Pacer Metaurus US Large Cap Dividend Multiplier 400 ETF

QDPL

Market cap $1.35B

The Undercovered Dozen series spotlights 12 lesser-known stocks highlighted in recent Seeking Alpha articles. This week's edition covers articles published between Oct. 31 and Nov. 7, offering fresh investment ideas. The series aims to inspire discussion and help investors discover overlooked opportunities in the market.

Pacer Metaurus US Large Cap Dividend Multiplier 400 ETF is rated a Buy, while JPMorgan Equity Premium Income ETF is rated as a Hold. QDPL offers a unique structure, delivering approximately 4x the S&P 500 yield via exposure to S&P Dividend Futures, outperforming JEPI in yield. JEPI uses equity-linked notes and covered call strategies for income, but QDPL's methodology provides superior income potential without sacrificing total return.

QDPL's strategy allows you to 4x the dividends of the S&P 500. But at what cost? The fund sacrifices 10% S&P 500 exposure for higher synthetic dividend income, using Treasuries as collateral for S&P Dividend Futures. The comparison with buy-write (like XYLD and JEPI) becomes interesting: they have a lower total return but larger cash flows.

MALVERN, Pa.--(BUSINESS WIRE)---- $QDPL #Dividend--Pacer ETFs announces transition to monthly distributions for QSIX, QDPL funds.

Pacer Metaurus US Large Cap Dividend Multiplier 400 ETF offers a 400% distribution over the S&P 500 yield via dividend futures, equities, and treasuries, creating market-beating distributions without using leverage. The ETF's top holdings—Nvidia, Microsoft, Apple, Amazon, and Broadcom—support the equity growth component of the strategy, with broad sector exposure. QDPL has outperformed peers in total returns and offers lower downside risk when compared to the S&P 500.

This article highlights undercovered ETFs, providing investment ideas for various strategies, including income generation, growth, and diversification. The Pacer Metaurus US Large Cap Dividend Multiplier 400 ETF is recommended for retirees seeking income generation, likened to the S&P 500 for capital appreciation. WisdomTree U.S. LargeCap Dividend Fund and Wisdom Tree Floating Rate Treasury Fund ETFs are suggested for dependable, long-term returns and portfolio diversification.

Investing can be overwhelming, but QDPL offers a simple approach for retirees, combining capital appreciation with high-income generation and lower volatility. QDPL invests nearly 90% of fund capital into the S&P 500, and 10-12% into dividend futures, which gives the ETF a robust dividend yield. Despite a high expense ratio of 0.6% and futures liquidity concerns, QDPL's robust strategy and consistent performance make it a top retirement income fund.

The Pacer Metaurus US Large Cap Dividend Multiplier 400 ETF (QDPL) has matched the S&P 500's performance, returning 10.28% versus the S&P's 10.30% since my last coverage. QDPL aims to provide 4x the dividend rate of the S&P 500 by using derivatives to purchase additional dividends. The fund has successfully achieved its objectives, offering high distribution rates and strong correlation to the S&P 500 index.

DIVO has consistently proven itself since its launch in 2016 as a fund that offers 4–7% yields at lower volatilities compared to the overall market. A pandemic environment increased demand for income-oriented investments, leading Pacer ETFs to develop QDPL—a unique fund that offers 4X the S&P 500's yield using dividend futures. Dividend futures are not risk-free. Despite recent outperformance, analysis of long-term backtests suggests that QDPL will perform more similarly to DIVO with higher volatility.

The Schwab US Dividend Equity ETF (SCHD) is a well-established, stable fund with a strong history of consistent, rising dividends, ideal for conservative investors. The Pacer Metaurus US Large Cap Div Multiplier 400 ETF (QDPL) is a much newer fund that caps S&P 500 exposure at 90%, but pays out 4x its dividends. These ETFs compete to see which fund is better for investors and which could be considered a core position for a dividend-heavy portfolio. Which fund should equity dividend investors consider?