DIVO’s Covered Calls on Raytheon Technologies Boost Fund’s 6%+ Yield but Cap Upside
Amplify Enhanced Dividend Income ETF (DIVO) holds RTX within its $6.6 billion portfolio and writes covered calls on RTX positions to push its 6%+ yield above underlying dividends. The fund’s 73% five-year gain highlights demand for RTX’s stable dividends despite capped upside on share rallies.
1. DIVO’s Portfolio Includes Raytheon Technologies
DIVO holds $6.6 billion in assets and includes Raytheon Technologies among its blue-chip equity positions, writing short calls on those shares. The fund’s covered call positions on Raytheon Technologies expiring in February and March 2026 supplement stock dividends to push its overall yield above 6%.
2. Covered Call Strategy Boosts Yield but Caps Upside
By selling covered call options, DIVO captures premiums that elevate its 6%+ yield above the underlying dividends paid by companies like Raytheon Technologies. This approach has delivered a 73% total return over five years but limits participation in strong share rallies when call options are exercised.
3. Implications for Raytheon Technologies Stock
If calls are exercised, DIVO must sell shares at predetermined strike prices, which can temper price gains in Raytheon Technologies stock. Steady demand from income-focused funds like DIVO may, however, support the stock’s dividend yield and trading volumes.