KraneShares China Internet and Covered Call Strategy ETF

KLIP

Market cap $115M

KraneShares China Internet and Covered Call Strategy ETF (NYSEARCA:KLIP) pays a 29% yield by selling call options on Chinese internet stocks, a strategy that generates real monthly income but caps upside and depends on sustained volatility to keep distributions elevated.

One useful rule for income investors to remember is that when you use a covered call strategy, the level of yield you can generate is closely tied to the volatility of the underlying asset.

March's top-yielding monthly pay (MoPay) equities offer annual dividends from $1K invested exceeding their share price, presenting volatile but potentially lucrative opportunities. Analyst estimates suggest the top 10 MoPay stocks could deliver average net gains of 35.12% by March 2027, with risk/volatility 25% below the market. Stellus Capital Investment (SCM), CION Investment (CION), and PennantPark Floating Rate Capital (PFLT) lead both by yield and price upside, reinforcing the yield-based 'dogcatcher' strategy.

YieldMax gets most of the attention when income investors go hunting for double-digit yields.

KraneShares KWEB Covered Call Strategy ETF offers diversified China exposure with monthly income via a covered call strategy. KLIP provides a high distribution rate (10.53%) and monthly payouts, though option premium declines have reduced dividends by 55.49% over 12 months. I assign a buy rating to KLIP for up to 10% of an emerging markets allocation, citing improving Chinese macro indicators and currency stabilization.

November's top monthly pay (MoPay) dividend stocks offer high yields, with most generating annual dividends from a $1,000 investment exceeding their share price. Analyst estimates suggest the top ten MoPay equities could deliver 21.58% to 86.54% total returns by November 2026, though risks and volatility remain elevated. Twenty MoPay stocks are identified as "safer" picks, meeting the criteria of positive free cash flow yields and strong dividend coverage, serving as starting points for further research.

October's top monthly dividend stocks offer high yields, with many providing annual dividends from $1,000 invested exceeding share prices, but carry volatility risks. Banco Macro, ARMOUR Residential, and Horizon Technology Finance lead projected gains, with average net gain estimates of 39.98% on $1,000 invested. Analyst estimates suggest the five lowest-priced MoPay stocks may outperform the top ten overall, highlighting contrarian opportunities for income-focused investors.

KLIP offers a unique covered call strategy on volatile Chinese tech via KWEB, delivering strong income and drawdown mitigation. Despite capping upside, KLIP's total return profile is impressive, outperforming KWEB with smoother returns and exceptional downside protection. The aggressive ~33% yield erodes NAV over time, but reinvestment can help maintain future income and growth potential.

Portfolio diversification matters more than ever in this year's challenging market environment. Tech investors looking for opportunities internationally would do well to consider China's internet sector for its performance, attractive valuations, and AI positioning.

Coming off stellar gains from last year, many entered 2025 expecting limited upside. But upside may be even more limited following the recent rebound in equities as the tariff rhetoric cools.