Magic or Mirage? Harvest Diversified High Income ETF (HHIS.TO)

Can you really retire on a 25% yield? We dive into the buzzworthy Harvest Diversified High Income ETF (HHIS.TO)—a high-yield ETF promising monthly income and exposure to trending growth stocks. Let’s explore whether HHIS is a sustainable income solution or simply too good to be true.

You’ll learn how the fund is structured, what’s behind its massive distribution, and the trade-offs investors need to consider.

You’ll Learn

The Appeal of Covered Call ETFs Has Grown Fast
Covered call ETFs are more popular than ever, with new variants offering leverage and exposure to trending stocks. HHIS takes this further—it’s an ETF of covered call ETFs.

Investors love the promise of high monthly income, especially as they approach retirement.
But these products trade short-term yield for long-term growth.

What’s Inside HHIS?
The ETF holds a basket of 14 trending stocks through Harvest’s own covered call ETFs.

Includes names like Microsoft, Amazon, Costco, Alphabet, Tesla, and Broadcom.
These companies are chosen for momentum and growth—but trending stocks don’t stay trendy forever.
Covered calls on high-demand stocks mean juicier premiums… for now.

How That 25% Yield Is Created
HHIS uses a 3-part strategy:

Leverage (up to 25%) to amplify returns.
Covered calls (on 50% of each stock holding) to generate premiums.
Capital gains or return of capital to fund distributions.

Covered Calls = Short-Term Income, Long-Term Limits
Mike breaks down how covered calls work and why they cap your upside.

You keep your shares if prices stay below the strike—great!
If prices skyrocket, you miss out on future gains.
Over time, this tends to reduce total return compared to just holding the underlying stocks.

Volatility Can Be a Double-Edged Sword
High market volatility can mean fatter premiums—but also increases the chance of being forced to sell a winning stock.

Covered calls offer a buffer during downturns but not true protection.
In bear markets, premiums often shrink just when investors want more income.

ETFs vs. Dividend Growth Stocks: A Total Return Battle
Mike runs a math-heavy comparison using HHIS and other covered call ETFs.

Even if you create income by selling shares from a basic ETF like SPY, you often outperform covered call ETFs.
In short: it’s often more efficient to build your own paycheck than pay a fund to do it for you.

Early Returns vs. Long-Term Reality
While HHIS has outperformed the Nasdaq recently, it still underperforms its own 14 underlying stocks.

12 of 14 HHIS covered call components returned less than their underlying assets.
The ETF looks good now, but history suggests results will normalize—and cool off.

The Risk of Chasing Trendy Stocks
Growth stocks can soar—but they don’t grow at 25% forever.

Crypto-related holdings like Coinbase or MicroStrategy could reverse if sentiment shifts.
Over time, explosive growth tends to fade, dragging down future income.

Tax Efficiency is a Real Benefit (In Taxable Accounts)
HHIS provides more favorable tax treatment than typical dividend income—especially for Canadian investors.

Distributions are mostly returns of capital or capital gains.
Still, that only matters if the overall return is strong and sustainable.

Final Verdict: Not an Atrocity, But Not a Miracle Either
Mike gives HHIS credit where it’s due—strong lineup, smart structure—but warns investors not to believe the 25% dream.