There’s one 68% (!) paying fund out there that will give us a lump of coal this Christmas, if we’re not careful enough to avoid it.
I’m talking about the YieldMax Ultra Income Strategy ETF (ULTY), which we last discussed in September. Its 68% payout is so ridiculous that you could be forgiven for wondering if I missed a period between the 6 and the 8.
It’s easy to see how one could fall for a payout like that. As 2025 wraps up, we’re looking at a third straight year of double-digit gains for the S&P 500. Nothing breeds complacency like a levitating stock market!
Meantime, getting a 68% dividend could seem to ease worries over, say, an AI bubble, or a general slowdown courtesy of grinding inflation and a sputtering job market.
But 68%!? C’mon, man.
As was the case in September, I’ve got plenty of beefs with this one, but two stand out:
- That 68% yield (of course), which entails a lot of risk.
- The fund’s unpredictable payout after shifting from monthly to weekly dividends this year (with more changes on the way, as we’ll see below).
Let’s dive into that 68% yield (based on the annualized weekly dividend payable on December 18) first, as it’s the number that leaps out the most.
A payout that big makes it sound like you’re getting more than two-thirds of your upfront investment back in a little over a year in dividends alone.
Tempting, right?
By that logic, those who bought ULTY at its February 2024 launch should have recouped their upfront investment by now. But even with that huge yield, these investors are in the red. This at a time when the S&P 500 gained 37% with dividends reinvested. Yikes.
Big Dividend Hardly a Gift to ULTY Investors …
It gets worse, because as you can see above, investors in ULTY (in purple) had to stomach a much more volatile ride. Why? ULTY’s price plunged, draining off the return from the payout. Without the dividend, the fund’s price has dropped 80% since launch.
… And Its “Price-Only” Return Has Been a Lot Worse
Moreover, the fund’s recent reverse stock split, under which it gave shareholders one share for every 10 held, gives the illusion of a higher share price, but it doesn’t, in fact, affect the value of an investor’s holding. (Reverse splits, by the way, are often a sign of management trying to paper over a shrunken share price. Not good!)
ULTY’s performance is especially disappointing because it sells covered calls to generate income. By doing so, it sells the right to buy its stocks at a fixed future date and price. No matter how those trades work out, ULTY keeps the “premium” it charges buyers.
Selling calls is a great way to generate income. The drawback? It can cap upside in a rising market as the fund’s best performers are sold, or “called away.”
Option Selling Is Usually a Profitable Strategy, But Not Here
Let’s take a closer look at ULTY’s approach. The fund says it has a menu of covered-call strategies it uses on its stocks, which typically number from 15 to 30. That, in short, is a lot of work, and it results in an expense ratio of 1.4%—high for an ETF.
ULTY focuses on tech, mainly speculative plays like Palantir Technologies (PLTR), the iShares Bitcoin Trust ETF (IBIT) and Robinhood Markets (HOOD). There are some large cap techs here, too, like Broadcom (AVGO), Amazon.com (AMZN) and Alphabet (GOOGL). You’ll also find some non-tech investments like the VanEck Gold Miners ETF (GDX).
That’s by design: Management recently said it will hold more large caps, and diversify into other sectors in order to stabilize its NAV and create what it calls a “smoother investor experience.” To that end, it’s also adjusting the option strategy. In sum, management says these moves could result in a lower, less predictable dividend.
This all sounds prudent, but it doesn’t give me much confidence, as the payout is already so unsteady, it’s hard to know how much less predictable it could get! Just since launch less than two years ago, management has shifted from monthly to weekly payouts, and the amounts have varied widely.
If we look at the fund’s complete dividend history (including its switch from monthly to weekly payouts at the left side of the chart below), we see that its weekly dividend jumped to $1.18 a share following the April “tariff tantrum.” That makes sense, given its options strategy.
ULTY’s Dividend Jumps Around, Then Sinks
Source: Income Calendar
It also makes sense that payouts have fallen in the relatively calm markets since the spring. But it’s been a big drop: 58%, to be exact, from that $1.18 a share payable on May 8 to $0.492 payable December 18!
That volatile payout and the recent slide are two things the average investor may overlook, in light of the fund’s huge 68% yield and weekly payout frequency.
Now management is making more changes to the payout! Time will tell whether this latest plan is successful, but there’s no reason for us to stick around and find out.
Instead, we’re buying the stout dividends in my Contrarian Income Report service’s portfolio. These 25 stocks and funds yield 8.5% on average, and they’re backed by reliable businesses with real cash flows. And many pay dividends monthly, to boot.
Forget ULTY: This Growing 11% Dividend Is Our Top Buy for 2026
One of my favorite picks in our portfolio is the 11%-paying fund I think all investors—no matter where they are in life—MUST own.
And right now, with 2026 about to dawn, is the perfect time to buy it. As volatility picks up heading into the new year (as I expect), this solid, and growing, 11% divvie will be something to be truly thankful for.
Check out the dividend history: This fund’s monthly payout hasn’t just held steady—it’s grown, and its shareholders have pocketed periodic special dividends, too!
This 11% Divvie Is the Real Deal
This fund is also run by one of the best managers in the bond business—he’s been recognized as the top talent in the field on multiple occasions.
Being able to drop an 11% dividend that grows proves his dominance!
All of this is why I see this “battleship” fund as a must-buy for all income investors, especially as we head into an uncertain new year.
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