This ETF Has a Double-Digit Yield and Could Surge 50%+ During a Recession

Core Viewpoint - The iShares 20+ Year Treasury Bond BuyWrite Strategy ETF (TLTW) is positioned as a strong investment option during potential future recessions, offering a high yield of 14.87% and monthly distributions [1][3]. Group 1: TLTW's Performance in Recessions - TLTW is a covered call ETF based on the iShares 20+ Year Treasury Bond ETF (TLT), which holds long-term U.S. Treasuries known for their safety [3][4]. - During recessions, U.S. Treasuries become more attractive as interest rates are cut, leading to increased demand for high-yielding assets like TLT [4][5]. - Historical data shows that TLT surged from approximately $90 in May 2008 to over $121 by late December 2008, demonstrating its resilience during economic downturns [5]. Group 2: Yield and Strategy - TLTW's high yield is achieved through a covered call strategy, which involves writing covered calls on TLT, resulting in a combined yield of 14.87% [6]. - The underlying TLT has a yield of 4.46%, and the covered call strategy enhances the overall yield significantly [6]. - However, the covered call strategy limits upside potential, meaning if TLT remains flat or declines, TLTW may lose value more significantly [6][7]. Group 3: Investment Outlook - Despite the capped upside, TLTW is viewed as a unique anti-recession investment with substantial dividend yield, making it attractive for investors [7]. - The expectation is that TLT will not decline significantly as interest rates are projected to decrease, which should support TLTW's performance [7]. - TLTW has shown a 13.81% increase over the past year when accounting for dividends, indicating strong performance potential during recessions [7][8].