How To Generate Income From High-Growth Tech Stocks

In today’s Juice, we give you an idea to help solve a conundrum many modern-day investors run into. 

Let’s set the stage. If you’re not at this point yet, all the better. You can use today’s Juice as a guide on something to aim for.  

You’re a long-term investor with a solid portfolio foundation up and running, if not performing quite well. 

It’s quite possible you follow something that looks like The Juice’s playbook:

• You own a handful of core, broad market ETFs, such as the ones that populate today’s Trackstar top five. 
• You own either a basket of dividend-paying stocks or solid dividend ETFs to see steady growth and generate some income. 
• You own a basket of individual tech stocks that have crushed it for you in recent times. We’re talking the Magnificent Seven stocks and other high flyers that have generated outsized returns for so many investors. 

All you need to do is look page by page in The Juice’s archives (we link to them in today’s Freshly Squeezed section) to see installments that inform and can help you develop this comprehensive strategy. 

One other thing you’ll find in the archives are installments where we warn against getting too fancy with ETFs. As in, buying a thematic ETF — like maybe one focused on artificial intelligence — when it makes much more sense to just go with SPY, QQQ and the fifth most searched ETF in Trackstar right now, the VanEck Vectors Semiconductor ETF (SMH). You’ll get significant AI exposure in those three ETFs. No need to make things complicated. 

More often than not it’s misguided to reinvent the wheel just for the sake of reinventing the wheel. This isn’t even a strategy. In fact, it’s a perfectly good way to mess up a portfolio. 

This said, if you have a problem you want to solve. If you want to satisfy a well thought out objective on the way to achieving a meaningful goal, you would be smart to look for ETFs that help in the process. 

For example, if you check one or more of the aforementioned bullet points, you might ask yourself:

How can I generate some or more income from these technology growth stocks? 

It’s a big dilemma for investors. How to balance the desire for growth with tech stocks with the need or desire to generate income from them? 

At the time, a few big names pay dividends that are not much to write home about. Think Nvidia (NVDA) and Apple (AAPL). Finally, Alphabet (GOOG) and Meta Platforms (META) pay out, but both yield less than half a percent. Even Microsoft (MSFT), which probably has the strongest and definitely the longest standing dividend among the bunch, yields significantly less than 1%. 

Of course, you can write covered calls against these stocks, but that’s a potentially confusing process that requires tons of time and considerable capital. To write just one covered call against each of the five stocks mentioned in the last paragraph, you will need 100 shares of each name, which, at the moment, equals about $150,000 invested. 

A bit too rich for The Juice’s pulp-filled blood.   

ETFs can help take care of this problem. As you know if you read The Juice regularly, we’re constantly searching for ETFs we can tell you about. 

Recently, we came across Kurv’s Premium Strategy ETFs that use covered calls to capture growth in big tech stocks at the same time as generating income that it would be difficult for individual investors to, in our opinion, generate on their own. 

To ensure their ETFs don’t sacrifice too much growth, but capture meaningfully income, Kurv typically writes covered calls that are between 5% to 15% out of the money, adjusting for the volatility of the particular stock. Kurv says the sweet spot is writing 5- or 6-weeks calls that they roll on a monthly basis. 

To ensure even monthly distributions, Kurv takes what it calls a “religious approach” to ensuring this consistency. Sometimes, Kurv will hold back some of the premium it collects to smooth out volatility and compensate for lower months when the market doesn’t generate as much income. 

In this video, Kurv’s CEO and Founder Howard Chan discusses the details of Kurv’s strategy, clearly defines how they execute it and transparently answers pretty much any question you might have about these ETFs. 

The Juice was impressed when we watched this: https://www.youtube.com/watch?v=nDOcEsZxyhU 

Kurv takes this approach in its slate of six ETFs:

• Kurv Yield Premium Strategy Netflix NFLX ETF (NFLP)
• Kurv Yield Premium Strategy Amazon AMZN ETF (AMZP)
• Kurv Yield Premium Strategy Microsoft MSFT ETF (MSFY)
• Kurv Yield Premium Strategy Google GOOGL ETF (GOOP)
• Kurv Yield Premium Strategy Apple AAPL ETF (AAPY)
• Kurv Yield Premium Strategy Tesla TSLA ETF (TSLP)

We’re obsessed with looking inside ETFs. When we looked under the hood at Kurv, here again, we were impressed with how the firm takes a relatively simple approach to help investors with a common, but, at the individual investor level, complicated problem. 

The Bottom Line: Most individual investors simply can’t execute something so technical that is, at the same time, an attractive addition to an already well-rounded portfolio. Most of us just do not have enough time, resources and knowledge to maximize a covered call strategy with a handful of most stocks, let alone massive tech names, such as NFLX, AMZN, MSFT, GOOG, AAPL and TSLA. 

We think Kurv can go a long way to helping solve this problem for a significant number of everyday, long-term investors.

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• Check Out The Juice’s Favorite ETF Screener