Using Covered Calls To Turn 2% Yields Into 12% Yields

Big yields are available today, but you have to be aware of the tradeoffs.

Yields are back on the rise again and that may or may not be good news for income seekers. If you’re looking to buy into bonds here, the 2.46% yield currently being offered by a 10-year Treasury note is double what it was only back in July of last year.

That’s still not near the 4-5% yield that many dividend income investors are trying to generate from their portfolios, but it is the highest it’s been in nearly 3 years.

If you’ve been holding government bonds over the past two years, it’s probably an experience you’d just as soon forget. The iShares U.S. Treasury Bond ETF (GOVT), which invests in a broad range of government bond maturities, is more than 10% off of its highs of August 2020.

If the pitiful yields offered by Treasuries weren’t bad enough, the capital losses shareholders have experienced on top of that are even worse.