two tells you plainly that most of what you’re collecting each month comes from option premium and return of capital working together, not from traditional investment income. That is the entire point of the structure and should be read as a design feature, not a red flag.

Management fee runs at 0.68%. The fund does not stop at income either, NAV total return sits at 18.14% year to date, meaning holders have collected the monthly payout while also watching the underlying portfolio appreciate.

Here is what you actually own inside the fund. The portfolio is concentrated in large, well known midstream operators rather than smaller, riskier names:

Those ten names alone make up more than 60% of the fund. This is a concentrated bet on the largest pipeline, storage, and LNG operators in North America, not a diversified basket of small midstream names, and most of these companies have their own long histories of stable, contracted cash flow. That concentration is exactly why the depreciation driven ROC treatment works so reliably here, these are capital intensive, asset heavy businesses by design.

I gave this fund a buy rating earlier this year, and the thesis has only gotten stronger since. Energy infrastructure has quietly been one of the best performing sectors in 2026, and the underlying demand story, more natural gas transport, more data center power demand, is not going away anytime soon.

Fund #2: The New One

JPMorgan Nasdaq Equity Premium Yield ETF launched March 18, 2026, and unlike a lot of income ETFs that stumble into ROC treatment, this one was engineered for it from the start.

The fund invests at least 80% of its assets in Nasdaq listed equities, layering an options overlay on top to generate current yield while still aiming to participate in capital appreciation.

That structural intent, income plus upside rather than income instead of upside, is the same design philosophy behind JPMorgan’s better known JEPI and JEPQ funds. The difference that matters for this article is the tax treatment, JPMorgan built ROCQ specifically to push distributions into return of capital rather than ordinary income.

The fund is genuinely concentrated. It holds 100 securities total, but the top 10 positions alone account for 54.9% of assets. Here is what sits at the top:

By sector, this is an unmistakably tech heavy fund: roughly 58% Technology, 14% Communication Services, and 11.5% Consumer Cyclical, with everything else a minor sliver. If you already own a broad market dividend or covered call fund, this is a concentrated bet on the same mega cap names driving the Nasdaq, wrapped in a structure designed to defer your tax bill on the income it throws off, not a true diversifier. Management fee runs at 0.35%, notably cheaper than MLPI.

Interestingly, ROCQ has outperformed and since inception, but the history is short.

The final tax character for the year will not be confirmed until early 2027, when the fund reports to shareholders. Everything about its ROC treatment right now is a design intention, not yet a proven multi year track record the way MLPI has.

I like what this fund is trying to do, but I have not started a position yet. I want to see a full year of confirmed tax reporting before I put real money behind the intention.

MLPI vs. ROCQ, Side By Side

Where I Stand

I hold MLPI today. I do not yet own ROCQ, and the reason is simple. MLPI has multiple distribution cycles of actual reported ROC behind it, not just a stated intention. ROCQ is a fund I think will keep working, but I want to see it confirm its own tax character with a full year of reporting before I put money behind it.

MLPI does not replace core dividend growth holdings in my portfolio. I think of it as part of the income sleeve, cash flow first, with tax efficiency as the reason I prefer this structure over a plain high yield fund paying everything out as ordinary income. If ROCQ delivers on its design over the next few reporting periods, it earns a real look at that point too.

One more thing worth repeating. Return of capital defers your tax bill. It does not erase it. Track your adjusted cost basis every year, because that bill eventually comes due when you sell, and getting caught off guard by a bigger capital gain than you expected is an easy mistake to make if you were not paying attention along the way.

That is real government capital chasing a technology that could put every unmodified smartphone on the planet inside AST’s coverage map, one country at a time, starting with a market of 124 million people. I already hold a position, and this news is enough for me to add more. Here is the growth case, the risks I am accepting anyway, and the $180 target I am underwriting it with.

I may take $5K of my profit in ASML Holding and rotate this into ASTS. Paid subscribers will get the alert first!

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No Idea What ASTS Does? Here’s Context

The Deal

This is the kind of catalyst that changes the growth math. The headline number is ¥150 billion, distributed over three years, earmarked for equipment procurement, satellite launches, and ground control infrastructure. It funds a new entity: a 50/50 joint venture between Rakuten Group and AST SpaceMobile, set to form in 2026, with Rakuten running day-to-day operations while AST supplies the orbital hardware and direct-to-cell technology.

• Timeline: Limited service from Rakuten Mobile by the end of 2026, full nationwide coverage targeted for fiscal 2027.

• Spectrum: Japan is revising rules to allow direct satellite communication in the 700 MHz band, the same band Rakuten already runs its terrestrial network on. Revisions are slated for September.

• The tech: Standard, unmodified smartphones connect straight to AST’s low Earth orbit satellites. No special hardware required on the user end.

Why Sovereignty, Why Now

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My portfolio is up nearly 40% on a YTD basis, compared to US stocks broadly at 10.16%. The income generated this month was lower than May, and that's by design. Rather than letting fresh dividend and premium income sit idle, I funneled a larger share of it into growth positions I see as undervalued at current prices.

This is the strategy working as intended, just running in the other direction this month. Collect income, identify where the market is mispricing quality growth, and rotate capital there even if it means a lighter total on the income line. During the month, here were the shifts that occurred, which I will cover here:

1. New Growth Positions

2. Actively writing covered calls for extra income & how I am reinvesting those premiums.

3. Rotated income into undervalued growth names.

4. Planning to accumulate more high yield names like , , and going forward.

The drop reflects a rotation decision, not a deterioration in the underlying income engine.

Regardless, the Yieldly Dashboard estimates that will collect more than $44k in dividends this year.

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Portfolio Highlights — Top Holdings

• Invesco NASDAQ 100 -

• ASML Holdings ASML 6.13%↑

• Meta Platforms META 0.60%↑

• Amazon AMZN 2.90%↑

• Microsoft MSFT -1.66%↓

• AST Space Mobile ASTS 16.55%↑

• Alphabet GOOG 3.57%↑

• Mastercard

• Robinhood

The Breakdown: Who Paid Me in June? 💰

The following positions paid me a dividend in June:

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But an HSA comes with a different mandate than the rest of my portfolio. This is not the account where I chase yield. This is the account I need to protect. Medical expenses are unpredictable, and the last thing I want is to need that money during a market downturn and find the balance cut in half.

At the same time, parking cash in a money market and accepting 4-5% while the market runs is not a real strategy either. The goal was to find something that could hold its value when conditions get rough, while still participating in the upside when conditions are good. That is what led me to the VictoryShares Free Cash Flow ETF .

For instance, VFLO has outperformed against VTI since its inception.

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A Conservative Approach For Lower Risk

Most people treat their HSA like a savings account. They accept the money market rate, tell themselves it is “safe,” and move on. The problem is that safe and productive are not the same thing.

The S&P 500 has delivered roughly 10% annually over the long run. Sitting in a money market fund means giving up most of that compounding over a multi-decade horizon. For someone in their 30s or 40s, that gap compounds into a significant sum by the time health expenses actually become a major concern.

The other extreme is just as problematic. Putting HSA funds into an aggressive growth fund means taking on full market risk for money that may need to be liquid. If the market drops 30% and you need funds for a medical expense in month two of a bear market, you are forced to sell at the worst possible time.

👉2 Dividend ETFs That Can Protect Your Money During A Pullback.

VFLO Strategy

VictoryShares Free Cash Flow ETF launched in June 2023. It now holds $7.5 billion in total net assets with a 0.39% expense ratio. The fund uses the Russell 1000 as its starting universe but runs everything through a four-step filtering process before anything makes it into the portfolio.

1. Start with 400 profitable large-cap companies screened from the Russell 1000

2. Narrow to the 75 stocks with the highest free cash flow yield relative to enterprise value

3. Filter to the 50 names with the best projected free cash flow growth scores

4. Weight each position based on the size and yield of its free cash flow

The fund ends up holding 49 positions. That concentration is intentional. Each name has to clear both a yield screen and a growth screen. Companies that look cheap on paper but are not growing their cash get filtered out before they become a problem.

What is inside the portfolio

Technology leads the allocation at nearly 39% of assets. That is not surprising given the free cash flow margins large-cap software and semiconductor companies generate. Health care and consumer discretionary round out the next two slots.

Top holdings include Devon Energy (DVN) as the largest position at 3.6% of assets, followed by Expedia (EXPE), Adobe (ADBE), Sandisk (SNDK), and Intuit (INTU). High-margin businesses with real pricing power and cash flow that does not depend on cheap debt to survive.

The Defensive Case: Protects Capital

Free cash flow is not just a quality metric. Companies that generate strong free cash flow can fund their own operations without raising debt, continue investing through slowdowns, and keep buying back shares or raising dividends even when revenue growth stalls. That self-sufficiency is what makes them resilient when the market gets nervous.

VFLO proved this in live market conditions early in 2026. When uncertainty over the Iran conflict hit, the S&P 500 dropped from its January highs to the bottom. VFLO declined less than 2% over that same window.

The holdings carry a 3-year EPS growth rate of 13.5%, well above the benchmark. That matters because earnings growth going into a downturn is what separates a company that weathers the storm from one that gets caught out. A business that has been compounding earnings at 13% annually has a meaningful buffer before it starts posting actual losses. The market knows this, and it prices that buffer into the stock during a sell-off by selling it less aggressively than the names without that cushion.

The return on equity of 19.5% tells a similar story. ROE measures how efficiently a company converts shareholder equity into profit. A high ROE without excessive leverage means the business is genuinely productive. Most of the companies inside VFLO are generating their returns through strong operating businesses, not by loading up on cheap debt and buying back stock. That distinction matters enormously in a rising rate environment or a credit crunch, because the companies using debt to manufacture ROE get repriced the hardest when borrowing costs go up.

VFLO trades at a slight premium to its benchmark on price-to-book, which means the screen is not just finding cheap companies. It is finding companies that deserve a premium because they generate strong cash relative to their enterprise value. Paying a slight premium for that quality has historically been the right trade. Classic value traps look cheap on price-to-book but have stagnant or declining earnings. VFLO’s screen cuts those out at step one by requiring demonstrated free cash flow and growth.

Upside Growth

Defensive does not mean sitting out rallies.. Many conservative plays protect on the downside but give up so much on the upside that they drag the portfolio over time.

VFLO is different because the free cash flow screen does not just find safe companies. It finds high-quality businesses that also have growth momentum. The yield screen captures companies generating strong cash today. The growth screen filters for companies expected to generate even more cash in the future. That combination means you are holding businesses that can participate in a bull market, not just survive a bear one. After all, the fund is still quite heavily skewed towards technology companies.

Since inception, VFLO has outpaced its benchmark, the Russell 1000 Value Index, as well as the iShares Russell 1000 Value ETF (IWD) and the S&P 500 ETF (SPY). That outperformance has come with less volatility, which is the combination you want in a conservative account.

1.1% Dividend Yield

VFLO pays a monthly dividend with a current yield around 1.1%. That is not an income play. But the growth rate on that payout is worth watching. The fund has delivered over 15% dividend growth in the trailing twelve months. That is as if your job gave you a 15% raise annually.

Year-end payouts since inception show a consistent upward trajectory.

An investor who bought in at launch in June 2023 now has a yield on cost approaching 2.1% and rising. As the businesses inside VFLO grow their free cash flow, the dividend follows. Over a longer holding period, I wouldn’t be surprised to see the dividend yield on cost balloon above 5%.

Risks to keep in mind

Nearly 40% of VFLO sits in information technology, and a meaningful chunk of that is software. The market environment for software companies has been difficult. As large language models become cheaper and more capable, investors are questioning whether the traditional SaaS business model still carries the pricing power it once did. If a company charges $50 per seat for a tool that AI can now replicate for a fraction of the cost, the moat starts to look a lot narrower.

Several software names have already seen multiple compression even when their near-term earnings held up, because the market is discounting what the business looks like in three to five years. If the software sector continues to face headwinds, that 40% allocation will be a drag on performance even if the rest of the portfolio holds up well.

Similarly, Consumer discretionary makes up about 15.9% of VFLO’s portfolio. That allocation is a pressure point if household spending starts to slow. Inflation has remained stickier than most forecasters expected, and while the consumer has held up better than many anticipated, that resilience has limits. Higher prices sustained over a long enough period eventually compress discretionary budgets.

The concern is a gradual softening that slowly erodes revenue growth and free cash flow for the companies in this bucket. If that happens, some of the names that passed VFLO’s screen at the last rebalance may no longer look as attractive by the next one. The fund will adjust at rebalance, but the damage to quarterly returns can accumulate in between.

The bottom line

VFLO is not where I am building my income portfolio. For that I use higher-yield positions. But for the HSA, where the mandate is capital preservation with real participation in long-term market growth, it is the right fund.

It filters down to 49 businesses with durable free cash flow and growing earnings. It has proven it can limit drawdowns in live conditions. The dividend is modest but growing above 15% annually. And the 0.39% expense ratio is reasonable for the quality of screen you are getting.

The goal for this account was simple: do not lose money in a downturn, but do not sit out the upside either. VFLO is built to do exactly that.

It grew its bookings 21%. It posted record operating profit. It generated $2.3 billion in free cash flow. It bought back roughly $3 billion of its own stock. It crossed 50 million paying members in a loyalty program that now drives half of everything it sells.

Now imagine that same stock is trading near its lowest point in a year, while Wall Street secretly stamps it with a Strong Buy and price targets that sit 45% to over 100% above where it trades today.

That is not a hypothetical. That is a real company, reporting real numbers right now, and the market has decided to price it like a melting ice cube because of one fear that I believe is wildly overblown.

I am going to name the stock and show you exactly why the market is wrong. Then, for paid members, I break down the partnership that ties this to a second stock I hold, the full numbers, Wall Street’s targets, my own price target, and how I am building the position. Let’s get into it.

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The Setup: A Leader Priced Like a Loser

Here is the mechanism behind the mispricing, because once you see it you cannot unsee it.

The entire market has fixated on a single story: that a new wave of technology is about to make this company obsolete. The narrative is so loud that it has completely drowned out the fundamentals. And the fundamentals are not just fine. They are accelerating.

This company runs a platform that almost everyone reading this has used. It operates in more than 70 countries. It has two enormous business engines, and the one investors ignore is actually growing faster and is almost completely immune to the very disruption everyone is panicking about.

The bear case says the core business gets eaten alive by automation over the next several years. The filings say bookings are compounding north of 20%, profit is scaling at more than twice the rate of revenue, and the company is so flush with cash it is aggressively buying back its own shares at these depressed prices.

So you have a profitable, cash-generating, share-shrinking market leader being valued as if its best days are behind it. That gap between perception and reality is exactly where the biggest returns come from.

And here is the part almost nobody is pricing in. This company is not fighting the technology that supposedly threatens it. It is positioning to become the toll road that every version of that technology has to drive through. Let me name it and show you.

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Uber Technologies (UBER)

The company is Uber Technologies , and as I write this it is trading in the low $70s, near its 52-week low, down on the year while the broader market is up.

The reason is simple and, in my view, wrong. The market has decided that self-driving cars from the likes of Waymo and Tesla will make Uber irrelevant. The logic goes that once robotaxis scale, nobody needs Uber’s network of drivers, so the business gets disrupted into the ground.

I see it the opposite way. Uber does not need to build the winning robotaxi. It needs to own the customer. In a world where dozens of companies are racing to build autonomous fleets, the supply of self-driving cars becomes fragmented and commoditized. When supply gets commoditized, the power flows to whoever controls demand. And Uber controls demand at a scale almost no one else on earth can match: 199 million monthly active users and 3.6 billion trips in a single quarter.

Uber has already signed up more than two dozen autonomous partners and plans to facilitate robotaxi trips in as many as 15 cities globally by the end of 2026. Instead of being the victim of the AV era, Uber is setting itself up to be the demand layer that every fragmented fleet plugs into. The robotaxi makers supply the cars. Uber supplies the riders. Guess who keeps the customer relationship.

That alone is the reason this stock should not be sitting near a 52-week low. But it is the next part that made me actually open my wallet, and it ties Uber directly to a second stock I already own.

The Numbers: Firing on All Cylinders

One thing to clear up, because it is the trap scaring people off. Uber’s headline GAAP net income came in at just $263 million, which looks like a collapse versus a year ago. It is not an operating problem. That number absorbed a $1.5 billion non-cash hit from marking down the value of Uber’s equity investments. Strip out that accounting noise and the operating business is the strongest it has ever been. The market is anchoring on a scary headline and missing the machine underneath it.

And remember those two engines. Delivery is now growing faster than ride-hailing, its segment profit jumped 43% in the quarter, and it is almost entirely unaffected by the AV fear. Even in a worst-case world where robotaxis pressure mobility, Uber has a second high-margin engine that keeps compounding. Management guided Q2 bookings to as much as $57.75 billion with EPS up to $0.82, so the momentum is not slowing.

The Upside: Wall Street’s Targets and My Own

This is where the risk/reward gets loud. Uber carries a consensus Strong Buy, with an average target around $104 to $108, the bulls at $115 (Tigress) and $125 (Guggenheim), a Street high of $150, and even the most bearish target near $75 sitting above today’s price.

Here is my own call: I think Uber is a $100 stock, and I think it gets there within about 12 months.

The catalyst is the one the bears are ignoring. Right now capital is crowded into the AI and memory-chip momentum trade, chasing the same handful of names. That rotation does not last forever. When it cools, money comes looking for profitable, reasonably valued compounders, and Uber is sitting right there near a 52-week low with record operating profit and $2.3 billion of quarterly free cash flow. A move from the low $70s to $100 is roughly 40% upside, and I believe that re-rating happens inside a year as the market remembers this business exists.

A Complementary Kicker: The Rivian Angle

There is one more reason I like this trade, and I want to be clear that it is a bonus, not the basis of my position.

I also own Rivian , and the two companies have a robotaxi partnership worth up to $1.25 billion, with Uber set to deploy up to 50,000 autonomous Rivian R2 robotaxis exclusively on its platform. Rivian has now started producing the R2 and first deliveries are rolling out, so this is no longer a paper concept. The autonomous version still has milestones to clear before those robotaxis hit the road around 2028, which is why I treat the deal as long-dated optionality rather than a near-term driver.

But it is a nice kicker. If it plays out, the same trend pays both of the positions I already hold, and my Uber thesis stands completely on its own without it. The cheap, profitable, cash-gushing core business is the reason I bought. Rivian is just a bonus I get for free.

How I Am Playing It

• Started with $4,000, building toward $10,000 as more capital comes in, adding on weakness near these 52-week lows.

• The cheap, profitable, cash-generating core business is the reason to own it today.

• Anchor on the $100 target over 12 months, and let the buybacks and free cash flow pay me to wait if it takes longer.

• Treat the robotaxi optionality, including the complementary Rivian angle, as upside I am barely paying for.

This is a different kind of position than my weekly income funds, and that is the point. I use the income those funds generate to accumulate high-conviction names like this one when the market hands them to me at a discount.

Bottom Line

The market is paying me to buy a dominant, profitable, cash-gushing platform at a discount because it is afraid of a disruption that Uber is positioning to profit from. Wall Street sees 45% to 100% upside. I see a $100 stock within 12 months, with a Rivian kicker that pays my other position too.

I am a buyer. $4,000 to start, building toward $10,000 on weakness.