2 spectacular ETFs with monthly income with returns of up to 10.5%

Chasing returns can be a dangerous game, unless of course you’re a young risk taker looking for a big upside and a big, fat check at the end of the month. Either way, these very high dividend yields (think 7-10%) in the stock markets often come with a lot of pressure. And while I’m all for buying dips, provided you do your homework and see real value that isn’t yet reflected by the market, I think investors should do extra due diligence to ensure all blind spots are covered.

When it comes to fallen stocks deep in a bear market, the stakes are high. And buying dips could lead to even more pain, especially in these types of markets, with 2026 turning negative for the major US indices and the TSX Index not falling too far behind.

For income hunters, I think pursuing an exchange-traded fund (ETF) could be a less risky way to earn higher returns. You get instant diversification and, in the case of some specialty income ETFs, additional income from different options strategies. In short, that means more income, but at the expense of profit. In this market (fresh off a 2025 peak with valuations on the higher side), that’s a worthy trade-off for retirees, at least in my opinion.

Hamilton Enhanced Canadian Covered Call ETF

Hamilton Enhanced Canadian Covered Call ETF (TSX:HDIV) stands out as a very interesting “covered call” ETF that currently yields 10.5%. Have stocks been volatile this year? With a 4% decline from peak to trough, HDIV shares are not immune to market-wide leaks. The difference, however, is that you collect a fat distribution every month. Maybe the monthly check you get is bigger than the quarterly checks you get from your favorite dividend stocks.

Anyway, the HDIV is a fund of funds, with a ‘modest’ leverage of 25% and a super high yield. Indeed, leveraged ETFs are not for everyone, and while I am against most of them, I think 25% is reasonable for risk takers who want upside income and capital. Basically, you are not taking on 100% or 200% (double or triple) leverage like some other securities out there. Of course, leverage, even a mild amount, means a steeper drop on the way down. Thus, investors should be aware of the downside risks compared to comparable non-leveraged covered call bonds.

Personally, I think 25% is just the right amount to give a covered call ETF enough upside shock. The covered call strategy does indeed have its own caps, which may not be ideal for those who want the best of both worlds.

Hamilton Enhanced Utilities ETF

At the same time, Hamilton Enhanced Utilities ETF (TSX:HUTS) stands out as a great bet with a 6.5% return. It is one of the funds within the HDIV and focuses on stable Eddie utilities (and telecom stocks) with the same 25% leverage. It is indeed intriguing to focus on a safe, defensive sector of the market with a bit of leverage.

Of course, what do you get when you combine risk (25% cash leverage) with defensiveness (utility exposure)? A nice balance that might better suit some of the more aggressive income investors who are willing to deal with more volatility for a chance at more profits and, perhaps most importantly, income.

Will these ‘enhanced’ income ETFs be right for everyone? Probably not, especially for a retiree who is easily upset by market shocks. But I think the ETFs are worth a look if you’re tired of traditional, lower-yielding solutions (dividend stock ETFs) or solutions with a lower upside ceiling (think covered call ETFs without cash leverage).