2 Gold Dividend ETFs That Are Must Buys Right Now

Quick Read

• Gold has doubled in price over two years as central banks worldwide reduce dollar dependency and buy gold instead.

• NEOS Gold High Income ETF (IAUI) offers a 13% forward annual yield through covered call options on gold ETPs.

• Sprott Gold Miners ETF (SGDM) is up 119.84% year-to-date as gold mining companies benefit from rising gold prices.

• Some investors get rich while others struggle because they never learned there are two completely different strategies to building wealth. Don’t make the same mistake, learn about both here.

Gold has doubled in price in the past two years. Gold dividend ETFs like NEOS Gold High Income ETF (BATS:IAUI) and Sprott Gold Miners ETF (NYSEARCA:SGDM) have been major beneficiaries. This isn’t just a fluke or speculation. Central banks and individuals worldwide are actively piling into gold as they see it as the safest asset to put their money into. Markets are healthy at the moment, and we are amidst an AI rally, so why are investors still choosing gold?

The answer lies mostly outside the U.S. Most of the world is not experiencing an “AI boom” right now, and they no longer see the dollar as the safe haven it used to be. Consequently, they’re buying gold instead, and the trend is expected to continue. Major economies worldwide are cutting interest rates and are therefore eliminating the opportunity cost of hoarding non-yielding gold.

Besides, the supply is nowhere near enough to meet worldwide demand, especially when you take into account how much gold will be needed for certain central banks to fully reduce dollar dependency.

If you want to hedge against inflation, a sliding dollar, and get paid dividends for it, it’s worth looking into gold dividend ETFs.

NEOS Gold High Income ETF (IAUI)

The NEOS Gold High Income ETF is an actively managed ETF that is quite recent. The aim of this ETF is to generate high monthly income while giving you exposure to gold prices. It uses a strategy that combines both gold exposure and options to give you partial upside to gold, plus a fat monthly yield.

Gold constitutes up to 25% of this ETF’s assets, with the synthetic options strategy having a notional value of up to 75% of net assets. The fund writes (sells) covered call options on gold ETPs with approximately one-month expirations to generate monthly income. This strategy converts a portion of the potential upside price appreciation of gold into current income for shareholders, though it necessarily caps the fund’s participation in gold price gains beyond the strike price of the written calls.​

All things considered, IAUI goes hand-in-hand with options-amplified dividend ETFs like NEOS Nasdaq-100 High Income ETF (NASDAQ:QQQI). If the stock market falters and gold keeps rising, you’ll be able to counteract some of the losses.

You get a forward annual yield of around 13%. The expense ratio is 0.78%, or $78 per $10,000 invested.

Sprott Gold Miners ETF (SGDM)

The ETF above and the Sprott Gold Miners ETF can conjointly get you both upside and income. SGDM is not that attractive on the dividend side, as the yield you get is 0.47%. The fund more than makes up for it with its performance, as SGDM is up 119.84% year-to-date. This is over a 7x outperformance when compared to the SPY’s year-to-date gain of 16.82%.

This ETF invests at least 90% of its net assets in stocks with underlying companies that are involved in gold mining. It does so by tracking the Solactive Gold Miners Custom Factors Total Return Index. This gives it exposure to gold mining companies listed on major Canadian and U.S. exchanges.

These miners have been among the biggest beneficiaries of the ongoing gold boom, and this has allowed SGDM to gain so much. As gold keeps rising, there’s room for even more outperformance in the future.

The biggest holding is Agnico Eagle Mines (NYSE:AEM) at 12.6%, followed by Newmont Corp (NYSE:NEM) at 8.86%, and Wheaton Precious Metals Corp (NYSE:WPM) at 7.78%. Its top 10 holdings together constitute 63.69% of its portfolio.

Without a doubt, this is a concentrated portfolio. But considering there are only a few dozen investable gold mining companies, SGDM actually gives you a well-diversified selection from the gold industry.

SGDM carries an expense ratio of 0.50%, or $50 per $10,000.