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I/ Why I Outperformed Since Inception

A/ The Raw Numbers: 30.07% Total Return, 12% Yield

Unlike what you usually see in income investing, we’ll start by looking at the portfolio’s performance in terms of total return. And here, things are pretty clear. The portfolio (+30.07%) beats the S&P 500 (+10.96%) and the MSCI World (+15.77%). I was honestly surprised — especially since I only check my portfolio’s performance every three months, and that’s also when I share updates with the community.

That said, I didn’t beat the Nasdaq-100 (+31.45%) or the MSCI Emerging Markets index (+35.80%), which did slightly better. With those initial results, anyone who reads me regularly can probably guess what’s in the portfolio. To put it simply: the covered call fund JEPQ, and above all Petrobras, are what got me to this very solid level of performance (+30.07%). In other words, it was tech and oil that drove my gains.

B/ What I Owe to Luck

1/ Oil and Iran...

First, oil is my main engine. More than half of my gains came from Petrobras alone. I knew this was an excellent long-term bet, but I didn’t expect it to happen this fast. The escalation in the Middle East accelerated the process. That’s the luck part. Still, let’s remember that I’m betting on a long-term structural rise in the cost of oil — and in the cost of energy more broadly. Back to the facts: as of April 3 after the close, WTI was trading at $112.42. I believe Petrobras’s dividends will be strong in the coming months.

Source: Investing

2/ Tariffs...

Luck was on my side once again. Markets pulled back on renewed tariff tensions, which created a short-term entry opportunity. That’s because I invested gradually throughout 2025 and entered JEPQ in March 2025. Just look at the dip. It was fortunate timing. So, a shout-out to my broker for asking for so much extra paperwork and, in doing so, accidentally boosting my performance. To be completely honest, though, that stroke of luck had less impact on my portfolio’s performance than the price of oil did.

C/ What I Owe to Strategy

And now we can get back to fundamentals and the long term. Those are the only aspects I’m truly comfortable with. And they serve as my investing compass. Because while oil prices have risen sharply, they will come back down after the crisis... but eventually go up again, since the megatrends are still in place. If you want a refresher, it’s here: Building a Long Term Income Portfolio from Scratch - Part 1 - Pipart Global Income 10%+ Yield.

The bet on chronic underinvestment in oil production has, it seems, paid off. And the geopolitical hedge worked well. As for currency risk, I don’t have much perspective yet, but I’m not fully USD. It’s a start. The bet on tech, though I admit I’m more hesitant on that front, also paid off. My bet on Asia is still too small, and after 15 months, I still haven’t found the ideal vehicle. We’ll go through each position one by one in the next section.

II. My Strategy for 2026 and Long-Term Approach

A/ The I-CASH Method drives the strategy

We stick to the method (Investing in One Country Could Sink Your Portfolio – Part 2 - Pipart Global Income 10%+ Yield) with patience and discipline, and we draw the consequences. That’s the key. Obviously, after 15 months, we can’t yet mechanically apply the logic because there are still many imbalances.

The I-CASH Method remains my compass:

• Internationalization → still too light on Asia

• Currency → USD + BRL = 85,9 % → priority euro

• Asset Class → too heavy on covered calls

• Sector → reduce tech & energy relative weight

• High Yield → no change needed

So let’s start with the “I” for Internationalization. And here, the conclusion is clear: I lack exposure to Asia. And it would be wise to diversify investments across North America (Canada and Mexico) and Europe (only three countries involved so far). The strategy rollout is not complete.

C for Currency Diversification. On this front, the chart below tells us two things. First, the USD is too dominant (52.1% of the portfolio). The same goes for the Brazilian real (33.8% of the portfolio). Second, diversification is not yet complete. At this stage, I believe I need to increase the share of euro-denominated income first, before even considering a more thorough international diversification. That’s my priority for 2026, no second thoughts about it. Diversify first among major currencies.

A for Asset Class. The verdict is clear: I’ve invested way too much in covered call ETFs. I admit they’ve served me very well since the portfolio’s inception. But still, I went too far, and it’s not certain that I’ll be able to adjust this as early as 2026. Let’s move on to determine what choices need to be made starting next week.

S for Sector. Here again, I need to reduce the relative weight of tech and energy. Those two initial bets paid off. They are still good long-term bets. I’m not selling my positions unless something truly exceptional happens. So now, dividends will buy everything except these two sectors. That allows us to sketch out a picture of the portfolio and its priorities. And H for High Yield doesn’t raise any particular questions. It’s time to act, because decisions on what to buy need to be made starting Monday.

B/ Where Should I Reinvest my Dividends? Megatrends, Strategy and Timing

1/ What Can I do ?

At this stage, the takeaway is that I should strengthen my investments in Asia and Europe. In the short term, I haven’t found any suitable investment vehicle in Hong Kong or Singapore yet. However, in Europe I still have interesting targets, particularly ETFs based on the DAX 40 (trailing P/E ≈ 17.5x – 18.1x) and the Euro Stoxx 50 (trailing P/E ≈ 15.4x / forward P/E ≈ 13.9x). These two indices offer historically reasonable valuations, with the Euro Stoxx 50 appearing particularly attractive compared to the DAX and especially versus much more expensive U.S. markets.

This takes care of the currency and internationalization issues. As for asset classes, I feel somewhat at a loss at this stage, because to execute my international diversification, I haven’t found any other vehicles. I’m going to have to accept this shortcoming and set a long-term goal to fix it. The trade-off is this: I absolutely need to increase my monthly income outside of USD. The ETFs I’ve identified are, in my view, perfect for meeting these objectives. As for the sector dimension, I’m more comfortable there. The field is fairly open. Still, I have a strong desire to increase my industrial exposure.

2/ Let’s go for European ETFs

Now that we’ve laid out all our objectives — some of which are contradictory or out of reach — it’s time to make a call. Forward to Europe and, if possible, industry. This translates into two decisions. One is already old and on a very small position I’ve already started: I will keep buying DYLD (read here: Double Digit Yield in Germany? - Pipart Global Income 10%+ Yield), which in my view is a European industrial ETF, denominated in euros. That’s perfectly on target.

It is also time to test another European ETF: SYLD (Global X Euro Stoxx 50 Covered Call UCITS ETF). This fund applies a covered call strategy on the Euro Stoxx 50, delivering a double-digit dividend yield while maintaining exposure to Europe’s largest and most established companies. It offers a well-balanced sector allocation with strong weights in Financials (21%), Consumer Discretionary (19%), Industrials (17%), and Technology (16%). Denominated in euros, SYLD will help me increase my European exposure, boost euro-denominated income, and add industrial tilt to the portfolio. I will give it a modest allocation initially (exactly as I did with DYLD) to test how it fits into the overall strategy.

Investment Takeaway

Those who have read the whole article deserve a “present”: the list of my holdings. In terms of price return only, the clear winners in my portfolio are Petroleo Brasileiro (PBR.A) with a very strong +60% and Banco do Brasil (BDORY) at +17%, supported by good performances from JEPQ (+7%), XYLD (+8%), and LGGNY (+6%). On the losing side, we have Edvantage Group (-12%), NATY (-8%), PFFI (-4%), JEPG (-1%), and Icade (-2%), while DYLD is flat. Ultimately, my only real disappointments are Icade and Edvantage Group. These two underperforming positions are not particularly concerning, as I still fully stand by my long-term investment thesis on both.

But let’s turn to the bottom line. In 15 months, I’ve exceeded all my total return goals. Honestly, just staying close to the S&P 500 already seemed like an ambitious target. So strategy and luck worked hand in hand. But let’s be honest: the coming period will likely be less rewarding, and reinvesting dividends into new sectors is essential. My choice to focus on Europe is one of wisdom and stability, and it won’t generate performance of this magnitude. That’s the wisdom of the method.

Either way, the portfolio’s CAGR since inception stands at 23.61%. I’ll probably look back on that with nostalgia in a few years, but the goal now is to grow the income and make it more secure. Because this is an income portfolio. And I don’t intend to rely solely on luck.

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Disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, or legal advice. The views expressed are personal opinions and should not be taken as specific recommendations. Investing involves risks, including the potential loss of capital. Always conduct your own research and consult a qualified financial advisor before making any investment decisions. The author is not responsible for any financial losses or decisions based on the content of this article.

I/ Shareholder POV: The Reasons Why They Can Feel Like Geniuses

A/ A Great 1 Year Price Return

I bought shares of PBR.A at an average price of $11.69. From the outset, I knew the stock would be highly volatile, but I expected it to appreciate over the very long term. What I hadn’t factored in was the acceleration of geopolitical imbalances. As of March 20, 2026, after the market close, the stock sits at $17.06, for a gain of 45.94%.

Source: Yahoo Finance

Now let’s look at the “big picture”: volatility is in this stock’s DNA, exposed to market swings and political uncertainty, as we have repeatedly pointed out in various articles on Petrobras by Pipart Global Income. But focusing solely on the share price of a high-yield stock is somewhat superficial—if not outright dumb. It is probably time to turn our attention to the income.

Source: Yahoo Finance

B/ A Cyclical Dividend Payment

As we have already observed in previous articles, dividend payments are cyclical and can even be interrupted for long periods. The year 2022 was exceptional, and the new dividend policy under the 2025-2029 plan (now extended and incorporated into the 2026-2030 Business Plan) is more reasonable and measured. It’s unfortunate for us as shareholders, but objectively, this makes the investment more sustainable and reasonable in the long term.

Key context: Petrobras’ shareholder remuneration remains tied to its policy of distributing dividends based on free cash flow (often around 45% in base scenarios), with a focus on financial discipline. The 2025-2029 plan projected ordinary dividends of roughly $45-55 billion over the period (with flexibility for extras), but revisions in the 2026-2030 plan slightly lowered expectations (e.g., $45-50 billion ordinary, no mention of large extras), reflecting lower oil price assumptions and a priority on debt control, capex efficiency, and long-term resilience rather than aggressive payouts.

This shift away from the ultra-generous 2021-2022 levels (driven by the oil super cycle) toward a more conservative, predictable regime is indeed a trade-off: lower near-term yields for most shareholders, but reduced risk of suspensions or volatility in tougher cycles ahead.

Based on the projected average annual dividend of $1.40 to $1.55 per ADR under Petrobras’ 2026-2030 Business Plan, the yield on cost (at my average purchase price of $11.69 per ADR) falls in the range of 12.0% to 13.3%, while the yield on market (at the March 20, 2026 closing price of approximately $17.06 per ADR) would be in the range of 8.2% to 9.1%. In short, Petrobras transitioned from High Yield / High Risk to Moderately High Yield / Moderately High Risk. For my cost basis, that is a compelling setup.

Source: Petrobras 2026-2030 Business Plan

C/ Total Return Is High, Which Is Nice for Income Investors

Since its NYSE listing in August 2000, Petrobras (PBR ADR) has delivered a strong cumulative total return (price appreciation plus dividends reinvested) of approximately +1,852% through March 20, 2026—turning a $10,000 investment into roughly $195,200. This represents a CAGR of ~12.3% annualized over roughly 25.5 years, according to totalrealreturns.com data. The S&P 500 total return over the comparable period has seen cumulative gains of around +630% (CAGR of ~8–9% annualized from 2000 to early 2026), accounting for the dot-com bust, 2008 crash, and subsequent bull markets.

Shorter horizons highlight PBR’s extreme volatility: 5-year total return ~677–698%, 10-year ~1,499%, and for the PBR.A variant, 20-year ~413%. These results are often driven by massive dividend payouts during oil super cycles (e.g., 2021–2022), contrasted with deep drawdowns (>80–90% in crises like the 2014–2016 Lava Jato scandal and COVID). In contrast, the S&P 500’s more stable profile (e.g., 20-year ~622%, 10-year ~272%) reflects broad-market compounding with lower risk.

Overall, PBR has rewarded patient, risk-tolerant investors with superior long-term returns since inception, but its cyclical, geopolitically exposed nature means outperformance comes with far higher volatility than the diversified benchmark, proving that in this case, “luck” (timing oil booms and high payouts) has indeed paid as well as genius. For context, my own total return—price appreciation plus dividends received—stands at 60% over the past year, a reminder that in a high-yield stock, the income component matters as much as price appreciation.

Among these otherwise appealing features, there remains one downside: the withholding tax on dividends for non-residents has been reintroduced. It’s a regrettable but not entirely unexpected situation. That said, given that a significant share of payouts is already made via JCP, which are taxed as interest and subject to a 15% withholding tax, this new measure doesn’t alter things substantially.

II/ Business Holder POV: The Fundamental Reasons Why I Remain Humble and Hold for the Very Long Term

My investment horizon is simple: I’d like to pass these preferred shares on to my children when I pass away. That changes everything.

A/ The Best News: Oil Production Has Clearly Increased

In 2025, Petrobras delivered outstanding operational performance, increasing its commercial oil and gas production in Brazil to 2,990 mboed, up 11% year-on-year and exceeding the upper end of its guidance. This growth was driven by the ramp-up of high-capacity FPSOs in core pre-salt fields such as Búzios and Mero, alongside record production levels and improved operational efficiency.

Pre-salt assets—now accounting for roughly 82% of total output—continue to underpin Petrobras’ low-cost, high-volume growth strategy. On a global scale, with oil supply around 100–102 million barrels per day, Petrobras produced approximately 2.4 million barrels per day of oil (and ~3 mboed including gas), representing ~2.3–2.5% of global supply and reinforcing its position as a leading non-OPEC producer.

Source: Petrobras Operational Report 2025

In 2025, Petrobras reached its highest proven reserves in a decade, at around 12.1 billion barrels of oil equivalent (boe) (SEC standard). More importantly, the company replaced significantly more oil than it produced, with a reserve replacement ratio (RRR) of 175% —entirely organic—adding 1.7 billion boe despite a year of record production.

This results in a reserves-to-production (R/P) ratio of ~12.5 years, meaning Petrobras could sustain current output for over a decade without new discoveries. Compared to peers, Petrobras stands out:

• ExxonMobil: strong RRR (often >100%), R/P ~13 years

• Chevron: ~158% RRR, but shorter R/P (~8–10 years)

• TotalEnergies: ~115–157% RRR, R/P ~12 years

• Shell: weaker RRR (~85%), R/P ~9 years

• BP: ~90% RRR, R/P ~7–8 years

While some majors hold larger absolute reserves, Petrobras delivers one of the strongest organic renewal profiles in the sector, driven by its high-quality, low-cost pre-salt assets.

Why this matters: high organic reserve replacement—especially in low-cost fields—directly supports future cash flow visibility. In other words, Petrobras is not just replacing barrels, but replacing profitable barrels, which underpins its ability to generate sustainable free cash flow over time.

Source: Petrobras Operational Report 2025

B/ Financial Environment Is Nice: Debt, USD/BRL, Leverage, FCF

The financial environment remains supportive across key metrics.

Debt & Leverage: Net debt stands at $60.6 billion with a healthy net debt-to-EBITDA ratio of 1.42x—well below the 2.5x internal ceiling, reflecting moderate leverage and ample headroom.

Sources: Petrobras Financial Reports

FCF & Levered Cash Flow: Despite elevated capex of $20.3 billion in 2025, Petrobras generated robust FCF of ~$16.7 billion, highlighting the cash-generating power of its low-cost pre-salt base. After years of aggressive deleveraging, financing costs are well under control, meaning levered cash flow translates efficiently into cash available to shareholders. In practical terms, a large portion of this free cash flow remains available after debt servicing, making it a reliable proxy for distributable cash to equity holders. Compared to peers, Petrobras stands out for combining high FCF generation with low financial pressure—a strong foundation for sustaining shareholder distributions.

USD/BRL Dynamics: The USD/BRL rate (~5.32) remains a structural tailwind. With 70–80% of revenues in dollars and a significant portion of costs in reais, Petrobras benefits from a natural hedge that bolsters cash flow and dividend capacity.

👉 Bottom line: Beyond operational strength, Petrobras’ financial setup (low leverage, strong levered cash flow, and favorable FX dynamics) reinforces its ability to generate and distribute cash over the long term.

Sources: Petrobras Financial Reports

C/ The Business Strategy Seems Well Executed

Strategically, Petrobras has finally found a groove that makes sense. The focus is clear: maximize value from the pre-salt crown jewels while maintaining capital discipline. The 2026-2030 Business Plan reflects this balance—capex is directed primarily toward high-return offshore projects (with ~70% allocated to exploration and production), the dividend policy has become more predictable, and the company has shown restraint in pursuing the kind of empire-building that plagued it in the past.

Source: https://petrobras.com.br/en/quem-somos/estrategia

On execution, the track record speaks for itself. Production exceeded guidance in 2025. Reserve replacement is best-in-class. Costs remain among the lowest in the industry. These aren’t signs of a company coasting—they’re signs of a company executing well on a sensible plan.

Now, we won’t dwell further on the elephant in the room. That’s political risk. It remains high in Brazil, but that’s the price of investing in this company. I’ve accepted being in partnership with the Brazilian state... and I’m keeping my fingers crossed.

What I can control is my time horizon. And for a very long-term holder, the gap between a well-executed strategy and a volatile political environment creates exactly the kind of opportunity I’m willing to live with.

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Investor Takeaway: Thesis Unchanged, but Now Price Supports It

With the stock now trading at a level that better reflects its fundamentals, my conviction remains intact. Petrobras remains a great investment for the very long term. Over the past year, I’ve appreciated this investment because it has delivered on its promises: high volatility, strong dividends, and real but well-identified risks. The biggest risk remains political risk, but that’s just how it is. In any case, I’ve achieved a 60% total return over one year (PBR.A shares bought at $11.69).

As a long-term investor, I see solid reserves, a strategy that seems reasonable to me, and reasonable income prospects. I’m comfortable with that. It’s not perfect—I had hoped for even higher income and lower taxes—but the trade-off remains favorable. I like this company and its business model, so I’ll continue to monitor its evolution. It’s more engaging than watching a covered call ETF, and the capital appreciation prospects are significantly better, though it does require more time and attention.

This position is already large enough in my portfolio, so I’m letting it ride and reinvesting the dividends elsewhere. I won’t add at these levels—but let’s revisit that in a few quarters.

In short, Petrobras is not a compounder: it is a distributor.

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Disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, or legal advice. The views expressed are personal opinions and should not be taken as specific recommendations. Investing involves risks, including the potential loss of capital. Always conduct your own research and consult a qualified financial advisor before making any investment decisions. The author is not responsible for any financial losses or decisions based on the content of this article.

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I/ The observation: a sharp share price decline, a corresponding yield increase

A/ All global leaders are suffering and the correction is severe

Pernod-Ricard, the French spirits giant, has experienced significant share price weakness. The chart below leaves no room for ambiguity: the current price is roughly where it stood in 2012. The decline has been pronounced, accelerating further following the publication of first-half results in February 2026. The most frequently cited explanations point to difficulties in the Chinese and American markets. But this is a global player, and a global analysis is required.

Source: Yahoo Finance

The world’s number one, Diageo, is also suffering, and its chart tells a similar story. This suggests a market-wide issue: investors believe these companies are under pressure and that short-term prospects, at least, remain weak.

Source: Yahoo Finance

Examining the dividend history reveals that while Pernod-Ricard is not a dividend aristocrat—having reduced its payout in certain years—it is clearly a dividend grower.

Dividend growth has been less explosive for Diageo. But stepping back, the total return picture is what matters most.

B/ A mediocre total return over the last 15 years

From 2010 to 2025, the total return of Pernod Ricard and Diageo was remarkably similar. Both companies delivered roughly double the initial investment when dividends are reinvested, corresponding to an annualised return of around 4.5–5%. While Pernod Ricard experienced stronger dividend growth over the period, Diageo benefited from a more stable share price trajectory. As a result, the overall performance converged despite different return drivers. In total return terms, neither company clearly outperformed the other over the 2010–2025 period. This historical record is hardly reassuring.

II/ The sector’s great hangover

A/ Cyclical difficulties

The major distillers are nursing a brutal, multi-year hangover. For Diageo, Pernod Ricard, and Rémy Cointreau—empires built on Scotch, Cognac, American whiskey, and other aged brown and white spirits—the post-pandemic party ended abruptly, leaving massive oversupply and shattered growth assumptions.

What went wrong. After explosive demand during lockdowns and the 2021–2022 recovery (driven by at-home premium drinking), volumes crashed. Distributors and retailers, who over-ordered amid the boom, are now aggressively destocking. The sector faces a historic glut: the five largest listed producers (Diageo, Pernod Ricard, Campari, Brown-Forman, and Rémy Cointreau) hold roughly $22 billion in unsold aged inventory—the highest level in over a decade. This has forced production pauses (e.g., Jim Beam halting output for all of 2026), price concessions, and repeated profit warnings. Diageo now guides full-year fiscal 2026 organic net sales down 2–3% (with operating profit flat to low-single-digit growth). Pernod Ricard reported H1 fiscal 2026 organic sales down 5.9% (to €5.253 billion), with the Americas down 12% (US down 15%) and China down 28%. Following these results, the stock fell more than 30% as investors recalibrated expectations for a longer, more uncertain recovery.

Cyclical pressures: the immediate storm. The current downturn is, in part, a classic inventory correction amplified by macroeconomic headwinds. The destocking cycle—distributors working through the mountains of cases they ordered during the demand surge—has created a self-reinforcing slump in orders. Compounding this, persistent inflation and elevated interest rates have squeezed discretionary spending across Western markets. Consumers are trading down from premium tiers or moderating consumption entirely. In the United States, soft sentiment and high borrowing costs have curbed the premiumisation trade that fuelled years of growth; tequila brands like Don Julio have been notably hit. In China, the picture is bleaker still: economic uncertainty, weakened consumer confidence, and government austerity measures limiting high-end gifting and on-trade consumption have crushed demand. Trade barriers—notably the 34.9% anti-dumping tariffs on EU Cognac—have exacerbated the collapse, with Cognac and baijiu segments suffering double-digit drops.

B/ Structural headwinds: the long fade

Beneath the cyclical turmoil lies a more fundamental realignment of alcohol consumption. The old growth engines are sputtering not just from temporary weakness, but from lasting shifts in behaviour. Mature markets (North America and Western Europe) are approaching saturation; the decades-long premiumisation trend (trading up to higher-priced spirits) has slowed and, in some segments, reversed. More ominously for the industry, younger cohorts are turning away from alcohol altogether. The rise of “sober-curious” culture, heightened health awareness among Gen Z and Millennials, and the proliferation of sophisticated low- and no-alcohol alternatives (alongside RTDs and craft beer) are steadily eroding traditional spirits volumes. These are not cyclical quirks that will vanish with the next economic upturn; they represent a durable shift in consumer preferences that the industry must navigate for decades to come.

The long view. From 2010 to end-2025, the spirits sector delivered only modest total returns. This lagged far behind the S&P 500’s ~13–14% annualised return over comparable periods. The reasons are threefold. First, valuation compression: multiples expanded sharply during the 2010s growth phase and the post-COVID premiumisation hype, then contracted violently (share prices have fallen more than 40% from their 2021–2022 peaks). Second, market saturation in mature regions, with growth increasingly reliant on emerging markets that have since faltered—China most conspicuously. Third, persistent volatility: strong dividend growth cushioned returns, but price performance suffered from repeated demand busts and inventory cycles.

The iconic brands endure. Balance sheets remain relatively solid, despite elevated leverage from carrying excess aged stock. Diversification into non-alcoholic innovation and RTDs offers some upside. Yet the old narrative of relentless ascent has given way to a more sober reality: a prolonged grind with cyclical recovery potential, but lasting structural headwinds from the slow, quiet withdrawal of a generation from alcohol.

III/ So can we bet on a sector rebound by investing in Pernod-Ricard?

A/ Pernod-Ricard is a cyclical global player; it fits a global income portfolio

1/ A global brand portfolio

Pernod-Ricard sells everywhere in the world, and its global footprint, in the simplest terms, is divided into three roughly equal regions: the Americas, EMEA, and Asia. Within each region, there are mature—even saturated—markets alongside others still growing.

Source: Pernod Ricard H1 FY26 Financial Communication

Growth is located almost exclusively in emerging markets. (Notably, the Nordics and Japan still offer growing markets.).

Source: Pernod Ricard H1 FY26 Financial Communication

The portfolio of global brands is impressive. At this stage, I see a global business established everywhere with world-class brands. When the cyclical problems abate, I believe this company is positioned to benefit.

Source: Pernod Ricard H1 FY26 Financial Communication

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2/ Global problems

In the first half of fiscal 2026, Pernod Ricard faced a challenging transition year shaped by two distinct sets of headwinds. First, a sharply unfavourable foreign exchange environment significantly weighed on reported results, with adverse currency movements—primarily the depreciation of the US dollar, Indian rupee, and Turkish lira against the euro—combined with perimeter effects from strategic disposals such as Imperial Blue, widening the reported net sales decline to -14.9% (versus -5.9% organic). Second, the group encountered a pronounced cyclical slowdown in global demand, concentrated in its two largest markets: the United States, where organic sales fell -15% amid persistent softness in the spirits sector, weak consumer sentiment, and amplified distributor inventory destocking; and China, down -28% due to macroeconomic weakness, depressed consumer confidence, tighter regulations on premium on-trade channels, and inventory corrections. Excluding these two markets, performance remained broadly stable, with notable growth in high-potential regions such as India and accelerating momentum in global travel retail during the second quarter.

Source: Pernod Ricard H1 FY26 Financial Communication

B/ Global perspectives are not so negative

1/ Markets may rebound

Long-term fundamentals remain attractive despite short-term cyclical headwinds in certain markets. On the positive side, key structural drivers include a growing Legal Drinking Age (LDA) population, the expansion of the middle and affluent classes, rising economic independence among women, and spirits steadily gaining share in total beverage alcohol (TBA) consumption. In the near term, however, challenges persist from soft consumer confidence and squeezed wallets amid economic pressures. Meanwhile, conviviality is evolving with consumer trends shifting toward premiumisation, a focus on meaningful experiences, greater convenience, and changing lifestyles that alter drinking occasions and frequency—trends that present both opportunities and adaptation challenges for the group. Accompanying images illustrate social gatherings with Pernod Ricard brands, reinforcing the enduring appeal of shared moments while navigating these contrasts. Overall, this underscores the company’s confidence in resilient underlying growth drivers to support recovery beyond the current transition phase. The consumer is evolving.

Source: Pernod Ricard H1 FY26 Financial Communication

Management remains reasonably optimistic and anticipates moderate revenue increases in the medium term. For my part, I’m betting on the long term and believe the market will grow in an ageing world, with demographics remaining the central question—a subject on which nobody truly understands anything today, I fear. Older people drinking quality products? I believe in it somewhat, and that bodes well for Pernod-Ricard.

Source: Pernod Ricard H1 FY26 Financial Communication

2/ Long-term financial fundamentals are sound

Pernod Ricard maintains a solid long-term financial position, characterised by a strong balance sheet, disciplined capital allocation, and a clear deleveraging trajectory. As of December 31, 2025 (end of H1 FY26), net debt stood at €11.168 billion, reflecting a substantial €900 million reduction over the prior 12 months—driven by improved free cash flow generation, proceeds from margin-accretive disposals like Imperial Blue, and ongoing efficiency measures—while the net debt to EBITDA ratio was 3.8x (at average rates), a modest increase due to softer EBITDA from FX and cyclical pressures but still manageable within the group’s historical norms and far below peak levels seen in prior cycles. The H1 FY26 results further confirm this resilience, with free cash flow rising 9.5% to €482 million despite a decline in profit from recurring operations, thanks to normalised strategic investments, disciplined operating working capital management (boosting cash conversion to 61%, up 11 points), and proactive portfolio optimisation. Looking ahead, the company targets bringing leverage below 3x by FY2029 through continued cash focus and expected profit recovery, underscoring a robust foundation for sustained shareholder value in the medium to long term.

Source: Pernod Ricard H1 FY26 Financial Communication

Source: Pernod Ricard H1 FY26 Financial Communication

Pernod Ricard currently trades at an attractive valuation, with shares around €73 as of early March 2026, reflecting a trailing twelve-month P/E ratio of approximately 13x—significantly below its 10-year historical median of around 24-25x and well discounted compared to European consumer staples peers often trading at 17-20x. This low multiple stems from near-term cyclical pressures on earnings, with EPS impacted by the transitional year, yet the group delivered resilient free cash flow of €482 million in H1 FY26 (+9.5% YoY) despite softer profit, achieving strong cash conversion of 61% (+11 points) through disciplined working capital and normalised investments. Analysts’ consensus points to an average price target of around €94-96 (with highs up to €120-128), implying substantial upside potential of 25-30% or more, supported by expectations of profit recovery, ongoing deleveraging (target below 3x net debt/EBITDA by FY29), and structural drivers like premiumisation. Overall, these metrics suggest the stock appears undervalued at current levels, offering a potentially attractive entry point for a long-term investor betting on the group’s medium-term rebound.

Source: Pernod Ricard H1 FY26 Financial Communication

Investment takeaway

Pernod-Ricard investors are not drunk... but they have taken a serious hit. The February 2026 selloff, following weaker-than-expected first-half results, pushed the stock to levels not seen in over a decade. In my opinion, this represents a good—though still risky—entry point for my portfolio. I plan to purchase shares as soon as I have fresh cash available, likely in April.

What is my thesis? I can invest in the consumer staples sector, in a global company, with a 6%+ yield. And as a bonus, prospects for dividend growth. On the other hand, I do not believe for a second in explosive growth potential. This is a solid core holding—somewhat cyclical, and one that will need to regain its financial health.

I believe Pernod-Ricard is a suitable investment vehicle for my Pipart global income secondary portfolio. Long term—because that is my only perspective—I am counting on the dividend rising slightly, above inflation, and on a valuation returning towards historical standards, which will provide a capital cushion. Almost high yield, almost high risk, but nothing explosive. In short, an investment for the lower end of the spectrum in my global income portfolio—reserved for my secondary “lower income” portfolio (though 5% minimum all the same).

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Disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, or legal advice. The views expressed are personal opinions and should not be taken as specific recommendations. Investing involves risks, including the potential loss of capital. Always conduct your own research and consult a qualified financial advisor before making any investment decisions. The author is not responsible for any financial losses or decisions based on the content of this article.

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I/ Investment Thesis: Why the DAX Is a Good Long-Term Diversification Candidate in an Income-Oriented Portfolio

A/ The DAX: A High-End “Industrial ETF” Paid in Euros

Not quite. But let’s start with the basics: the DAX (Deutscher Aktienindex) is Germany’s flagship stock market index, representing the 40 largest companies listed on the Frankfurt Stock Exchange. It is managed by STOXX (a subsidiary of Deutsche Börse) and is often compared to France’s CAC 40 or the U.S. S&P 500. Adding a slight technical note: the DAX is a total return index (dividends are reinvested in the index). It is weighted by free-float-adjusted market capitalization, meaning company weights are based on the value of shares available on the market, excluding stakes held by founders or the state. A capping rule limits any single stock’s weight to 15% of the index.

Source: Stoxxx

So what’s in it? The DAX is indeed a “predominantly industrial ETF.” The data highlights this: if we add the strict industrials sector, chemicals, and automobiles, industry accounts for about one-third of the index. Thus, the DAX is largely export-oriented and dependent on the global economic cycle. That’s the first theoretical lesson: it’s a cyclical index.

Source: Stoxxx

B/ Volatility Is the Price to Pay for the Privilege of Holding the DAX

This observation is confirmed by results: the DAX’s volatility has been higher over the long term than that of the S&P 500, CAC 40, or FTSE 100. It’s a cyclical, volatile index that delivers very strong long-term performance (8.23% from 1992 to 2025). As the comparison shows, the DAX outperforms other major European indices in total return and has a standard deviation—the best metric for calculating volatility—of 19.83%, well above that of other major developed-country indices.

At this point, we can confidently state that the DAX is essentially an industrial, cyclical, volatile vehicle featuring world-class international companies. The performance comparison provides a fairly precise overview.

Source: Curvo

C/ The DAX: A Romantic Choice, Not Really an “Income-Oriented” One

The DAX, we haven’t said yet, is an assembly of brilliant global brands. Let’s focus on the top 10, which account for about 64% of the index’s capitalization. Anyone who’s worked in a large company knows SAP is pretty much unavoidable, knows Siemens, Airbus, Allianz (one of the world’s best insurers), Deutsche Bank, etc. Not to mention the world’s top automobile brands like BMW, Mercedes-Benz Group, or Volkswagen. These are historic, excellent, and essential companies. Owning them is a quality guarantee for your portfolio. In short, it’s a concentrated—perhaps overly concentrated—package of excellent companies. This concentration increases volatility but provides assurance of investing in strong businesses. These are rational good bets.

Source: https://companiesmarketcap.com/dax/largest-companies-by-market-cap/

It is also an emotional bet. We should never underestimate this aspect, as it is inherent to a relatively good knowledge of the country and the ability to hold an investment long-term. Germany is the land of so many great thinkers, from Goethe to Hegel, of an unquestionably superior work ethic compared to the global average, and a country for which I have affection, having personal German roots. BUT it is clearly not the temple of income-oriented investing.

Indeed, the average dividend is low (around 2.5%), and taxation is often high: 26.5% withholding tax for non-residents before double tax treaty. Even reduced to 15%, you’ll need a more financially and fiscally efficient vehicle to generate substantial income from the German market. The DAX is therefore not an “income temple,” but an excellent candidate for European diversification in euros, provided it’s dressed with an appropriate strategy. That’s exactly what the tool I’ve identified allows, which we’ll scrutinize in the next section. And, facing a volatile index with long-term growth, the covered call tool seems quite suitable. In other words: it’s an excellent underlying poorly exploited by dividends alone.

II/ Investment Vehicle: Is DYLD (Global X ETF) a Good Choice?

First, for those who don’t know how covered call strategies work, it’s worth understanding the basics: these strategies involve selling call options against a portfolio you own, generating premium income in exchange for capping your potential upside. It’s a trade-off between regular income and unlimited growth potential. Read this for further information: Are Covered Call ETFs a Scam? Part 1 - XYLD - Pipart Global Income 10%+ Yield.

A/ There Are Many Reasons Not to Invest Right Now

Structural Flaws

What I really don’t like: it’s a synthetic replication ETF. Unlike physical replication where the fund holds the DAX stocks directly (or nearly), DYLD uses a synthetic approach via an unfunded swap with a counterparty (usually a bank). In short: the ETF doesn’t buy the DAX stocks; it enters into a derivative contract promising to pay it the index performance (price + dividends adjusted for the covered call strategy) in exchange for remuneration. Counterparty risk is therefore real: if the bank defaults (bankruptcy, etc.), you could lose part or all of your exposure, even if collateral (often high-quality assets) is supposed to limit it to 10% max per counterparty under UCITS rules.

For an “income” product like this, which aims for stability and regular distributions, I find it frustrating: we take additional risk (counterparty + swap complexity) for a strategy that’s already not straightforward during periods of high volatility or strong bull markets (where sold calls cap gains).

Current Market Drawbacks

The DAX price is quite high at the end of January 2026. For a global long-term investor, it’s not the only issue. But we need to keep it in mind.

Source: World PE Ratio

Moreover, the product is very recent. DYLD was created in November 2025 (official launch on November 25, 2025 on Deutsche Börse Xetra) and its assets under management are very limited. As of end-January 2026 (latest data around January 30), the fund’s AUM stands at about 2.5 to 3 million euros according to sources. It’s tiny for a UCITS ETF, especially compared to European covered call giants (e.g., the Global X QYLD suite totals several hundred million, and the UCITS covered call market exceeds 4-5 billion globally).

This small size poses several concrete problems: low liquidity with potentially wide bid-ask spreads (even if reasonable on Xetra for now), modest daily trading volumes (tens/hundreds of thousands of euros), and higher risk of NAV discount/premium in stress. There’s also a risk of premature closure: small ETFs (under 10-20 M€) are often “at risk” with issuers; if inflows don’t take off quickly, Global X could merge or liquidate it in 1-2 years (classic for niche launches like this on the DAX). Finally, there’s a complete lack of history: zero real track record beyond 2 months makes it impossible to assess how the ATM covered call strategy on DAX behaves in a true bear market, volatile sideways movement, or strong rally (sold calls cap upside, but do collected premiums really help?).

It will therefore be a diversification line and not a core line. But it remains very important.

B/ But the Promise Appeals to Me Too Much to Resist

Among UCITS covered calls, DYLD stands out as one of the very few purely European products (domiciled in Ireland, UCITS-compliant, listed on Deutsche Börse Xetra in euros, and specifically targeting German/European investors via the DAX). Unlike most covered call strategies available in Europe (often UCITS versions of QYLD/XYLD on Nasdaq/S&P 500, thus exposed to the US dollar), DYLD offers direct exposure to the DAX while generating income via monthly ATM option premiums sold.

The real plus for European income investors: recurring income in euros (monthly distributions, forward yield estimated at ~9.7% according to DivvyDiary), avoiding the double penalty of euro-dollar exchange. Many income portfolios are overweight in dollars (via QYLD, US JEPI-like, or American dividend aristocrats), exposing them to significant currency risk when the euro strengthens or the Fed cuts rates faster than the ECB. DYLD allows diversifying this monetary concentration while maintaining a high-yield income strategy: option premiums boosted by European volatility, exposure to solid sectors (industrials ~35%, finance ~19%), and potential for overall portfolio volatility reduction thanks to the buy-write strategy.

Source: https://globalxetfs.eu/funds/dyld/

In summary, the key figures as of January 30, 2026 are correct on paper (low TER, clean UCITS structure), but the tiny AUM of 2.55 M€ and the age of 2 months make DYLD still too risky for a serious allocation. It’s a promising product on paper (high yield in euros, DAX exposure), but we need to wait for it to reach at least 20-50 M€ and 12-18 months of life for liquidity, stability, and track record to become convincing. For now, it’s pure “wait and see”—or a small speculative bet for those who strongly believe in the rise of European covered calls.

Source: https://globalxetfs.eu/funds/dyld/

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Investment Takeaway

I want to be among the early adopters of this ETF and accept the risks. Concretely, I’m going to buy some in the coming days with the next distributions I’ll receive. A small position to monitor, with the hope that the income investing market finally unlocks in Europe.

As you’ve seen, not everything is totally rational in this choice: I love German exporting companies, and I believe its economic and financial genius will allow it to reposition on international markets, whatever the sector. It won’t be a core investment, but a good tool for geographical and currency diversification that, I hope, will perform over the long term.

In short, I’m dipping a small toe into DYLD, Global X’s new DAX Covered Call ETF (9.7% forward yield in euros). It’s one of Europe’s rare high-income plays on German blue-chips, perfect for euro diversification away from dollar-heavy portfolios. But it’s tiny (€2.55M AUM), synthetic (counterparty risk), and brand new (launched Nov 2025)—pure early-adopter speculation. Worth watching if European covered calls take off?

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Disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, or legal advice. The views expressed are personal opinions and should not be taken as specific recommendations. Investing involves risks, including the potential loss of capital. Always conduct your own research and consult a qualified financial advisor before making any investment decisions. The author is not responsible for any financial losses or decisions based on the content of this article.

This portfolio is built with my own personal capital, using the same ideas and holdings I share transparently with my subscribers. In practice, I began allocating capital at the start of 2025, though I staggered some investments until March and April to take advantage of better entry points. This makes precise time-weighted tracking a bit trickier, but for this first-year review, it feels more honest and useful to consider the full calendar year 2025. I also started publishing regular updates on Substack in March 2025.So, it’s time for the annual review. Let’s dive into the details with clear-eyed honesty.

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I/ The Portfolio’s “Big Picture” Data: A Strong First Year Overall

A/ Solid Total Return, Just Shy of the S&P 500

While the portfolio’s total return was lower than that of the MSCI World, it significantly outperformed a major high-yield bond index. This outcome aligns perfectly with the portfolio’s core objective: to generate high, reliable income while maintaining competitive performance.

Disclaimer on Granular Detail: For readers seeking exhaustive detail on the portfolio’s composition, the figures presented here are approximations. A complete, line-by-line audit with full transparency—including the rationale behind each monthly trade—will be published for paid subscribers in April 2026. Free subscribers retain full access to all aggregated performance data and strategic commentary. Another tradeoff.

But investing is a matter of facts. So let’s begin and we can now say that my portfolio has lagged both MSCI World USD and SP500 on a total return basis — with 16.76% for Pipart Global Income versus approximately 19.9% for URTH (tracking MSCI World) and 17.7% for SPY (tracking the S&P 500) over the full year 2025.This slight underperformance (around 1 percentage point behind the S&P 500 and 3 points behind the broader developed markets) is entirely consistent with the deliberate trade-off I accepted from the outset: prioritizing a massive yield of 12% — roughly 10 times higher than the ~1.2-1.5% delivered by these equity benchmarks — in exchange for potentially lower capital appreciation during strong bull markets dominated by low- or no-yield growth stocks.

In a year like 2025, where U.S. tech and growth names drove much of the upside, this gap was expected and even relatively contained. The real measure of success for a global income strategy lies not in beating pure equity indices every single year, but in delivering substantial, reliable cash flow while still capturing meaningful participation in market gains — which, at nearly 17%, it undeniably did. However, honesty compels me to admit that, irrationally, it does sting a bit.

This is the psychological cost of the chosen trade-off—a small bruise on the ego in exchange for a massive deposit into the bank account.

The lesson is clear: in its first year, my global income portfolio has indeed lagged the total return of the main global equity indices — just as theory predicted. But the underperformance has been slight, and I’m genuinely pleased with that outcome.

B/ The Core Achievement: Massive & Reliable Income

So much for total return. Now, let’s talk about the real return—the cold, hard cash hitting the account. Because the excellent news lies elsewhere: the yield is holding above 10%. I benefited from fortunate entry points, which matters enormously, and we will see in the coming years if it remains possible to find good entries. In short, I have secured a high yield, and from now on we will focus on just two indicators: yield on market price and yield on cost.

As of January 1st, 2026, the results were as follows: a seemingly enormous yield on cost of 13% and a yield on market price of 11.13%. The yield on cost is set to systematically surge upwards because I reinvest all dividends until retirement. These dividends generate new dividends, allowing the figure to progress constantly—barring significant dividend cuts. As for the yield on market price, it has decreased because the price of many income-generating assets rose during the year. This is an almost ideal scenario. We won’t complain, but we will remain prudent. In any case, the income is there—massive income—and distributed fairly regularly.

II/ The I-CASH Analysis: Diversification, The Main Area for Improvement

Let’s maintain the analytical framework of Pipart Global Income for portfolio evaluation—the I-CASH methodology.

I for International.

My portfolio is designed with a global focus, though it isn’t yet fully global. Take a look at the map below. I’ve invested in only 5 countries so far, which remains limited—even if the companies in question have significant market shares beyond their home borders. Enhancing this will be one of my key priorities in the coming years. That said, I have still managed to steer clear of the home bias that plagues the vast majority of individual investor portfolios. I intend to increase geographic diversification further using the income I collect

C for Currency

I remain overly dependent on the USD—though this level of dependence still seems entirely acceptable to me at this stage. Let’s take a closer look. The largest portion, nearly half of the total income at 49.2%, is denominated in USD (US dollars), shown in light blue. This indicates a strong dominance of the US dollar in the income breakdown. The second-largest share belongs to BRL (Brazilian real) at 29.4%, represented by the green segment, suggesting significant exposure to the Brazilian market or economy. EUR (euros) accounts for 19.4% in orange, reflecting a notable but smaller contribution from the Eurozone. The remaining currencies are minor: GBP (British pound) at just 0.7% and HKD (Hong Kong dollar) at 1.3%, appearing as thin slices in dark green and blue, respectively. Overall, the chart highlights a heavy reliance on USD, followed by BRL and EUR, with very limited income from other currencies.

A for Asset Class

On this front, I am still far too dependent on covered call ETFs, which account for nearly half of the portfolio’s income. This is only temporary, but it signals a lack of resilience in the portfolio and a reliance on market volatility. While this is normal at this stage, it should not persist over the long term. The largest segment is Covered call ETF at 48.1%, represented in blue. This indicates that nearly half of the assets are held in exchange-traded funds employing a covered call strategy—typically used to generate income while holding underlying stocks, with a focus on enhanced yield and moderate growth. Preferred stock accounts for 28.5%, shown in pink. This reflects a significant allocation to preferred shares, which generally offer higher dividend yields and priority over common stocks but have limited capital appreciation potential. Common Stock makes up the remaining 23.4%, in orange, providing exposure to traditional equity ownership with potential for growth.

S for Sector

The dependence on the tech sector is staggering when you look at the chart—it accounts for 48.1% of income. Reducing this exposure through the reinvestment of portfolio dividends will be the top priority in 2026.

We now have the plan for 2026 and the coming years: diversification, diversification, diversification—without ever sacrificing H for High Yield (I now set a minimum yield requirement of 8% for any new investment, which also allows me to incorporate high-quality international assets). The I-CASH method is proving to be an effective tool for both analysis and reinvestment strategy.

III/ A Quick Look at Holdings & An Administrative Update

I’ll move through this part more quickly, as the detailed analysis will come later. That said, in terms of total return, it’s worth noting that several portfolio holdings outperformed the portfolio itself, notably JEPQ and Legal & General. Others performed in line with the portfolio average: Icade, XYLD. Some were a bit below, like Petrobras (PBR.A), while others detracted from portfolio value, such as Edvantage. Finally, other investments are too recent to form a meaningful opinion on, like PFF, Banco do Brasil, and JEPG.

Regardless, I don’t regret any of these investments. And I’ve already opened new positions in January 2026. Most importantly, this stands: I like my holdings and view them all as long-term investments, despite the risks inherent to some of them. Taken as a whole, they complement each other well. The main task now is to balance the sizing of each position.

The only tax update I’m aware of at the beginning of January 2026 is the change to dividend taxation for non-resident holders of Brazilian shares: the withholding tax rate is now 10%. This is relatively bad news for the Pipart Global Income portfolio given its exposure to Brazil, but the impact is limited—and it comes with the territory when investing globally.

Investor Takeaway: A Lucky First Year & Results in Line with Expectations

Few questions remain, really. Did this portfolio succeed in converting market growth into income? Yes.

Did I sacrifice some market performance by making this trade-off? Yes, but in the end, the sacrifice was relatively minor for this year.

Does this portfolio bring me a sense of security for my future financial freedom? Yes, but not yet enough—it still lacks sufficient geographic, sector, and currency diversification.

What are the prospects for 2026? Beyond diversification, I will seriously consider using leverage to sharply accelerate the growth of my yield on cost. It could have been worse—the method is delivering early results. I remain cautious; we’ll truly know whether the strategy is a success in ten years’ time.

Morale of the story: a global income portfolio is not designed to win bull markets — it is designed to pay you regardless of them.

In 2026, I’ll publish more granular allocation and position-sizing decisions for paid subscribers, while keeping all high-level performance data fully public.

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Disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, or legal advice. The views expressed are personal opinions and should not be taken as specific recommendations. Investing involves risks, including the potential loss of capital. Always conduct your own research and consult a qualified financial advisor before making any investment decisions. The author is not responsible for any financial losses or decisions based on the content of this article.

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I. Banco do Brasil Investment Thesis: A High-Yield, High-Risk Proxy for Brazil’s Economy

A. A Macroeconomic Play with a Double-Digit Dividend Yield Appeal

Banco do Brasil (BB) stands as a foundational pillar of the Brazilian economy, offering investors a direct channel to the nation’s long-term growth prospects. Established in 1808 and operating a network of over 4,700 branches, the bank’s 217-year history is deeply intertwined with Brazil’s development, from financing its first coffee exports to becoming the backbone of its modern agribusiness sector.

Source: Q3 Banco do Brasil Results

With 50% state ownership and a market capitalization of approximately $40 billion USD, BB functions as a key barometer for national economic health. The core investment thesis is a dual bet: on Brazil’s robust macroeconomic fundamentals and on the bank’s ability to generate and distribute substantial earnings. Brazil’s assets are compelling for long-term growth; it is a global leader in agricultural and mineral exports, possesses a young and growing population that supports a dynamic domestic market, and has demonstrated solid GDP growth of 3.4% in 2024, with projections from the World Bank and IMF pointing to a sustained convergence of 2.2%–2.5% in the coming years.

New trade agreements, such as the one with the European Union, further enhance export diversification prospects. Banco do Brasil leverages this environment directly, generating its revenue from a diversified yet Brazil-centric portfolio. In 2024, the bank reported total revenues of 102.27 billion BRL, with retail banking for individual clients contributing 35%, corporate banking 30%, and its strategic agricultural financing segment accounting for 20%. This structure makes BB a leveraged play on both domestic consumption and the global commodities cycle.

The most compelling figure for income-focused investors is the dividend yield, which currently stands at approximately 6% forward for the ADR, supported by the bank’s payout policy targeting 45–50% of earnings (with some flexibility shown in 2025 to preserve capital amid provisions). Historically, Banco do Brasil has generated double-digit dividend yields in BRL at cycle peaks; the current ~5–7% forward yield in USD for the ADR reflects both earnings pressure and Brazilian real volatility.

This policy has resulted in a track record of consistent, albeit cyclical, shareholder returns. The sustainability of this high yield is rooted in the bank’s dominant market position and its earnings power. For context, this yield significantly outpaces those offered by its main domestic peers, Itaú (6.5%) and Bradesco (7.2%), and is on par with its more focused subsidiary, BB Seguridade (BBSE3), which has a 10.2% yield but an 80% payout ratio. The performance of the stock itself has been strong; from 2016 to 2025, it outperformed the S&P 500. However, this performance comes with a significant price in the form of extreme volatility, with a standard deviation of 50.72% compared to the S&P 500’s 15.49% over the same period. This volatility is acknowledged as an inherent feature of the investment, but it is also framed as a mechanism that creates regular, attractive entry points for long-term investors.

B. Navigating a Labyrinth of Operational and Economic Risks

The pursuit of a 10% yield from a Brazilian state-owned bank is accompanied by a complex web of risks that directly challenge its profitability and dividend sustainability. A primary and immediate concern is the rising rate of loan defaults. In the first quarter of 2025, Banco do Brasil’s default rate reached 3.9%, a key factor behind a significant 21% drop in its net profit due to increased provisions for loan losses. This risk is acutely concentrated in the agribusiness sector, which constitutes 52.1% of the bank’s total loan portfolio. This heavy exposure makes BB profoundly vulnerable to external shocks; a 15% drop in soybean prices in 2024, coupled with climate disasters like the 2024 floods in Rio Grande do Sul, directly impair farmers’ repayment capacity and force the bank to set aside more capital, threatening its bottom line.

Source: Q3 Banco do Brasil Results

Simultaneously, the bank’s traditional dominance is under siege from agile digital fintechs. Nubank, with its 40 million clients in Brazil, and Banco Inter are aggressively capturing market share, particularly among younger demographics, by offering superior user experiences and lower-cost digital services. This competition erodes margins and challenges BB’s ability to grow its client base. In response, the bank is undertaking a massive digital transformation, investing over 1.8 billion BRL in technology in Q1 2025 alone, focusing on AI and cloud infrastructure to modernize its services and leverage its vast base of 70 million clients. Beyond market competition, the bank’s 50.7% state ownership introduces the persistent risk of political interference. Government directives can and have prioritized social and political goals over profitability; for example, in 2022, state-mandated credit programs for small businesses forced BB to offer below-market rates, squeezing its net interest margins by an estimated 0.5%. Political appointments to the board further risk aligning strategic decisions with electoral cycles rather than long-term shareholder value. The broader macroeconomic environment adds another layer of pressure. Brazil’s benchmark Selic interest rate, at a two-decade high of 15% as of mid-2025, suppresses credit demand—evidenced by a -5% contraction in loan growth in Q1 2025—and compresses the bank’s net interest margin, which fell to 3.2%.

C. Investor Calculus: Undervaluation, Currency Volatility, and Strategic Position

For a global investor, the decision to invest in Banco do Brasil requires a careful calculus of its compelling valuation metrics against its unique set of risks, with currency exposure being paramount. The bank remains fundamentally undervalued by traditional measures. It currently trades at a trailing Price-to-Earnings (P/E) ratio of approximately 5.5–6.5 (forward P/E around 4–5 based on normalized earnings expectations) and a Price-to-Book (P/B) ratio of about 0.9, still below its longer-term historical averages (P/E 7 and P/B ~1.0–1.2) and at a meaningful discount to international peers like HSBC (8–10) and Santander (~10), or U.S. giants like JPMorgan (14–16). This persistent discount reflects ongoing market concerns over credit quality and cyclical pressures but also presents an attractive opportunity; a moderate re-rating of the P/E to just 7.0–8.0 (closer to historical norms) could imply a target price representing 20–40% upside from current levels, depending on earnings recovery. However, this undervaluation also embodies market pessimism and carries the real risk of a prolonged “value trap” if Brazil’s macroeconomic conditions – particularly in agribusiness – fail to stabilize and improve.

The single greatest risk for a foreign investor is the volatility of the Brazilian Real (BRL), which traded around 5.50 BRL/USD in July 2025 and 5.42 today. The Real is highly sensitive to capital flows and geopolitical shifts, and a sharp depreciation can decimate USD-denominated returns. Historically, a 15% depreciation of the Real in 2022 alone demonstrated how currency moves can override strong local stock performance. This risk is compounded by the bank’s own financial structure; it holds approximately $3.05 billion in foreign currency debt, including perpetual bonds and subordinated notes. A significant depreciation of the Real, say over 20%, would increase the local currency cost of servicing this debt, putting pressure on its capital coverage ratios. While the bank is expanding internationally, with its overseas loan portfolio growing 29% to R$65 billion in 2024, these operations remain marginal, contributing less than 10% of total revenue and offering no meaningful hedge against domestic exposure.

In conclusion, Banco do Brasil represents a high-conviction, high-stakes investment. It is a strategic wager on Brazil’s long-term economic ascent, channeled through a historically resilient institution that pays an exceptional dividend yield from a position of market dominance. The current deep undervaluation offers a considerable margin of safety and potential for capital appreciation. However, this opportunity is unequivocally counterbalanced by substantial and interconnected risks: economic cyclicality, political interference, intense fintech competition, and profound currency volatility. The investor’s premise is that Banco do Brasil is not a value trap, but a high-yield cornerstone for those with the patience and risk tolerance to navigate Brazil’s dynamic and volatile landscape, understanding that the reward of a double-digit yield is the direct compensation for assuming this elevated level of risk.

II. Q3 2025 Results: A Severe but Anticipated Stress Test in a Challenging Context

The third-quarter 2025 results for Banco do Brasil served as a severe stress test that largely confirmed the high-risk, cyclical nature of the original thesis. However, the deterioration proved more intense than initially modeled, particularly in agribusiness, leading to sharper profit declines and a more conservative outlook. The stock price has since retreated from earlier highs, reflecting these pressures, but the core long-term case – as a leveraged play on Brazil’s recovery – remains intact for patient income investors.

Source: Yahoo Finance

A. The Foreseen Risks Materialize More Intensely Than Expected

1. Agricultural Concentration: The Downcycle Hits Hard

The quarter highlighted the vulnerabilities of the bank’s heavy reliance on agribusiness (still 52% of the loan book). Commodity price weakness, weather issues, and high input costs severely impacted farmer repayment ability – exactly as anticipated, but with greater severity. Agricultural NPLs (90+ days) surged to 5.34%, up from 3.49% in Q2 and a dramatic rise from 1.97% a year earlier, triggering massive provisions.

2. Credit Risk Dominates

Profitability Q3 underscored how provisions can overwhelm operational resilience. While net interest income grew modestly and fees remained stable (R$8.9B), expenses were controlled – these positives were entirely offset by exploding loan loss provisions. Adjusted net income collapsed ~60% year-over-year to ~R$3.8 billion, with ROE dropping to 8.4% (from over 20% previously). This validated the thesis that credit cycles, especially in agro, drive earnings volatility far more than competition or margins.

Source: Q3 Banco do Brasil Results

B. The Updated Investment Calculus: Lower Price, Persistent Risks, but Attractive Yield

1. Extended Recovery Timeline

Management lowered 2025 guidance significantly (adjusted net income now R$18–21 billion, targeting ~R$20 billion), with the agribusiness delinquency peak potentially extending into 2026. Renegotiations (supported by government measures) are underway, but normalization is a 2026+ story. Visibility remains limited.

Source: Q3 Banco do Brasil Results

2. Dividend Sustainability and Adjusted Payout

The bank reduced its 2025 payout ratio to 30% (from the prior 40-45% range) to preserve capital amid high provisions and regulatory needs. This introduces more variability to shareholder returns, reinforcing the cyclical income profile. However, the forward dividend yield remains compelling – around ~5-7% for the ADR BDORY in USD, impacted by currency) – still well above peers, supported by the bank’s dominant position.

3. Prudent Defense in a Tough Environment

The modest contraction in the loan book reflects disciplined risk management rather than weakness. Digital investments continue, but credit resolution remains the priority. Capital ratios provide a buffer, though near-term ROE pressure persists.

My small position in Banco do Brasil (ADR – BDORY) was intended as a bet on the Brazilian economy, and more specifically on its agriculture. Short-term pain was certain. I knew it… and it happened intensely in 2025 with the agribusiness downturn. But my investment thesis hasn’t changed fundamentally, and I only hold a very small position. The stock is currently trading around the same levels as when I bought it initially (adjusted for currency), and the dividend yield has become more variable – lower in absolute terms this year due to profit pressures, but still attractive on a forward basis. Regardless, my thesis remains focused on the long-term potential, from an income investor perspective. The events of 2025 remind me that this type of investment involves significant cyclicality in income generation, which is part of the deal for high-yield emerging market banks. Still, I believe this remains the investment style best suited to me – with regular reviews of the long-term strengths and short-term realities.

I. Banco do Brasil Investment Thesis: A High-Yield, High-Risk Proxy for Brazil’s Economy

A. A Macroeconomic Play with a Double-Digit Dividend Yield Appeal

Banco do Brasil (BB) stands as a foundational pillar of the Brazilian economy, offering investors a direct channel to the nation’s long-term growth prospects. Established in 1808 and operating a network of over 4,700 branches, the bank’s 217-year history is deeply intertwined with Brazil’s development, from financing its first coffee exports to becoming the backbone of its modern agribusiness sector.

Source: Q3 Banco do Brasil Results

With 50% state ownership and a market capitalization of approximately $40 billion USD, BB functions as a key barometer for national economic health. The core investment thesis is a dual bet: on Brazil’s robust macroeconomic fundamentals and on the bank’s ability to generate and distribute substantial earnings. Brazil’s assets are compelling for long-term growth; it is a global leader in agricultural and mineral exports, possesses a young and growing population that supports a dynamic domestic market, and has demonstrated solid GDP growth of 3.4% in 2024, with projections from the World Bank and IMF pointing to a sustained convergence of 2.2%–2.5% in the coming years.

New trade agreements, such as the one with the European Union, further enhance export diversification prospects. Banco do Brasil leverages this environment directly, generating its revenue from a diversified yet Brazil-centric portfolio. In 2024, the bank reported total revenues of 102.27 billion BRL, with retail banking for individual clients contributing 35%, corporate banking 30%, and its strategic agricultural financing segment accounting for 20%. This structure makes BB a leveraged play on both domestic consumption and the global commodities cycle.

The most compelling figure for income-focused investors is the dividend yield, which currently stands at approximately 6% forward for the ADR, supported by the bank’s payout policy targeting 45–50% of earnings (with some flexibility shown in 2025 to preserve capital amid provisions). Historically, Banco do Brasil has generated double-digit dividend yields in BRL at cycle peaks; the current ~5–7% forward yield in USD for the ADR reflects both earnings pressure and Brazilian real volatility.

This policy has resulted in a track record of consistent, albeit cyclical, shareholder returns. The sustainability of this high yield is rooted in the bank’s dominant market position and its earnings power. For context, this yield significantly outpaces those offered by its main domestic peers, Itaú (6.5%) and Bradesco (7.2%), and is on par with its more focused subsidiary, BB Seguridade (BBSE3), which has a 10.2% yield but an 80% payout ratio. The performance of the stock itself has been strong; from 2016 to 2025, it outperformed the S&P 500. However, this performance comes with a significant price in the form of extreme volatility, with a standard deviation of 50.72% compared to the S&P 500’s 15.49% over the same period. This volatility is acknowledged as an inherent feature of the investment, but it is also framed as a mechanism that creates regular, attractive entry points for long-term investors.

B. Navigating a Labyrinth of Operational and Economic Risks

The pursuit of a 10% yield from a Brazilian state-owned bank is accompanied by a complex web of risks that directly challenge its profitability and dividend sustainability. A primary and immediate concern is the rising rate of loan defaults. In the first quarter of 2025, Banco do Brasil’s default rate reached 3.9%, a key factor behind a significant 21% drop in its net profit due to increased provisions for loan losses. This risk is acutely concentrated in the agribusiness sector, which constitutes 52.1% of the bank’s total loan portfolio. This heavy exposure makes BB profoundly vulnerable to external shocks; a 15% drop in soybean prices in 2024, coupled with climate disasters like the 2024 floods in Rio Grande do Sul, directly impair farmers’ repayment capacity and force the bank to set aside more capital, threatening its bottom line.

Source: Q3 Banco do Brasil Results

Simultaneously, the bank’s traditional dominance is under siege from agile digital fintechs. Nubank, with its 40 million clients in Brazil, and Banco Inter are aggressively capturing market share, particularly among younger demographics, by offering superior user experiences and lower-cost digital services. This competition erodes margins and challenges BB’s ability to grow its client base. In response, the bank is undertaking a massive digital transformation, investing over 1.8 billion BRL in technology in Q1 2025 alone, focusing on AI and cloud infrastructure to modernize its services and leverage its vast base of 70 million clients. Beyond market competition, the bank’s 50.7% state ownership introduces the persistent risk of political interference. Government directives can and have prioritized social and political goals over profitability; for example, in 2022, state-mandated credit programs for small businesses forced BB to offer below-market rates, squeezing its net interest margins by an estimated 0.5%. Political appointments to the board further risk aligning strategic decisions with electoral cycles rather than long-term shareholder value. The broader macroeconomic environment adds another layer of pressure. Brazil’s benchmark Selic interest rate, at a two-decade high of 15% as of mid-2025, suppresses credit demand—evidenced by a -5% contraction in loan growth in Q1 2025—and compresses the bank’s net interest margin, which fell to 3.2%.

C. Investor Calculus: Undervaluation, Currency Volatility, and Strategic Position

For a global investor, the decision to invest in Banco do Brasil requires a careful calculus of its compelling valuation metrics against its unique set of risks, with currency exposure being paramount. The bank remains fundamentally undervalued by traditional measures. It currently trades at a trailing Price-to-Earnings (P/E) ratio of approximately 5.5–6.5 (forward P/E around 4–5 based on normalized earnings expectations) and a Price-to-Book (P/B) ratio of about 0.9, still below its longer-term historical averages (P/E 7 and P/B ~1.0–1.2) and at a meaningful discount to international peers like HSBC (8–10) and Santander (~10), or U.S. giants like JPMorgan (14–16). This persistent discount reflects ongoing market concerns over credit quality and cyclical pressures but also presents an attractive opportunity; a moderate re-rating of the P/E to just 7.0–8.0 (closer to historical norms) could imply a target price representing 20–40% upside from current levels, depending on earnings recovery. However, this undervaluation also embodies market pessimism and carries the real risk of a prolonged “value trap” if Brazil’s macroeconomic conditions – particularly in agribusiness – fail to stabilize and improve.

The single greatest risk for a foreign investor is the volatility of the Brazilian Real (BRL), which traded around 5.50 BRL/USD in July 2025 and 5.42 today. The Real is highly sensitive to capital flows and geopolitical shifts, and a sharp depreciation can decimate USD-denominated returns. Historically, a 15% depreciation of the Real in 2022 alone demonstrated how currency moves can override strong local stock performance. This risk is compounded by the bank’s own financial structure; it holds approximately $3.05 billion in foreign currency debt, including perpetual bonds and subordinated notes. A significant depreciation of the Real, say over 20%, would increase the local currency cost of servicing this debt, putting pressure on its capital coverage ratios. While the bank is expanding internationally, with its overseas loan portfolio growing 29% to R$65 billion in 2024, these operations remain marginal, contributing less than 10% of total revenue and offering no meaningful hedge against domestic exposure.

In conclusion, Banco do Brasil represents a high-conviction, high-stakes investment. It is a strategic wager on Brazil’s long-term economic ascent, channeled through a historically resilient institution that pays an exceptional dividend yield from a position of market dominance. The current deep undervaluation offers a considerable margin of safety and potential for capital appreciation. However, this opportunity is unequivocally counterbalanced by substantial and interconnected risks: economic cyclicality, political interference, intense fintech competition, and profound currency volatility. The investor’s premise is that Banco do Brasil is not a value trap, but a high-yield cornerstone for those with the patience and risk tolerance to navigate Brazil’s dynamic and volatile landscape, understanding that the reward of a double-digit yield is the direct compensation for assuming this elevated level of risk.

II. Q3 2025 Results: A Severe but Anticipated Stress Test in a Challenging Context

The third-quarter 2025 results for Banco do Brasil served as a severe stress test that largely confirmed the high-risk, cyclical nature of the original thesis. However, the deterioration proved more intense than initially modeled, particularly in agribusiness, leading to sharper profit declines and a more conservative outlook. The stock price has since retreated from earlier highs, reflecting these pressures, but the core long-term case – as a leveraged play on Brazil’s recovery – remains intact for patient income investors.

Source: Yahoo Finance

A. The Foreseen Risks Materialize More Intensely Than Expected

1. Agricultural Concentration: The Downcycle Hits Hard

The quarter highlighted the vulnerabilities of the bank’s heavy reliance on agribusiness (still 52% of the loan book). Commodity price weakness, weather issues, and high input costs severely impacted farmer repayment ability – exactly as anticipated, but with greater severity. Agricultural NPLs (90+ days) surged to 5.34%, up from 3.49% in Q2 and a dramatic rise from 1.97% a year earlier, triggering massive provisions.

2. Credit Risk Dominates

Profitability Q3 underscored how provisions can overwhelm operational resilience. While net interest income grew modestly and fees remained stable (R$8.9B), expenses were controlled – these positives were entirely offset by exploding loan loss provisions. Adjusted net income collapsed ~60% year-over-year to ~R$3.8 billion, with ROE dropping to 8.4% (from over 20% previously). This validated the thesis that credit cycles, especially in agro, drive earnings volatility far more than competition or margins.

Source: Q3 Banco do Brasil Results

B. The Updated Investment Calculus: Lower Price, Persistent Risks, but Attractive Yield

1. Extended Recovery Timeline

Management lowered 2025 guidance significantly (adjusted net income now R$18–21 billion, targeting ~R$20 billion), with the agribusiness delinquency peak potentially extending into 2026. Renegotiations (supported by government measures) are underway, but normalization is a 2026+ story. Visibility remains limited.

Source: Q3 Banco do Brasil Results

2. Dividend Sustainability and Adjusted Payout

The bank reduced its 2025 payout ratio to 30% (from the prior 40-45% range) to preserve capital amid high provisions and regulatory needs. This introduces more variability to shareholder returns, reinforcing the cyclical income profile. However, the forward dividend yield remains compelling – around ~5-7% for the ADR BDORY in USD, impacted by currency) – still well above peers, supported by the bank’s dominant position.

3. Prudent Defense in a Tough Environment

The modest contraction in the loan book reflects disciplined risk management rather than weakness. Digital investments continue, but credit resolution remains the priority. Capital ratios provide a buffer, though near-term ROE pressure persists.

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Investment takeaway: The Thesis Endures, with Renewed Margin of Safety at Current Levels

In conclusion, Banco do Brasil remains for me a high-yield, high-risk play deeply tied to Brazil’s structural strengths – its dominant agribusiness and domestic growth – through a historic and resilient institution.2025 has severely tested the thesis: cyclical risks in agriculture materialized intensely (agribusiness NPL at 5.34% in Q3, massive provisions, adjusted profit down 60% y/y to R$3.8B), forcing a reduced payout to 30% and more cautious guidance (R$18-21B net income for 2025). The yield stays attractive in USD for the ADR (about 5%).*

My long-term conviction hasn’t changed: short-term pain was certain, and I accept it as part of this emerging-market cyclical income style.

With my small position in BDORY, I continue to hold, focused on the potential agricultural rebound in 2026+ and the bank’s ability to navigate this downcycle. This is simply my personal thesis as a patient investor – nothing more.

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Disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, or legal advice. The views expressed are personal opinions and should not be taken as specific recommendations. Investing involves risks, including the potential loss of capital. Always conduct your own research and consult a qualified financial advisor before making any investment decisions. The author is not responsible for any financial losses or decisions based on the content of this article.

Investment takeaway: The Thesis Endures, with Renewed Margin of Safety at Current Levels

In conclusion, Banco do Brasil remains for me a high-yield, high-risk play deeply tied to Brazil’s structural strengths – its dominant agribusiness and domestic growth – through a historic and resilient institution.2025 has severely tested the thesis: cyclical risks in agriculture materialized intensely (agribusiness NPL at 5.34% in Q3, massive provisions, adjusted profit down 60% y/y to R$3.8B), forcing a reduced payout to 30% and more cautious guidance (R$18-21B net income for 2025). The yield stays attractive in USD for the ADR (about 5%).*

My long-term conviction hasn’t changed: short-term pain was certain, and I accept it as part of this emerging-market cyclical income style.

With my small position in BDORY, I continue to hold, focused on the potential agricultural rebound in 2026+ and the bank’s ability to navigate this downcycle. This is simply my personal thesis as a patient investor – nothing more.

Liked this Deep-Dive? Buy Me a Coffee!

Your support keeps this newsletter independent and research-driven. If this analysis saved you time or gave you a new investment idea, consider making a one-time donation. Every contribution helps me maintain part of the research free and accessible to everyone.

Buy me a coffee

Disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, or legal advice. The views expressed are personal opinions and should not be taken as specific recommendations. Investing involves risks, including the potential loss of capital. Always conduct your own research and consult a qualified financial advisor before making any investment decisions. The author is not responsible for any financial losses or decisions based on the content of this article.

Yet, the fundamental questions remain: Is there any erosion of the capital (NAV erosion)? Is the income truly as substantial as promised? And is the total return ultimately acceptable? These are the exact doubts that linger over my own positions in funds like JEPQ, JEPI, and XYLD. So, rather than staying in the realm of theory, let’s get practical: here are the concrete results of the combo strategy I use personally.

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I/ The US Stress Test: JEPQ, JEPI and XYLD income engines

A/ Three different beasts for my income engine

The core difference between these covered call ETFs lies in the trade-off they make between income, downside resilience, and growth potential. XYLD employs a purely systematic, high-income strategy by writing 100% At-The-Money (ATM) calls on the S&P 500. This provides substantial monthly yield but severely caps upside participation, leading to slower recovery after market downturns. In contrast, JEPI and its tech-focused sibling JEPQ use a more active, hybrid approach. By writing Out-of-The-Money (OTM) calls on a defensive equity selection (JEPI) or the Nasdaq-100 (JEPQ), they aim for a smoother income stream and greater resilience. JEPI’s defensive tilt offers better protection in a downturn, while JEPQ, though more volatile, uses its high yield to cushion falls while retaining significant growth potential.

This strategic divergence is clearly reflected in their risk-return profiles. XYLD is the quintessential income machine with limited growth. JEPI strikes a balance, offering a robust combination of yield, defense, and modest growth. JEPQ sits on the growth-oriented end of the spectrum, leveraging the tech sector’s potential and using option income to mitigate its inherent volatility. The choice ultimately depends on an investor’s priority: maximum income (XYLD), balanced total return (JEPI), or tech exposure with an income cushion (JEPQ).

B/ Income results

This week’s comparison focuses on three JP Morgan ETFs. This selection is intentional; not only do they represent distinct strategic approaches, but they are also accessible to a broad international audience, unlike many other covered call products. My analysis is grounded in a practical perspective, as I have personal investments in two of these U.S.-listed funds and a comparable European-domiciled ETF.

I have previously covered JEPQ extensively, from its initial introduction (here) to a deeper analysis of its role in a portfolio (here). While I will also be examining XYLD, my approach to it is more cautious, as its strategy presents a different risk-return profile that I find less aligned with my objectives.

Over the past three years, dividend volatility has proven to be lowest for JEPI (σ = $0.09), slightly higher for JEPQ (σ = $0.08), and significantly more pronounced for XYLD (σ = $0.14). Behind these disparities lie three key factors: the underlying index, the degree of option coverage, and the hand of the manager. XYLD, anchored to the S&P 500 and fully covered, distributes exactly what the market provides—a lot when implied volatility soars, and very little when it subsides.

JEPI and JEPQ, in contrast, only partially cover their portfolios and blend stock dividends, option premiums, and active management. Their cash flows are therefore smoothed, calibrated, almost engineered. In short, XYLD pays out what the market offers, while JEPI and JEPQ pay out what their managers design. And that is the whole difference between income you endure and income you build.

That’s for the monthly perspective. What about the yearly perspective?

Source: Portfolio Visualizer

This chart of annual income provides crucial insight into the reliability and behavior of the income, going beyond mere monthly volatility.

• XYLD (Portfolio 3): The High, but Market-Dependent Income. XYLD’s annual income is stable over this period but entirely dictated by market volatility. It offers no growth and is fully exposed to the cycles of investor fear and complacency. This is “raw” market income.

• JEPI (Portfolio 2): The Smoothed and Resilient Income. JEPI’s profile is the most defensible. Its core strength is not appreciation, but consistency and resilience. The active management of its equity portfolio and its use of OTM calls smooths out the cash flow, protecting it from the sharp downturns that affect XYLD. It provides a reliable, high-quality income stream that holds up well across different market environments.

• JEPQ (Portfolio 1): The High-Potential, Cyclical Income. JEPQ’s income is the most volatile, mirroring the boom-and-bust cycles of its tech underlying. It can deliver spectacular payouts in strong years but is also the most susceptible to sharp declines, as the projection for 2025 suggests.

Annual Conclusion: The choice crystallizes between a high but unpredictable income (XYLD), a stable and resilient income (JEPI), and a high-potential but cyclical income (JEPQ). For an investor seeking predictable and defensive income, JEPI is the clear standout.

The Case for the Three-Fund Mix

This refined understanding makes a powerful case for combining all three. You are not blending three identical income streams, but three complementary engines that cover the entire spectrum of market environments:

• XYLD acts as the strategic anchor, providing a high base level of yield.

• JEPI acts as the tactical stabilizer, delivering consistent and reliable income that smooths out XYLD’s volatility.

• JEPQ acts as the performance booster, capturing periods of high tech volatility and growth to provide outsized returns.

Therefore, the mix is not just attractive—it is strategic. It creates a robust, all-weather income portfolio designed for both stable cash flow and participation in growth, effectively turning the weakness of any single fund into the diversified strength of the whole.

II/ The Total return and NAV erosion debate

Source: Portfolio Visualizer

A/ Total Return Analysis: One Clear Winner, Two Also-Rans

This performance summary delivers a stark verdict for the total return investor. The primary goal here is wealth accumulation, and only one strategy truly delivers.

1. The Dominant Outperformer: Sample Portfolio (JEPQ)

From a total return standpoint, JEPQ is in a league of its own. It isn’t just the best among covered call ETFs; it beat the S&P 500 itself.

• Superior Growth: A 26.33% CAGR surpasses the S&P 500’s 24.25%. This demonstrates that the powerful growth of the Nasdaq-100 can more than compensate for the upside cap imposed by the call strategy.

• Efficient Growth: Crucially, it achieved this higher return with lower risk (10.89% Std Dev vs. 12.23%) and a similar maximum drawdown. Its exceptional Sharpe Ratio (1.78) confirms this was the most efficient risk-adjusted return in the entire comparison. The call premium provided a direct boost to returns and a buffer against volatility.

2. The Capital-Drag Strategies: JEPI & XYLD

Both JEPI and XYLD severely handicap an investor’s wealth-building potential. Their “safety” comes with an extreme opportunity cost.

• Chronic Underperformance: With CAGRs of 9.75% and 11.65% respectively, they delivered less than half the annualized return of JEPQ over this period. An initial $10,000 in JEPI grew to ~$13,000, while in JEPQ it grew to over $19,000.

• Inefficient Safety: While they were less volatile, their risk-adjusted returns (Sharpe Ratios of 0.63 and 1.00) are significantly inferior to both JEPQ and the S&P 500. This means investors were not adequately compensated for the massive growth they sacrificed. The “safety” was inefficient and costly.

B/ The Verdict for the Total Return Investor

The choice is unambiguous:

• For Maximum Total Return: JEPQ is the only logical choice. It successfully leveraged a high-growth asset and used the covered call strategy to enhance risk-adjusted results, ultimately leading to superior wealth accumulation.

• JEPI and XYLD are not total return vehicles. They are income vehicles that, in this strong market cycle, acted as a significant drag on portfolio growth. An investor focused purely on growing their capital would have been deeply disappointed with their results.

In conclusion, if the goal is to maximize the end balance, the data clearly shows that JEPQ’s strategy of writing calls on a high-growth index was the most effective path to superior total return.

C/ NAV Analysis: Stagnation in Name, Erosion in Real Terms

This portfolio growth chart reveals the critical distinction between nominal and real performance for covered call strategies.

JEPI & XYLD: The Stagnation That Erodes Purchasing Power

The flat trajectories of Portfolio 2 (JEPI) and Portfolio 3 (XYLD) show nominal capital stagnation. While the principal value was preserved in dollar terms, it failed to grow. In an inflationary environment, this stagnation translates directly into a loss of purchasing power. The high income they distribute, therefore, is not purely a bonus; it partially serves as a necessary offset to this hidden erosion of the capital’s real value. In essence, these strategies create an income stream that is funded by sacrificing both growth and the inflation-adjustment of the principal.

JEPQ: Growth That Overcomes the Real-Term Test

In stark contrast, the Sample Portfolio (JEPQ) demonstrates the power of combining high growth with income. Its explosive performance not only increased the nominal NAV but did so at a rate that significantly outpaces inflation. This resulted in genuine growth of the capital’s real purchasing power. Here, the covered call income is a true enhancement to an already appreciating asset base.

The Bottom Line: The key takeaway is that for income ETFs, nominal NAV stability can be deceptive. True capital preservation requires growth that at least matches inflation. From this perspective, JEPI and XYLD expose investors to real-term NAV erosion, while JEPQ provided a buffer against it through substantial real returns.

III/ The European Income Attempt: JEPQ, XYLD and JEPI

For international readers, especially in Europe, US-listed ETFs are often inaccessible due to regulations. The landscape is dominated by UCITS (Undertakings for Collective Investment in Transferable Securities) compliant funds, which offer a different perspective on the covered call strategy.

A/ A Three-Way UCITS Comparison

While a perfect, like-for-like replica of the JP Morgan funds is rare, the European market offers clear strategic counterparts that validate our findings on a global stage.

• The JEPI Equivalent: JEPG (JPMorgan Global Equity Premium Income UCITS ETF)
  JEPG is the direct, UCITS-compliant sibling of JEPI. It employs the same active, low-volatility equity selection and uses ELNs to write OTM calls. The objective is identical: to provide a smoothed and resilient income stream with some participation in upside growth. It is the European tool for building a reliable, high-quality income.

• The JEPQ Equivalent: Tech-Focused UCITS Covered Call ETFs (JEPQ in London et JEQP in Germany :
  While a direct clone of JEPQ is less common, several UCITS ETFs apply a systematic covered call strategy on the tech-heavy Nasdaq-100 (e.g., those offered by providers like WisdomTree or Lyxor). These funds mirror JEPQ’s exposure to the sector’s high-growth, high-volatility profile. They offer the potential for explosive income during tech rallies but come with the same cyclicality and susceptibility to sharp downturns.

• The XYLD Equivalent: Systematic European & Global Covered Call ETFs
  The most common UCITS covered call ETFs replicate the XYLD model. They track a European or global index (like the EURO STOXX 50 or MSCI World) and write ATM calls on 100% of the portfolio. They are the quintessential high-income, capital-stagnation engines, providing “raw” market yield at the total cost of long-term capital appreciation.

B/ Income results

While the UCITS versions of these strategies are relatively new to the market—launched between mid-2023 and late 2024—their early track record already echoes the patterns observed in their U.S. counterparts. With limited historical data (typically 1-2 years), our analysis relies on available monthly distributions and yields, focusing on consistency rather than long-term cycles.

As with the U.S. funds, these European ETFs distribute monthly, blending option premiums with underlying dividends to generate income. However, UCITS regulations impose stricter liquidity and transparency rules, which can slightly temper yields compared to U.S. versions but enhance accessibility for EU investors. From a monthly perspective, dividend volatility remains low across the board, reflecting the smoothing effects of active (or semi-active) management in JEPG and JEPQ UCITS, versus the more market-tied fluctuations in XYLU. Based on available data:

• JEPG (JEPI Equivalent): σ ≈ £0.034 (over 23 months), showcasing the lowest volatility. Its global low-volatility equity selection and OTM call overlays via ELNs create a calibrated payout stream, rarely dipping below £0.08 or exceeding £0.15 (barring one outlier in June 2025 tied to heightened volatility).

• JEPQ UCITS (JEPQ Equivalent): Limited to ~13 months of data, with σ estimated at ~£0.025 (preliminary, based on yields and partial history). As a Nasdaq-focused fund, its payouts show mild cyclicality, averaging ~£0.20 monthly but with slight upticks during tech rallies.

• XYLU (XYLD Equivalent): σ ≈ £0.016 (over 27 months), surprisingly tight for a systematic ATM strategy on the S&P 500. This reflects the stabilizing influence of synthetic swaps, though payouts are more sensitive to U.S. market VIX swings, ranging from £0.07 in low-vol periods to £0.13 in elevated ones.

These figures align with U.S. trends: JEPG and JEPQ UCITS engineer smoother flows through partial coverage and manager discretion, while XYLU delivers “raw” premiums that track market conditions more closely. The key insight? Even in Europe, active hybrids like JEPG prioritize reliability over raw yield. Shifting to the yearly perspective, the chart of annual income (aggregated from monthly distributions) highlights reliability amid short histories and varying market environments (e.g., the 2024 tech rebound and 2025’s mixed cycle).

• XYLU (Portfolio 3 Equivalent): The Market-Driven Anchor. Annual income totaled £1.07 in 2024 and ~£1.05 YTD 2025 (projected ~£1.26 full-year). Like its U.S. sibling, it’s stable but fully exposed to volatility cycles—higher in uncertain years, muted in calm bulls. This provides a high base (10-11% yield) without frills.

• JEPG (Portfolio 2 Equivalent): The Engineered Stalwart. Delivering ~£1.33 in 2024 and ~£1.49 YTD 2025 (projected ~£1.63), it demonstrates resilience with modest growth in payouts. Its defensive global tilt and OTM strategy buffered 2025’s early wobbles, offering the most consistent profile for European income seekers.

• JEPQ UCITS (Portfolio 1 Equivalent): The Volatility Harvester. Early data shows ~£1.85 annualized in 2024 (partial) and ~£2.10 projected for 2025, with a 9-10% yield. It shines in tech-favorable periods but hints at cyclical dips, mirroring Nasdaq’s boom-bust nature.

Annual Takeaway

With shorter histories, patterns are emerging but not battle-tested. XYLU offers predictable high yield tied to markets; JEPG excels in smoothed resilience; JEPQ UCITS promises upside in growth phases. For Europeans, JEPG stands out for its balance, while the trio’s mix diversifies across global, tech, and broad-market exposures—creating an all-weather income engine compliant with UCITS standards.C/ NAV erosion?Given the youth of these UCITS funds (1-2 years of data), a full “erosion” analysis is preliminary, but early performance underscores the same trade-offs as their U.S. peers: income at the expense of growth potential.

Total returns (including reinvested distributions) reveal modest appreciation overall, but nominal NAV trajectories often stagnate in rising markets due to capped upside from calls. In real terms—factoring ~2-3% EU inflation—this can imply subtle erosion unless yields fully offset it.

Balanced but capped over their brief lifespans, these ETFs prioritize income over aggressive growth, lagging pure equity benchmarks like MSCI World (~15% CAGR over 2 years) but offering downside cushions.

1. The Resilient Performer: JEPG (JEPI Equivalent)

   • Solid Foundation: ~6% CAGR since inception (Nov 2023), with YTD 2025 at -1.8% but 1-year total return +12.3%. Volatility (10.7%) and max drawdown (-11.3%) are the lowest, yielding a Sharpe ratio ~0.6—efficient for defense.

   • Why It Works: Active low-vol stock picks and OTM calls allow ~70% upside capture, turning premiums into a true buffer without severe drag.

2. The Steady but Subdued: XYLU (XYLD Equivalent)

   • Income-Focused Grind: ~8% CAGR since Jul 2023, but YTD -5.9% and 1-year +0.5% highlight stagnation in bull legs. Higher yield (11%) compensates, but vol (14.4%) and drawdown (-20.5%) make it less efficient (Sharpe ~0.03).

   • Trade-Off Exposed: Full ATM coverage caps recovery, leading to flat NAV in rallies—ideal for yield chasers, not growth hunters.

3. The High-Potential one: JEPQ UCITS (JEPQ Equivalent)

   • Growth with Guardrails: ~9% total return since Oct 2024 (1-year +7.5%), but higher vol (20.1%) and drawdown (-24.1%) reflect Nasdaq exposure. Sharpe ~0.4 suggests room for outperformance in tech upswings.

   • Nasdaq Edge: Partial OTM calls preserve more upside than XYLU, but early data shows vulnerability in corrections—premiums help, yet it’s the most “cyclical” here.

NAV Reality: Preservation with a Catch

The portfolio growth trajectories (NAV + reinvested income) paint a familiar picture: XYLU and JEPG show near-flat nominal NAV lines, buoyed by distributions that preserve principal in dollars/euros but struggle against inflation. For instance, an initial €10,000 in XYLU grew to ~€11,900 total (mostly income), while pure S&P exposure might hit €12,500. JEPQ UCITS edges toward genuine appreciation, with NAV up ~5% net of payouts, outpacing inflation for real growth.Bottom Line: UCITS covered calls mirror U.S. dynamics—nominal stability masks real erosion for income-heavy strategies like XYLU and JEPG, where yields (~8-11%) serve as inflation hedges.

JEPQ UCITS offers the best shot at real capital gains, but all three underscore the strategy’s core paradox: robust cash flow funded by forgone appreciation. In Europe’s regulated landscape, this makes them complementary tools, not standalone growth engines.

Investment Takeaway

This combo can be a viable strategy for US and ex-US income investors. With UCITS rules, yield would be a little bit lower (lower risk, lower yield). At least for those who accept risk, income volatility and NAV nominal stagnation. I own these three but I have to admit that JEPQ represents 90 % of my covered call investments. I like JEPG because it is global, but the yield is too low.

For European investors eyeing covered calls, the UCITS trio (JEPG, JEPQ UCITS, XYLU) validates the U.S. playbook: blend for diversification—JEPG for stability, JEPQ UCITS for tech-fueled potential, XYLU for baseline yield. With short histories, monitor volatility spikes, but their monthly payouts already deliver counter-cyclical comfort. Prioritize based on risk: defensive (JEPG), aggressive (JEPQ UCITS), or pure income (XYLU). In a portfolio, you can allocate to this mix for resilient, all-weather income without U.S. tax headaches—turning market anxiety into engineered cash flow.

We have already written about these 3 ETFs, I focus on JEPQ because I can have the cake and eat it too: growth and income. But in the long run, a mix of these three would be more reasonable.

Because 10% yield portfolios can be reasonable too: this is what we’re working on each week.

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Disclaimer: This article is for informational and educational purposes only and does not constitute financial, investment, or legal advice. The views expressed are personal opinions and should not be taken as specific recommendations. Investing involves risks, including the potential loss of capital. Always conduct your own research and consult a qualified financial advisor before making any investment decisions. The author is not responsible for any financial losses or decisions based on the content of this article.

My strategy is to build a portfolio that can deliver income every month — steady, predictable, and globally diversified. The key is understanding how dividend calendars differ around the world. By aligning payout seasons across the U.S., Europe, and Asia, I built what I call my Homemade 10% Monthly ETF — a strategy that turns regional dividend cycles into a continuous cash flow.

I/ USA: the dividend investor paradise

A/ What are we talking about? Payment date matters

Source: https://www.investopedia.com/terms/e/ex-dividend.asp

The dividend timeline is a sequence of key dates that determines who receives a payment. It begins with the Declaration Date, when the company’s board officially announces the upcoming dividend. The most critical date for investors is the Ex-Dividend Date; if you buy the stock on or after this day, you are not entitled to the declared dividend. To qualify, you must be a shareholder on the Record Date, which is set by the company, typically one business day after the ex-dividend date. Finally, the Payment Date is when the company distributes the dividend funds to all eligible shareholders of record.

For the long-term income investor, only the payment date is truly relevant. My strategy as a global investor is therefore built on an efficient dividend calendar, designed for retirement to require minimal maintenance while delivering the recurring pleasure of dividend income as often as possible.

B/ The American Quarterly Dream

For an income investor building a monthly income portfolio, understanding the rhythm of payment dates is crucial. The vast majority of U.S. companies that pay dividends do so on a quarterly basis, and these payments are not randomly distributed throughout the year. They follow a distinct and concentrated seasonal pattern—much like Rockefeller’s steady checks, but with predictable “lumps” that demand smart diversification.

The Three Main Quarterly Payment Cycles

U.S. companies tend to cluster their dividend payments into three primary cycles, often referred to by the first month of their quarterly sequence (based on S&P 500 data from 2023-2025):

• The Jan/Apr/Jul/Oct or 1/4/7/8 Cycle (JAJO): This is the leanest cycle, favored by some fiscal-year-end reporters. Examples: Procter & Gamble (PG, consumer staples) and Johnson & Johnson (JNJ,). Payments often hit mid-to-late month, providing a bridge but not the flood.

• The Feb/May/Aug/Nov or 2/5/8/11 Cycle (FMAN): The powerhouse, aligning with many calendar-year filers’ earnings cadence. Heavy hitters like JPMorgan Chase (JPM, financials) and Verizon (VZ, telecom) dominate here. This is your “dividend deluge” months—expect the biggest cash influx.

• The Mar/Jun/Sep/Dec Cycle or 3/6/9/12 (MJSD): A solid mid-tier, peaking in quarter-ends for tax and reporting reasons. Think ExxonMobil (XOM, energy, yield ~3.8%) and Coca-Cola (KO, consumer staples, yield ~3%). December often feels festive with year-end bonuses in dividends.

The Distribution Between the Three Cycles

While exact splits fluctuate annually (e.g., influenced by sector shifts), data from S&P 500 constituents shows a clear skew (per S&P Dow Jones 2024 report). This lopsided setup means FMAN months can generate 2-3x the income of JAJO—great for reinvestment, but a headache for bill-paying smoothness.

Key Implications for the “Monthly ETF” Strategy

This seasonality isn’t a bug; it’s your blueprint for U.S. allocation:

• Natural Imbalance: Pure U.S. plays can’t deliver flat monthly income—FMAN will bulge your wallet, while JAJO leaves gaps. Aim for 40-50% U.S. in your homemade ETF, overweighting FMAN/MJSD for yield, but padding JAJO with reliable payers like utilities (e.g., Duke Energy, DUK in JAJO).

• The “January Gap”: JAJO’s slimmer size creates a classic drought in Q1. Counter it globally—European semi-annual payers (e.g., Unilever in May/Nov) or Asian ad-hoc flows can fill January, turning lumpiness into liquidity.

• Focus on the “Heavy” Cycles: Build your core around FMAN/MJSD (e.g., 60% of U.S. sleeve), then cherry-pick 10-15 JAJO names for balance. Pro tip: Use filter tools to screen for aristocrats or income plays (25+ years of increases) with good yields. For scale, layer in monthly ETFs like JEPI or JEPQ to smooth intra-quarter.

In essence, the U.S. is your high-power engine—reliable, growing, but a little bit bumpy. That’s why your Global Dividend Calendar shines: blending these cycles with Europe/Asia rhythms crafts that Rockefeller-level monthly joy, paying bills and fueling reinvestment.

The Case for Monthly dividend payers

For the ultimate smoothing of income, the U.S. market offers a brilliant solution: monthly dividend payers. This elite group, including iconic names like Realty Income (O)—”The Monthly Dividend Company”—and supplemented by monthly ETFs like JEPQ, acts as the fine-tuning mechanism of the portfolio. They provide the psychological and practical comfort of a paycheck-like cadence, ensuring that even during the leaner weeks of the JAJO cycle, the cash flow never fully abates. While their yields can be compelling, they are best used as strategic “mortar” to fill the gaps between the larger “bricks” of the quarterly powerhouse cycles.

Ultimately, the U.S. segment of global income investing is a sheer pleasure compared to the rest of the world, precisely because its calendar possibilities are immense. The sheer volume of companies, the clarity of the quarterly cycles, and the very existence of a robust monthly-paying ecosystem provide an unrivalled playground for engineering a seamless income stream. The innovation is so advanced that for those seeking an even more granular approach, the market has now ushered in the era of weekly dividend ETFs, pushing the logic of frequent, compounding pleasure to its absolute extreme. This is the dividend investor’s paradise in action. However, as we have seen in our 27 previous articles (archive is here), we cannot place all our income eggs in the U.S. basket, and it is essential to diversify the income portfolio. And that is where the puzzle begins.

II. The Global Dividend Calendar: A Four-Season Puzzle

A Geographical Reading of Time

Dividend income does not flow continuously across the world. Each region follows its own fiscal rhythm, legal framework, and reporting tradition. From Tokyo to Frankfurt, from Sydney to São Paulo, global dividends form a temporal mosaic—abundance in spring and autumn, droughts in summer and early winter. Understanding this uneven flow is the foundation of any true global income strategy.

A/ Asia-Pacific: The Dual Pulse of Spring and Autumn

Asia’s dividend rhythm beats twice a year. Each market has its own fiscal calendar, yet most Asian payments cluster around March and September. These months define the region’s income tides.

Japan – The March Fiscal Clock

January 🔴 | February 🔴 | March 🟢🟢🟢🟢 | April 🟠 | May 🟠 | June 🔴 | July 🔴 | August 🔴 | September 🟠 | October 🔴 | November 🔴 | December 🔴

Japan anchors Asia’s calendar. Roughly 70% of listed companies close their fiscal year in March, with dividend payments concentrated between mid- and late-March.
A small second wave appears in April–May, but the rest of the year remains quiet.
Japan’s fiscal timing drives the global spring peak in dividend flows.

Australia – The September Counterpoint

January 🔴 | February 🔴 | March 🟠 | April 🟠 | May 🟠 | June 🟠 | July 🟠 | August 🟠 | September 🟢🟢🟢🟢 | October 🟠 | November 🟠 | December 🔴

Australia’s calendar mirrors Japan’s. With fiscal year-end in June, most Australian firms pay final dividends in August–September. This creates the second Asian high tide, complementing Japan’s spring cycle and filling part of the U.S. summer lull.

China & Hong Kong – The Irregular Flow of Conglomerates

January 🔴 | February 🟠 | March 🟢 | April 🟠 | May 🟢🟢 | June 🔴 | July 🟠 | August 🟠 | September 🟢🟢 | October 🟠 | November 🟢 | December 🟠

Companies listed in Hong Kong and mainland China usually pay semi-annually, with interim dividends in May and finals in September or November. Activity drops sharply in December–January, as the Lunar New Year halts board meetings and settlement schedules.

Singapore – The Semi-Annual Balance

January 🟠 | February 🟠 | March 🟢 | April 🟠 | May 🟢 | June 🔴 | July 🟠 | August 🟠 | September 🟢 | October 🟠 | November 🟢 | December 🔴

Singaporean blue chips tend to distribute two to four times a year, with concentrations around May and November. This pattern smooths Asia’s extremes, offering steadier cash flows than Japan or Australia.

India – The Bi-Annual Cadence

January 🔴 | February 🔴 | March 🟢🟢 | April 🟠 | May 🟠 | June 🔴 | July 🟠 | August 🟠 | September 🟢🟢 | October 🟠 | November 🟠 | December 🔴

Indian companies generally pay twice per year, after their March and September closings. The country aligns closely with the overall Asia-Pacific pulse: spring and autumn peaks, with thin months in between.

Asia-Pacific Summary

January 🔴 | February 🟠 | March 🟢🟢🟢🟢 | April 🟠 | May 🟢🟢 | June 🔴 | July 🟠 | August 🟠 | September 🟢🟢🟢🟢 | October 🟠 | November 🟢🟢 | December 🔴

Across Asia, two powerful waves dominate:

• March, driven by Japan and India’s fiscal closings.

• September, led by Australia and India’s second payments.

The region’s weakest months are June and December–January—clear structural voids in the income calendar.

B/ Europe: The Seasons of the Annual Meeting

European dividends follow the calendar of Annual General Meetings (AGMs).
Most companies pay shortly after their AGMs in April–May, and a smaller number issue interim payments in October–November.

United Kingdom – The Quasi-Quarterly Exception

January 🟠 | February 🟠 | March 🟢 | April 🟢 | May 🟢🟢 | June 🟠 | July 🟠 | August 🟢 | September 🟠 | October 🟢 | November 🟢 | December 🟠

UK corporates, especially banks and utilities, often distribute several instalments per year. This pattern creates a more continuous flow, with major peaks in May and October–November.

Germany – The Spring Tradition

January 🔴 | February 🔴 | March 🟠 | April 🟢 | May 🟢🟢🟢 | June 🟢 | July 🔴 | August 🔴 | September 🟠 | October 🟠 | November 🟠 | December 🔴

German firms overwhelmingly hold AGMs (Annual General Meeting) in April–May and pay immediately afterward. Dividend activity is thus heavily concentrated in the second quarter, with a long quiet stretch over the summer.

France – The Fiscal Twin of April–May and October

January 🔴 | February 🔴 | March 🟠 | April 🟢🟢 | May 🟢🟢🟢 | June 🟠 | July 🔴 | August 🔴 | September 🟠 | October 🟢 | November 🟢 | December 🟠

Most French companies pay in May following AGMs, while a few (LVMH) issue an autumn interim. This produces a dual-season rhythm—dominant in spring, very modest in fall.

Switzerland – The Binary Pattern

January 🔴 | February 🔴 | March 🟠 | April 🟢🟢 | May 🟢 | June 🟠 | July 🔴 | August 🔴 | September 🟠 | October 🟢🟢 | November 🟢 | December 🟠

Swiss corporates (Nestlé, Roche, Novartis) mainly distribute in April, with occasional October payments. A consistent, AGM-driven structure.

Nordics and Netherlands – The Spring Regulars

January 🔴 | February 🔴 | March 🟠 | April 🟢🟢🟢 | May 🟢🟢 | June 🟠 | July 🔴 | August 🔴 | September 🟠 | October 🟠 | November 🟠 | December 🔴

Northern Europe amplifies the same trend: a heavy spring focus and minimal activity in the summer.

Europe Summary

January 🔴 | February 🔴 | March 🟠 | April 🟢🟢🟢 | May 🟢🟢🟢🟢 | June 🟠 | July 🔴 | August 🔴 | September 🟠 | October 🟢🟢 | November 🟢🟢 | December 🟠

Europe runs on a two-peak AGM rhythm:

• Spring (April–May–June) is the dominant season.

• Autumn (October–November) brings smaller interim flows.

The main droughts are January–February and July–August, when few companies are active.

C/ Emerging Markets: Irregular but Continuous

Emerging-market dividends are less synchronized, but their irregularity provides natural diversification.
Three regional pillars shape the pattern:

• Brazil, with frequent or quarterly payouts.

• India and South Africa, both semi-annual.

• China-EM, scattered and unpredictable.

Brazil – The Steady Quarterly Flow

January 🟢 | February 🟢 | March 🟢 | April 🟢 | May 🟢 | June 🟢 | July 🟢 | August 🟢 | September 🟢 | October 🟢 | November 🟢 | December 🟢

Brazilian companies (Petrobras, Vale, Itaú) pay quarterly or even monthly.
It is one of the few markets with truly year-round income. That’s why I love this market.

South Africa – The March and September Semi-Annuals

January 🔴 | February 🔴 | March 🟢🟢 | April 🟠 | May 🟠 | June 🔴 | July 🟠 | August 🟠 | September 🟢🟢 | October 🟠 | November 🟠 | December 🔴

South African firms typically pay in March and September, mirroring India’s cadence.
The mid-year and end-year gaps remain significant.

Emerging Markets Summary

January 🟠 | February 🟠 | March 🟢🟢 | April 🟢 | May 🟢 | June 🟢 | July 🟢 | August 🟢 | September 🟢🟢 | October 🟢 | November 🟢 | December 🟢

Thanks to Brazil, emerging markets deliver a near-continuous baseline flow.
Although smaller in size, these payments fill gaps left by the more cyclical developed markets.

D/ Global ex-U.S. Overview

January 🔴 | February 🟠 | March 🟢🟢🟢🟢 | April 🟢🟢 | May 🟢🟢🟢🟢 | June 🟠 | July 🟠 | August 🔴 | September 🟢🟢🟢🟢 | October 🟢🟢 | November 🟢🟢 | December 🟠

Across all regions outside the United States, three strong peaks dominate:

• March, led by Japan and India.

• May, powered by Europe’s AGM season.

• September, driven by Australia and emerging markets.

Three months stand out as global troughs: January, February, and August—periods when Ex-US income nearly vanishes.

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E/ Global Diagnosis

The global dividend cycle is structurally discontinuous. Even broad diversification cannot smooth the rhythm entirely. Income outside the U.S. arrives in bursts, not in streams.

The three recurring weak points are:

• January–February: post-holiday and pre-AGM inactivity.

• August: the European vacation blackout.

These three months together account for roughly one-third of the year’s income drought. They define the central constraint of global income investing: the calendar itself is cyclical, not linear.

Investment takeaway – The Time of Income

The global dividend calendar flows like a tide, not a clock. March, May, and September bring surging rivers of cash. January, June, and August expose dry beds. Recognizing this temporal map is the first step toward mastering global income—not to chase yield, but to understand the rhythm of return.

Global income investing is, admittedly, more complex. It involves more calendar constraints and more currency risk. However, it is fundamentally more secure than single-currency investing for those with a long-term perspective. I count myself among them. With a few basic tools, I can significantly reduce the monetary, fiscal, and calendar complexity. It’s a modest intellectual effort in exchange for a far greater securing of my income.

Do you feel safe with a portfolio tied to a single country and a single currency? I don’t. That’s why I accept the added complexity; the reward is enjoying dividends every month – from different parts of the world, in different currencies. This is my path.

The Homemade 10% Monthly ETF isn’t a product you buy — it’s a discipline you build. Each month’s dividend is a page in your personal cash-flow calendar.

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Disclaimer: This article is for informational and educational purposes only and should not be considered financial or investment advice. The views expressed are solely those of the author and do not constitute a recommendation to buy, sell, or hold any security. Always conduct your own research and consult with a professional before making any investment decisions.

I/ Investor Experience: The High-Yield Rollercoaster

The journey since March has mirrored the anticipated turbulence of a deep-value, income-focused REIT play, amplified by persistent macroeconomic headwinds like elevated interest rates and French political uncertainty. Yet, the income stream has provided a robust buffer, underscoring the asymmetric reward profile.

Source: Icade Site

Dividend Windfalls

The Compelling Payoff. Missing the March ex-dividend by a narrow margin, I captured the full July payout. Even with a projected 2025 dividend of €3.10 per share (down from €3.98 in 2024, al

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igning with reaffirmed NCCF guidance of €3.40–€3.60), the trailing yield at my cost basis exceeds 15.1%. This isn’t mere speculation; it’s cash flow reality. At least, this is my personal bet!

Over the holding period, annualized income has outpaced inflation by a wide margin, effectively paying investors to endure the wait for re-rating. In a peer context, this dwarfs the ~4-7% yields of diversified European REITs like Unibail-Rodamco-Westfield or Klépierre highlighting Icade’s unique “distressed yield” appeal.

Volatility Tax: The Inevitable Cost

Price action has oscillated wildly between €18.50 and €24.50 year-to-date, a ~32% swing reflective of broader office sector anxieties and rate sensitivity. This isn’t idiosyncratic; French office vacancy rates hover at 7.5% nationally, with Paris at risk of further polarization. Daily portfolio checks? A recipe for regret. Instead, a quarterly review cadence, anchored in fundamentals, mitigates the noise—much like ignoring short-term NAV writedowns (down ~5% YoY in H1) in favor of execution milestones.

Source: Yahoo.fr

Net: A classic high-conviction hold—lavish cash returns amid episodic drawdowns

The ~62% discount to the primary EPRA NTA benchmark (€56.6 per share as of June 2025), alongside more conservative floors at 64% (EPRA NDV) and 65% (EPRA NRV), underscores the persistent deep-value opportunity—though notably narrower than at my March purchase (€20.50 entry, implying ~67%+ to then-estimated NAV) due to asset valuation pressures eroding the NAV base. This sustains the asymmetric value case amid volatility, but demands steel nerves. This is still an interesting perspective, as there are some improvements about operational momentum.

II/ Operational Momentum: Executing the ReShapE Strategy Amid Headwinds

The 9-month results aren’t fireworks, but they evidence disciplined progress under the ReShapE strategic plan—a multi-year blueprint to reshape Icade into a leaner, more resilient player focused on sustainable mixed-use developments and high-quality income assets. Launched in 2023, ReShapE targets portfolio diversification away from legacy exposures (e.g., healthcare, non-core offices) toward “future-proof” segments like light industrial and prime offices, with deleveraging as the linchpin. Q3 underscores tangible advancement, blending liquidity generation with quality enhancements.

Core Portfolio Resilience: Quality Over Quantity

Amid a -6% rental income dip to €263.2 million, the underlying strength emerges in occupancy gains. Financial occupancy climbed to 88.8% for prime offices (up 0.8 pps vs Dec 2024) and 90.4% for industrials (up 1.5 pps), driven by 166,000 sqm in leases YTD (including 125,000 sqm of new leases)—securing €29 million in annualized rents at a solid WALB of 6.8 years. The KPMG renewal (41,000 sqm in La Défense’s EQHO Tower, to 2031) is emblematic: 70% of activity was new lettings, signaling demand for ESG-compliant, transit-oriented assets. In short, the group achieved around €430m in disposals, maintained strong leasing activity with improved occupancy rates, stable property development trends, and confirmed its 2025 guidance.

Source: Icade Q3 Report

Deleveraging Acceleration: Building Financial Fortitude

The headline act in Q3: €430 million in disposals completed or under firm agreement year-to-date—a deliberate, ReShapE-fueled push to shed non-core weight and fortify the balance sheet. Far from haphazard fire sales, this is precision engineering: the €173 million Italian healthcare portfolio (spanning 23 assets, set to close by year-end) anchors a broader €210 million carve-out of legacy healthcare holdings, freeing up capital to extinguish intra-group loans and streamline operations. Layered on top, €220 million from other non-strategic sales commanded an average yield of 6.1%, handily topping December 2024 NAV valuations and proving Icade’s assets still draw premium bids in a skeptical market.

Source: Icade Q3 Report

This firepower directly bolsters financial resilience

With LTV (Loan-to-Value) already dialed back to 38.1% as of H1 2025 and momentum carrying toward a mid-30s target by December, refinancing headwinds from the ECB’s cautious rate regime feel far less daunting. Liquidity? A €2.6 billion net fortress (as of September 2025, with maturities secured through 2029), further extended by savvy moves like the recent €500 million green bond issuance at a 4.375% coupon. Stack that against peers like Covivio (clocking ~40% LTV in their latest) or those mired at 40-45%, and Icade’s playbook screams proactive edge—poised to slash borrowing costs and unlock reinvestment firepower as early as 2026. In a word: from this standpoint, perspectives brighten considerably.

Development Adaptation: Stabilizing the Pipeline

The Pinel tax incentive sunset slashed individual orders -43% in volume, yet total units held flat at 2,815, with value down -5% to €722 million. Bulk/institutional sales surged +11% to 1,530 units (51% of volume), diversifying away from retail sensitivity. Backlog resilience supports visibility, though commercial softness tempers optimism.

Source: Icade Q3 Report

III/ Very well, but what about the dividend’s sustainability?

Optimism tempered

Revenue erosion and market fragility underscore why Icade isn’t a “set-it-and-forget-it” play. A balanced view demands stress-testing the income engine.

Revenue Pressures: Operational Strain

The -9% topline contraction to €923 million reflects a bifurcated market—rental -6% from tenant churn and negative reversions (-2.7 pps), development -10% from Pinel fallout and subdued commercial demand (take-up -8% in Greater Paris). Even post-disposals, recurring EBITDA faces ~5-7% compression, pressuring the €2.73–€2.93 NCCF from strategic ops (ex-non-core €0.67). Absent acceleration, 2026 could see further 5-10% erosion if rates linger above 3%.

Source: Icade Q3 Report

NCCF Trajectory: Dividend Anchor Under Scrutiny

As the main ‘truth dividend indicator’ NCCF’s (Net Current Cash Flow) reaffirmed but lowered guidance signals caution—payout coverage slips to 86-90% at midpoint, vs. 100%+ in 2024. Non-strategic contributions (e.g., full €37 million Praemia dividend) provide a floor, but core stabilization is pivotal. A sustained downtrend could force a 10-15% cut in 2026, eroding the yield moat. Strategically, ReShapE’s disposal proceeds (€500 million net post-debt) offer a war chest for selective reinvestment, but execution risk looms if cap rates stay elevated (5.5-6.5% for offices). I still maintain my bet on a €3.10 dividend, but I definitely feel (a little bit) more stressed than before.

Sector Fragility: instability and interest rates

Total occupancy stagnates at 84.0% (-0.7 pps), with “to-reposition” offices at a dismal 52.8%. NAV pressures persist, sustaining the 62% discount amid still-elevated LTV (38%). Broader risks—French political gridlock, slowing inflation (~1.2% CPI), and 2026 macro uncertainty—could delay recovery, contrasting peers like Segro (industrial focus, ~+11% TSR YTD) that sidestep office woes. Icade’s ESG edge (GRESB 92/100) aids adaptation but can’t fully insulate.

Investor takeaway : Personal Thesis Intact

This Q3 snapshot reaffirms my initial personal investment thesis: Icade endures as a high-risk, high-reward convexity play, where strategic grit meets undervaluation.

• Yield Magnet Persists: At 15%+, dividends dwarf peers, compensating for risks while funding transformation— a rare income-value hybrid in Europe’s €420 billion REIT market.

• Psychological Fortitude Essential: Volatility is baked in; success hinges on tuning out noise for milestones like LTV compression and 90%+ core occupancy. But it is still easier to say!

• ReShapE Gaining Traction: €430 million disposed, leasing momentum, and backlog stability evidence a proactive pivot to resilient assets, positioning for 2027 recovery (projected office rents +3-5% annually).

My personal stance holds: Accumulate income, monitor execution, and await discount convergence. The road remains bumpy, but with €2.6 billion liquidity, a 60%+ discount and a double digit dividend yield even after the projected dividend cut, it still looks compelling.

In short, Icade’s 15% yield remains unmatched in Europe, but the patience tax is real. Execution on ReShapE and debt reduction are the key catalysts. High yield, high nerve, high potential. Not made for everyone.

It fits my temperament — shaped by decades in finance and nearly 15 years of investing.

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Disclaimer: This article is for informational and educational purposes only and should not be considered financial or investment advice. The views expressed are solely those of the author and do not constitute a recommendation to buy, sell, or hold any security. Always conduct your own research and consult with a professional before making any investment decisions.

I/ A tightrope walker business model

A/ Mortgage REITs for Dummies: How They Work

If you want to understand the business, here’s a breakdown of the key chronological steps.

Step 1: Raising Capital (the Beginning). It all begins with shareholders. AGNC raises funds by issuing shares, for example through a public offering. This money constitutes its share capital, or “equity.” This is the company’s own financial base, its initial fund.

Step 2: Massive Borrowing (The Leverage). AGNC does not rely solely on its own capital. To amplify its investment capacity, the company engages in massive borrowing, primarily through the repurchase agreement (”repo”) market. In practice, AGNC takes a portion of its capital to a bank and borrows a multiple of that amount—for example, eight times the initial sum. In return, it must provide assets as collateral, typically the MBS it acquires. These loans are very short-term (often overnight or a few days) and carry a variable interest rate, directly linked to benchmark rates. The result is significant leverage: the starting capital is multiplied, allowing AGNC to operate with a much larger financial pool.

Step 3: The Investment (The Asset). Backed by the raised capital and debt, AGNC acquires its primary asset: agency Mortgage-Backed Securities (MBS). These are bonds backed by thousands of US residential mortgages, guaranteed by agencies like Fannie Mae or Freddie Mac. These assets have three key characteristics: they are long-term (typically 30 years), exempt from credit risk thanks to the agency guarantee, and income-generating, as they pay a fixed interest, known as a coupon.

Step 4: Generating Income (The “Spread”). The core of AGNC’s business model lies in generating net interest income, or the “spread.” Two financial flows are at play: on one side, the cash inflows from the coupons received on the MBS portfolio; on the other, the cash outflows corresponding to the interest paid on the debt incurred. The difference between these two flows constitutes the net spread. Even if this spread is relatively small as a percentage, the leverage effect allows it to be applied to a substantial asset base, thus generating an attractive return on the initial equity.

Step 5: Risk Management (The “Hedge”). The “borrow short to invest long” model is inherently risky, particularly in the face of interest rate fluctuations. To protect against this risk, AGNC actively uses derivative instruments, such as interest rate swaps. Schematically, these tools allow it to convert a portion of its variable-rate debt into a fixed financial expense. This hedging strategy aims to stabilize borrowing costs and protect the profitability of the spread, although it does not completely eliminate risk.

Step 6: Distribution (The Dividend). As a Real Estate Investment Trust (REIT), AGNC is legally required to distribute at least 90% of its taxable income to its shareholders. The dividends—often paid monthly and characterized by a high yield—are primarily funded by the net interest spread, after deducting hedging costs and operational expenses. This is the mechanism that attracts investors seeking regular income.

B/ When Interest Rates Move: The Double-Edged Sword for m-REITs

Interest rates are the dominant force in an m-REIT’s universe. Here’s what happens when that environment shifts.

Scenario 1: Rising Rates — The Direct Threat

• Funding Costs Spike: m-REITs like AGNC rely on short-term borrowing. When rates rise, their cost of funding increases immediately, compressing the net interest spread, the core of their earnings. This directly pressures their ability to sustain dividends.

• Asset Values Fall: As new bonds offer higher yields, the market value of existing fixed-rate MBS falls. This erodes the Net Asset Value (NAV) per share.

• Leverage Amplifies the Pain: With high leverage (7-9x equity), a small decline in the total asset value translates into a magnified loss for shareholders. The very tool that boosts returns in calm markets exacerbates losses in turbulent ones.

Scenario 2: Falling Rates — The “Friendly” Trap

• A Temporary Boost: Cheaper borrowing costs widen the interest spread, boosting near-term earnings. Simultaneously, the value of existing MBS rises, increasing NAV—a positive for the balance sheet.

• The Prepayment Problem: This is the catch. As mortgage rates fall, homeowners refinance or move, triggering early repayments. AGNC is then forced to return this capital and reinvest it into new MBS that now offer lower yields. This slowly but surely erodes the portfolio’s future income potential.

The Bottom Line

An m-REIT like AGNC is a high-yield income machine balanced on a knife’s edge.

• Rising rates hurt its margins and book value.

• Falling rates create a slow-burn reinvestment risk that undermines future dividends.

In a perfect world of stable rates, it thrives. But in the real world of constant change, the generous dividend that attracts investors is also the most vulnerable component of the total return.

II/ AGNC: not totally an income investment

A/ The AGNC Paradox: Lower and Lower NAV and Dividends, Positive Total Return

At first glance, AGNC Investment Corp.’s performance seems like a textbook yield trap. Since its IPO in May 2008, the company’s tangible net book value per common share (a proxy for NAV, adjusted for preferred stock and other intangibles) has trended downward structurally—reflecting the erosive impact of interest-rate volatility, prepayment risks, and leverage amplification during adverse cycles. For instance, According to AGNC Investment Corp.’s Form 10-Q for Q3 2025, the tangible net book value per common share declined from approximately $17.59 at year-end 2020 to $8.41 as of December 31, 2024, and further to $8.28 as of September 30, 2025. This represents a structural decline of over 50% since 2020, underscoring the “knife’s edge” balance described in the theory section—rising rates hammer asset values, while falling rates trigger reinvestment at lower yields. See the share price since inception below:

Source: Yahoo Finance

Dividends tell a similar story of contraction. AGNC’s payouts, once robust quarterly declarations exceeding $1.25 per share in 2012 (annualizing to over $5), shifted to monthly distributions but steadily shrank amid margin compression. By 2015-2016, monthly dividends hovered at $0.20 (annual $2.40), dropping to $0.16 by late 2019 ($1.92 annual), and stabilizing at the current $0.12 monthly rate ($1.44 annual) since April 2020—a reduction of more than 70% from peaks. This holds steady into late 2025, with the next ex-dividend date on October 31 for the November payment.

This trajectory aligns with broader m-REIT challenges: as spreads narrow and hedging/funding costs rise, the 90% distribution mandate forces reliance on ever-thinner net interest income, leading to repeated trims that erode the headline yield’s allure over time. Yet here’s the paradox that keeps tens of billions flowing into AGNC and its peers: total shareholder returns—with dividends reinvested—have remained positive and often resilient across cycles.

The total return tells a different story. Based on publicly-available data to mid-October 2025, $10,000 invested at IPO (May 2008) would have grown to approximately $61,000-$62,000 under dividend reinvestment — corresponding to an annualized return ~11%.

Over the past decade, annualized returns stand at approximately 6.63%, while the 5-year cumulative total return is 36.76% (about 6.4% annualized); year-to-date through October 2025, it’s a strong +22.79%. The year-by-year volatility is significant (+23.73% in 2017, +18.23% in 2016, +13.31% in 2019), yet even with the share price closing at $10.04 on October 21, 2025—well below its 2013 peak of over $20—the high dividend yield (currently 14.41%) has powered meaningful total return.

B/ What Can We Do with m-REITs in a Global Income Portfolio?

The theory and the AGNC paradox show that m-REITs are fundamentally different from traditional income investments. To use them effectively, one must consider two specific market dynamics: premium/discount to NAV and the impact of share issuance.

1. The Premium/Discount Trap and Share Dilution

The stock price of an m-REIT rarely matches its Net Asset Value (NAV), which is the underlying market value of its assets minus its liabilities.

• Buying at a Discount: The ideal time to buy is when the stock trades at a significant discount to its NAV. This means you are essentially acquiring the company’s bond portfolio for less than its liquidation value. This provides a margin of safety and the potential for capital appreciation if the stock price reverts to NAV.

• The Share Issuance Risk: When an m-REIT trades at a premium (above its NAV), the company often takes the opportunity to raise capital by issuing new shares. While this brings in funds, it is highly dilutive to existing shareholders. Issuing shares at a premium above NAV is profitable for the company, but if the premium is small, or if shares are issued when the stock is near or below NAV, the operation effectively destroys shareholder value and accelerates the structural decline of the NAV per share. This action is the main enemy of long-term investors.

2. Tactical Use: Betting on Rate Cycles

Given their sensitivity, m-REITs are not peaceful buy-and-hold investments but rather tactical plays on Federal Reserve policy.

• Best Tactical Position: m-REITs can be a compelling short-term position (1-2 years) when there is a strong expectation of a rate-cutting cycle. Declining short-term rates immediately reduce funding costs, which widens the net interest spread and boosts near-term earnings and dividend sustainability. This is a crucial window for high total returns (capital appreciation + high yield).

  For example, Annaly’s price surges have consistently coincided with the early to mid-phases of Fed easing cycles, when funding costs drop faster than MBS yields. Conversely, every tightening cycle (2004–06, 2013, 2022–23) has crushed spreads and valuations — proving that mREITs thrive on rate cuts, not rate hikes.

Source: Yahoo Finance

• Worst Tactical Position: Conversely, they are highly vulnerable during periods of rising rates or high volatility, as seen in the structural NAV decline.

AGNC’s price rallies have always coincided with early easing cycles (2009–2012, 2020) — when falling short-term rates and rising MBS valuations align. Its steepest drawdowns occurred in tightening phases (2013, 2022–23), when funding costs jumped faster than asset yields. mREIT income investing, therefore, is a game of timing the Fed — not time in the market.

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Investment takeaway

m-Reits are not built for our philosophy of global income: you have to reinvest a large portion of your dividends, it is destroying NAV and the dividend is structurally getting down. So it is not made for me in a long term perspective.

BUT I have to admit that I love big and monthly dividends like AGNC’s ones, and that I have earned good money some years ago in markets with lowering rates. So that’s the question: will I invest some bucks in AGNC for one year or two, hoping to accumulate capital gains and fat dividends? But if I do that, will I wait for discount to NAV? I like these companies, but they are not fit for my long term portfolio. I don’t like structurally decaying NAV.

In short, too many issues and questions for a global income portfolio. But a reasonable investment for those who look for total return and DRIP each month.

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Disclaimer: This article is for informational and educational purposes only and should not be considered financial or investment advice. The views expressed are solely those of the author and do not constitute a recommendation to buy, sell, or hold any security. Always conduct your own research and consult with a professional before making any investment decisions.

I. A Premier Global Energy Income Play

A/ A Diversified Energy Mix Positioned for Transition

TotalEnergies bridges the worlds of traditional hydrocarbon leadership and emerging low-carbon innovation. With operations spanning over 130 countries, the company is one of the rare global players capable of delivering multiple forms of energy—oil, gas, LNG, renewables, and flexible power—while pursuing consistent growth and disciplined capital allocation.The foundation of TotalEnergies’ strategy rests on two complementary pillars: its robust upstream Oil & Gas business (with a special focus on LNG) and an aggressively expanding Integrated Power segment. The group is targeting a compound annual growth rate in overall energy production of about 4% through 2030, with 95% of future volumes already running or in development. In the coming years, growth will be driven by high-margin oil projects in regions such as the US, Brazil, Iraq, and Uganda, alongside major new LNG starts from Qatar and Malaysia.

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Source: https://totalenergies.com/system/files/documents/totalenergies_document-enregistrement-universel-2024_2025_fr.pdf

Simultaneously, TotalEnergies is reshaping its power generation mix. Electricity output is set to rise by approximately 20% annually, targeting 100 to 120 TWh per year by 2030—where the majority will be renewable-based, with flexible gas providing the necessary grid stability. The company concentrates investment in major deregulated markets (United States, Europe, Brazil), where its integrated model gives both resilience and pricing power. A rigorous $7.5 billion savings program (Capex and Opex over 2026-2030) underpins its efficiency drive, keeping net Capex for low-carbon investments at $4 billion a year, including a large allocation for Integrated Power.These moves illustrate TotalEnergies’ commitment to delivering “more energy, less emissions.” The company aims to cut Oil & Gas carbon emissions (Scope 1+2) by 40% net from 2015 levels and methane emissions by 80% versus 2020, while also developing carbon capture and storage projects across Europe and beyond.

Source: Total Energies Annual Report 2024

B/ A Reliable Income Investment with Growth Discipline

Share

For income-focused investors, TotalEnergies is distinguished by scale, diversification, and a shareholder-centric cash flow philosophy. Unlike peers whose payouts fluctuate with commodity cycles, TotalEnergies has built its reputation on sustaining robust, covered dividends—supported by a resilient, diversified energy mix and strict capital discipline. Since transitioning to a quarterly dividend format, the company’s payout frequency now aligns with US investor standards. The dividend yield, consistently among the highest in the sector (around 6.5% forward as of 2025), is fuelled by strong free cash flow from both Oil & Gas and rapidly expanding power divisions.

TotalEnergies maintains its commitment to shareholder returns, aiming for a payout ratio above 40% of cash flow—complemented by share buybacks that are dynamically adjusted in response to market conditions and earnings growth. The Board recently confirmed a 7.6% increase for the 2025 interim dividend (€0.85/share), underscoring its cycle-resilient growth trajectory.Notably, the firm’s Integrated Power segment is expected to be free cash flow positive by 2028 and achieve a return on average capital employed (ROACE) of 12% by 2030, further enhancing income stability regardless of fossil fuel price cycles.TotalEnergies’ strategic blend of old and new energy, geographic breadth, and financial discipline creates a resilient platform for turning global energy flows into shareholder returns. This approach is rare in the sector—and exemplifies how a leading energy company can embrace the energy transition while ensuring income reliability and capital growth for investors.

Source: Total Energies Annual Report 2024

Despite its robust cash flow engine, TotalEnergies faces sector-wide risks such as energy price cycles, potential windfall taxes in Europe, and the execution risk on long-term energy transition projects. The company’s main listing in Paris also results in structural undervaluation (“French discount”) of up to 15–20% compared to US-listed peers, reflecting historical governance risk, lower liquidity, and home bias among global investors. However, this may offer upside if European sentiment improves, or if the firm’s execution on global diversification is further recognized by international markets.

Beyond its attractive dividend policy and cycle-resilient cash flow, TotalEnergies has delivered strong total returns for long-term shareholders. Over the past decade, the ADR listing in New York has delivered a price total return of 117% (2015–2025), with annualized performance above 8% (including dividends reinvested). While French-listed shares have sometimes traded at a discount to US peers due to lower liquidity and home bias, the company’s recent dual listing and growing global recognition may help close this gap. For income investors seeking a balance between yield, safety, and capital growth, TotalEnergies offers a solid, globally competitive package.

Source: Total Energies Annual Report 2024

II. The Cash Engine: How Hydrocarbons Fund the Dividend & The Transition

TotalEnergies’ powerful dividend is not sustained by ambitions of going green—it is rooted in robust, recurring cash flows generated by a world-class hydrocarbon portfolio. In 2024, over $30 billion in operating cash flow was delivered, with the overwhelming majority sourced from oil and gas. This provides the surplus that grows the quarterly dividend and finances the company’s entire transition to cleaner energy sources.

A/ Oil: The High-Margin Core

Source: Total Energies Annual Report 2024

Total Energies remains a top-tier global oil producer, operating major projects across the United States (including deepwater Gulf of Mexico), Brazil, Iraq, and Uganda. These regions are selected not just for volume but for margin stability—the company boasts break-even prices in the $25–30 per barrel range. This means TotalEnergies can deliver healthy free cash flow even when oil markets turn volatile, supporting uninterrupted dividend payments during commodity downturns and macro crises such as COVID-19.The strategy targets a deep, diversified upstream portfolio, balancing long-reserve assets (MENA, Africa) with dynamic, high-return wells in the Americas. Total Energies’ production costs consistently rank among the lowest in its peer group, underpinned by operational discipline and focused capital allocation. The dividend, paid quarterly and currently yielding around 6.4%, is built first on this dependable oil cash engine—not on hopes or political windfalls.

B/ Gas & LNG: The Balancing Force

Gas—especially LNG—is TotalEnergies’ “insurance policy” for shareholders, smoothing profits as oil prices fluctuate. As one of the world’s leading LNG players, Total Energies enjoys a contracted, global business with clients in Asia, Europe, and the Americas. This segment generates steady and predictable income, largely insulated from spot oil volatility.

The company continues investing heavily to grow its LNG portfolio, opening new production in Malaysia and Qatar, and securing access to cost-competitive US supply. Flexible sales contracts—indexed to both Brent and Henry Hub prices—further optimize earnings through dynamic market conditions. LNG acts as a stabilizer, ensuring that the company’s dividend and investment capacity are protected, regardless of swings in global energy pricing.

Source: Total Energies Annual Report 2024

C/ Hydrocarbons: Fueling the Dividend, Securing the Transition

At the core, TotalEnergies’ hydrocarbons fund not only today’s dividend, but tomorrow’s business evolution. Oil and gas supply the free cash flow that enables generous payouts, substantial buybacks, and a substantial annual investment into renewables and integrated power. The current ~6.4% yield remains covered well by core operations, not debt or equity dilution. Even as capex pivots toward decarbonization, the discipline is clear: only surplus cash from hydrocarbons is reallocated—project returns for renewables must match double-digit benchmarks to secure reinvestment.
This self-funding model is what makes TotalEnergies structurally different from state-influenced rivals and sets its dividend appeal apart for income investors. It’s not an aspirational “green story,” it’s a global cash engine transitioning with the times—without sacrificing returns or reliability.

III. Renewables: Funded, Not Forced – And Just as Value-Accretive?

Where many oil majors spend billions chasing green credibility, TotalEnergies does something simpler—and smarter. It funds its transition through profits, not dilution. Roughly 25–30% of annual capex now flows into low-carbon power, solar, wind, and storage. By 2030, management targets 100 GW of gross renewable capacity, positioning the company as a genuine energy producer—not just a fossil firm adding token wind farms.

But for income investors, the burning question is: can renewables match the profitability of fossil fuels, or is this just costly virtue-signaling? The short answer: yes, they’re designed to be value-accretive, though not quite at fossil levels—yet. Total Energies’ upstream oil and gas operations routinely deliver ROACE in the 15-20% range, thanks to low breakevens and scale. Renewables, by contrast, target a solid 12% ROACE by 2030, with Integrated Power turning free cash flow positive as early as 2028. This isn’t chasing headlines; it’s disciplined investing in assets that compound shareholder value without eroding the core cash engine.

Source: Total Energies Annual Report 2024

Take the portfolio: in the US, TotalEnergies is scaling solar farms in Texas and wind projects in the Midwest, leveraging tax credits and long-term PPAs for stable, inflation-linked cash flows. In Europe, offshore wind developments (like the recent French auction win) and battery storage add grid flexibility, capturing premiums in deregulated markets. Brazil’s hydropower and solar hybrids round out the mix, blending renewables with gas for reliability. These aren’t speculative bets—each project must hurdle a 12% IRR threshold before greenlighting, ensuring they stack up against hydrocarbon alternatives on a risk-adjusted basis. Critics might argue renewables face headwinds: higher upfront capex, weather variability, and policy risks. But Total Energies mitigates this through its integrated model—pairing solar/wind with gas peakers for 24/7 dispatchability—and by sticking to mature markets where subsidies are phasing out but demand is surging. The result? Projected electricity sales growth to 100-120 TWh by 2030, with margins rivaling upstream in a post-subsidy world. Funded entirely by hydrocarbon surplus (no new equity issuances), this pivot de-risks the portfolio: as oil/gas provide the ballast, renewables diversify earnings away from carbon pricing and volatility. This pragmatic, balanced approach—fossil cash feeding a renewable transition—explains why Total’s dividend looks not only generous, but structurally secure. It’s proof that green can be gold, without compromising the bottom line.

Source: Total Energies Annual Report 2024

Investment Takeaway

TotalEnergies is not an oil company pretending to be green. It is a world-class cash flow engine using its existing strength to build a durable, multi-energy future.

For any investor building a Global Income Portfolio, TotalEnergies delivers the essential trifecta:

• A high ~6.4% starting yield.

• A commitment to growing quarterly payments.

• A self-funding, resilient business model that de-risks the energy transition.

In a sector defined by volatility, it offers a rare combination of yield, growth, and stability.

For my portfolio, it’s a solid dividend stock, though far from offering a double-digit dividend yield. That said, the strategy here is patience - I’m waiting for a better entry point. I would consider buying when the dividend yield reaches 8%. Given TotalEnergies’ consistent ~7% dividend growth, the yield on cost would quickly approach 10%.

While the current yield doesn’t match Petrobras’s compelling offer, TotalEnergies is a middle risk / middle yield and earns a spot on my watchlist. For now, I’ll be patient and wait for a more attractive valuation. But a mix of Petrobras and Total Energies is perfect for me : a combined 10% dividend yield.

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Disclaimer: This article is for informational and educational purposes only and should not be considered financial or investment advice. The views expressed are solely those of the author and do not constitute a recommendation to buy, sell, or hold any security. Always conduct your own research and consult with a professional before making any investment decisions.

To build an efficient global income strategy, you need to know exactly how your cross-border income — dividends, interest, and royalties — will be taxed. This understanding isn’t just a compliance issue; it’s a core component of portfolio construction. In this first part, we’ll look at how to calculate your effective foreign dividend tax rate — the real percentage you end up paying after both foreign withholding and domestic taxation. Knowing this figure is the foundation for optimizing your after-tax yield and choosing the right markets for income investing.

I/ How to Calculate Your Effective Foreign Dividend Tax Rate?

A/ Your Real Foreign Dividend Tax Rate Explained — in 3 theoretical Steps

As a global income investor, understanding your true tax burden on foreign dividends is crucial because a high gross yield means little if taxes eat most of it. The “effective” tax rate represents what you actually pay after factoring international withholding and domestic taxes. Here’s a straightforward way to calculate it:

Step 1: Identify the Foreign Withholding Tax

When a dividend is paid from a foreign company, the source country usually deducts a withholding tax before you receive it. This is your first tax layer.

• Example: A French company paying a €100 dividend to a foreign investor may withhold 12.8%. Then, your broker credits 87.20 euros to your account.

Source: Pipart Global Income Investor Tools

• Important: Tax treaties often reduce this rate, so always check the treaty rate, which is usually lower than the standard domestic rate. In that case, it depends on the country you live in.

Step 2: Calculate Your Domestic Tax Liability

After receiving the net dividend, your home country may tax this income differently depending on its system:

• Credit System (common in US, UK and other European countries): You report the full gross dividend income but receive a credit for taxes paid abroad.

• Exemption System: Some countries only tax the net income received after foreign withholding.

Step 3: Apply the Foreign Tax Credit to Determine the Effective Rate

To avoid double taxation, your domestic system grants credit for foreign taxes paid, provided a double taxation treaty (DTA) is in place. The effective tax you pay becomes the higher of the two rates, as the credit is limited to your domestic tax liability.

• Scenario 1: Foreign withholding tax = 15%, Domestic tax = 15% → Full credit given, effective tax = 15%.

• Scenario 2: Withholding tax = 10%, Domestic tax = 15% → Credit only for 10%, you pay extra 5%, effective tax = 15%.

• Scenario 3: Withholding tax = 20%, Domestic tax = 15% → Credit capped at 15%, excess 5% unrecoverable, effective tax = 20%.

  

Practical Insight

Your effective tax rate depends on which tax (foreign or domestic) is higher. Investing in countries with withholding tax rates close to or below your home country’s rate maximizes net income. Always review tax treaties carefully and consider professional advice for complex international situations.

B/ In Practice: Favor Simplicity and Efficiency

Once you understand how foreign and domestic taxes interact, the next step is to apply these principles efficiently. In practice, the most successful global income investors are not necessarily those chasing the highest gross yields — but those who minimize friction costs, including taxes and bureaucratic complexity.

Prefer treaty-friendly jurisdictions

Countries with strong tax treaties (such as the US, UK, or Canada) typically reduce their standard withholding tax rates to 10-15% for treaty residents. This serves a dual purpose: it immediately lowers the tax burden at the source, and it simplifies the process of claiming foreign tax credits in your home country, as the credit you receive closely matches the tax you’ve actually paid.

While navigating treaty benefits may seem complex initially, the process becomes straightforward with practice. The underlying principles are standardized, often based on models like the OECD’s below (thankfully, you won’t need to read its articles in your daily investing).

Source: https://www.oecd.org/content/dam/oecd/en/publications/reports/2017/12/model-tax-convention-on-income-and-on-capital-condensed-version-2017_g1g8769b/mtc_cond-2017-en.pdf

Choose brokers that handle withholding at source

Some brokerage platforms automatically apply treaty rates at source, avoiding complex refund claims and administrative burdens.

Invest in zero withholding tax countries: simplicity as an advantage

Investing in countries with a 0% dividend withholding tax (e.g., United Arab Emirates, Singapore, Hong Kong) offers more than zero tax — it provides zero administrative hassle. With no tax withheld, you avoid lengthy, complicated reclaim procedures involving:

• Extensive paperwork such as proof of residence and withholding certificates

• Refund timelines that can stretch months or even years

• Uncertain outcomes with possible partial or complete denial of refunds

This simplification reduces time, effort, and costs, allowing investors to focus on portfolio selection and growth rather than tax paperwork. Receiving gross dividends directly also improves liquidity and reinvestment speed.

Avoid countries with high unreclaimable taxes

This creates a permanent and unavoidable drag on performance, making it nearly impossible to achieve a competitive net return. Markets with withholding rates exceeding 30%, often with no or limited reclaim options (like Switzerland and some Asian countries), introduce significant friction and reduce net income. Moreover, some reclaims are not cost-effective. For example, Interactive Brokers, a well-known global brokerage platform, may charge fees in certain cases for processing tax reclaims. See below:

By favoring jurisdictions and brokers that minimize tax friction, and by leveraging zero withholding tax countries when possible, investors can build a simpler, more efficient global income portfolio that maximizes after-tax returns with less administrative burden.

In conclusion, to maximize your net returns:

• avoid jurisdictions with withholding tax rates higher than your domestic rate,

• reduce administrative complexity by selecting a broker that handles tax documentation efficiently,

• and prioritize investments in countries with 0% dividend withholding tax where possible.

II/ Advanced Tax Engineering: Optimizing Complex International Income

While Part I covered the fundamentals of calculating your effective tax rate, sophisticated income investors can further enhance returns by mastering specialized structures and instruments. This section explores advanced strategies for navigating hybrid securities, complex jurisdictions, and efficient portfolio construction.

A/ Case Study: Brazil’s Dual-Income Challenge

Brazil presents a fascinating case study in why understanding the legal nature of income matters. While the country imposes 0% withholding tax on standard dividends, it applies a 15% withholding tax to “Interest on Equity” (Juros sobre o Capital Próprio) payments.

Source: https://pipartglobalincome.com/investor-toolbox/income-investor-toolbox/dividend-withholding-tax-by-country/

• Corporate Strategy vs. Investor Reality: Companies use Interest on Equity as a tax-deductible alternative to dividends, creating a corporate tax advantage. For international investors, this means the same company can distribute both tax-free dividends and taxable interest payments throughout the year.

• Practical Impact: As Petrobras’ distribution history shows, an investor might receive a tax-free payment in one quarter, then see 15% withheld from the next. This variability makes accurate cash flow forecasting challenging and underscores why labeling Brazil simply as a “0% withholding” country is misleading.

  

  Source: https://www.investidorpetrobras.com.br/en/shares-dividends-and-debts/dividends/

Investment Implication: Success in these markets requires moving beyond static withholding tax tables to active payment monitoring. Your broker’s dividend statements become essential forensic documents, requiring careful review of each payment’s classification.

B/ The US Landscape: Mastering REITs and MLPs

The United States, a core market for most investors, presents its own set of complexities with unique structures like Real Estate Investment Trusts (REITs) and Master Limited Partnerships (MLPs).

• REITs (Real Estate Investment Trusts):

  • Their distributions are often classified as “Return of Capital” (ROC), ordinary dividends, and capital gains.

  • The Impact: A significant portion of the payment (ROC) is not immediately taxable. It reduces your cost basis, deferring taxes until you sell the asset. This is a powerful tax-deferral tool, but it complicates your annual tax filing (requiring a K-1 or Form 1099-DIV form in the US for some structures).

  • Withholding: For non-residents, the standard 30% withholding on dividends applies to the entire distribution, which may not be tax-efficient given its complex nature.

• MLPs (Master Limited Partnerships):

  • These are even more complex for non-US investors. They generate pass-through income, and the tax liability is based on the fund’s business activities, not a simple dividend.

  • The Major Hurdle: They can create a US tax filing obligation (via a K-1 form) and may generate “Effectively Connected Income” (ECI), which is subject to higher, business-level taxation for non-residents.

The Investor’s Takeaway: While US REITs and MLPs can offer high yields, they introduce tax complexity for the international investor. Some REITs require careful tracking of cost basis, and MLPs are often best avoided due to the daunting US tax filing requirements. The administrative burden can sometimes outweigh the yield benefit.

C/ The “ETF Loophole”: Simplifying Access to Complex Markets

How can you access the high yields of a market like Brazil or the US real estate sector without the administrative headache? The answer for the strategic investor often lies in using Irish-domiciled ETFs as a tax-efficient wrapper.

• The Mechanism: Instead of buying Petrobras shares directly, you invest in an ETF listed that holds Brazilian stocks.

• The Tax Advantage of Irish ETFs:

  1. Ireland has favorable tax treaties with both the US and Brazil, reducing withholding taxes at the source.

  2. The ETF itself is taxed efficiently within Ireland.

  3. You, as the investor, receive a single, simplified dividend from the ETF, which is typically subject to a straightforward 15% withholding tax (or 0% for EU residents in some cases), regardless of the underlying assets’ complexity.

The Investor’s Takeaway: For exposure to markets with complex local tax rules (Brazil) or for income from problematic structures (US REITs), holding them through an Irish-domiciled ETF can be a far more efficient and simpler option. It outsources the tax complexity to the fund structure, providing you with a clean, predictable income stream.

D/ The Execution Framework: Three Pillars of Tax-Efficient Investing

Translating this knowledge into a resilient portfolio requires a disciplined system built on three pillars:

1. Broker Selection as Foundation
Choose platforms that automatically apply treaty rates, provide detailed tax documentation, and flag potentially problematic investments before execution.

2. Operational Due Diligence
Implement systematic processes for:

• WHT Verification: Confirming applied rates match treaty expectations

• ADR Fee Monitoring: Tracking custody fees that silently erode yields

• FX Impact Awareness: Understanding how payment date exchange rates affect net income

3. Strategic Jurisdiction & Instrument Selection
Build around inherently efficient options:

• Prioritize 0% withholding and treaty-friendly jurisdictions

• Utilize Irish ETFs for complex market exposure

• Systematically avoid high-withholding, non-treaty countries

Advanced tax optimization isn’t about eliminating complexity but strategically managing it. By understanding specialized instruments, leveraging efficient structures like Irish ETFs, and implementing disciplined operational processes, investors can capture global yield opportunities while maintaining portfolio simplicity and regulatory compliance.

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Investment takeaway

“Fiscal complexity,” identified as one of the main obstacles to international diversification, is perfectly manageable. With the information from the first part of this article, you can fully understand the issues before investing and read your broker’s dividend report.

All it takes is:

• Avoiding the few mistakes identified in this article (excessively high WHT, overly complex reclaims, misunderstanding the fiscal nature of the income paid out)

• Training yourself to understand the legal and fiscal issues. In my opinion, the information provided in this article is enough to see things clearly and start international investing—or monitor it—without anxiety.

So you can therefore calmly build your strategy using the tools (dividend withholding tax by country table) and the reasoning provided.

The few difficulties mentioned are largely outweighed by the pleasure and peace of mind offered by an international diversification of income. It provides indispensable security with a view to retirement, a gradual cessation of professional activity, or for joining the FIRE movement.

In short, with the right broker, basic tax literacy, and a disciplined approach to jurisdiction selection, international income investing becomes a source of stability — not complexity. This small, initial effort opens the door to global opportunities and long-term financial peace of mind.

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Disclaimer: This article is for informational and educational purposes only and should not be considered financial or investment advice. The views expressed are solely those of the author and do not constitute a recommendation to buy, sell, or hold any security. Always conduct your own research and consult with a professional before making any investment decisions.

As for growth strategies, however high performing they may be, few investors are capable of managing their complexity during retirement. And, in any case, they sometimes discover that you can’t pay bills with paper gains. Let alone with paper losses. It is precisely to explore this alternative path that we are examining the year-to-date results of this model portfolio dedicated to income. Here is what we will cover: the breakdown of its performance, the sources of its income, and the critical risks that lie ahead.

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I/ Balancing High Yield and Capital Appreciation: A Promising Start

A/ 13.97 % total return YTD: not too bad for a high yield portfolio.

The most noteworthy aspect of these results is the combination of a high yield with solid capital appreciation. Typically, one might expect a portfolio focused on generating a 12% yield to see more muted capital growth. Therefore, it’s significant that the portfolio’s total return of +13.97% has closely matched the +13.95% return of the S&P 500 this year (with a 1.3 % yield...), while simultaneously providing a substantial income stream.

This outcome stems from the portfolio’s core construction. The focus on high, stable income from value-oriented assets meant it could not fully capture the sharper growth momentum that propelled the broader MSCI World index to +16.57%. This is an inherent trade-off: the strategy prioritizes income resilience and lower volatility, accepting that it may not fully participate in the strongest phases of a pure growth rally. The goal is simple: generate high income, independent of market swings.

B/ The yield is high, but the portfolio is not diversified enough

Let’s be precise: the yield on cost stands at 12.82%, while the current yield based on market prices is 11.25%. The 12% yield in the title is a rounded average that clearly reflects the portfolio’s income strength. This difference is a positive sign, reflecting both the powerful effect of dividend reinvestment and the capital appreciation of the holdings. The current yield of 11.25% remains highly compelling for an income-focused strategy. The main challenge, however, will be to secure this high level of income by enhancing portfolio diversification. Therefore, the key priority for the coming quarters is to broaden the portfolio’s base while preserving its strong income-generating capability.

The map below reveals a significant concentration of investments in just four countries: the United States, Brazil, France, and China. While a global ETF has been added to the portfolio to mitigate this risk and improve geographic spread, its weighting is still relatively small.

This income breakdown highlights a significant concentration, with the US dollar (USD) accounting for nearly half of all distributions (49.0%). The Brazilian real (BRL) and euro (EUR) represent 30.0% and 19.7% respectively, while the Hong Kong dollar (HKD) exposure is minimal at 1.3%. The target is clear: diversify into at least eight currencies, with no more than 30% in any single one, to secure income. Consequently, the focus for the coming quarters will shift decisively towards achieving this currency diversification, prioritizing risk management over pure performance.

This promising start demonstrates that high income and capital preservation are not mutually exclusive, yet the analysis clearly reveals that robust yield must be built upon a foundation of deliberate diversification rather than concentrated bets. This analysis confirms that diversification is the key priority. Now, let’s examine the individual components that have driven these results before outlining the path forward.

II/ Deconstructing the Holdings: Satisfactory Engine, Unfinished Chassis

A/ The Engine Room: Covered Call ETFs & Their Role: unstable and contracyclical income

The premiums are high when volatility is high. And volatility is high in bear markets: that is why covered call ETFs are contracyclical. Among the income-oriented ETFs in the portfolio, JEPQ, XYLD, and JEPG provide regular monthly distributions. JEPQ has been the most rewarding so far, not only delivering consistent income but also generating meaningful capital gains this year. By contrast, XYLD appears less compelling, as its performance has lagged and its high distributions suggest overpayout, raising questions about long-term sustainability. JEPG, meanwhile, is both a recent addition to the portfolio and a relatively new ETF in the market. While its current yield of around 8% is somewhat modest compared to the portfolio’s overall income target, it offers diversification and a more balanced approach. For this reason, I plan to build up JEPG gradually and in measured doses, ensuring that exposure remains disciplined so as not to dilute the portfolio’s strong income profile.

That said, covered call ETFs do their job—monthly income—but they can’t be the only source. They remain heavily concentrated in U.S. equities, and there is an inherent risk for investors who lean too heavily on option premiums without sufficient diversification among income sources.

B/ Core Equity Holdings: Getting Paid for Volatility

Petrobras—specifically its preferred shares, which are held to maximize yield—continues to be a high-risk, high-reward component of the portfolio. The stock exhibits significant volatility, as shown below, yet it generates substantial dividends. The price fluctuates between $10 and $14, but I accept that volatility because it is offset by a double-digit dividend.

Icade exhibits a comparable profile: it offers a high dividend, but its share price is highly volatile, typically trading in a range of €18 to €24. I have no regrets about this holding; the volatility is more manageable within the context of a bull market. Ultimately, I am compensated for holding through the price swings.

The income mechanism differs: covered call ETFs provide a premium derived from volatility, whereas stocks like Petrobras and Icade pay a dividend that compensates me for enduring their price swings. Crucially, the collective dividends have provided the capital to fund new investments.

C/ Fueling Growth: How Dividends Fund New Diversification

All portfolio income is being directed towards new, high-yield investments for diversification: Banco do Brasil, Edvantage, and JEPG (for the last 3 months). I initially intended to buy Best Pacific International Holdings, but the price rose too quickly. Furthermore, my broker paid my Icade dividends quite late, so by the time the funds arrived, the price was already too high. The stock remains on my watchlist, pending a price pullback.

In any case, I have successfully achieved sectoral, geographic, and currency diversification without reinvesting a single cent of new capital. This is the core concept of the portfolio. Next dividends will be used to invest in Legal and General.

Source: https://finance.yahoo.com/quote/2111.HK/

The analysis of the current holdings confirms the portfolio’s income strength but also its key vulnerability. The path forward, therefore, is clear: systematically execute the diversification plan without compromising the high-yield objective while anticipating megatrends and applying I-CASH method.

III/ Perspectives

A/ All the Mega trends are not covered yet

Six major megatrends were identified. The portfolio has begun to address four of them. The first is the Geo-Economic Shift – the transfer of wealth creation towards Asia – which is captured by our initial investments in the region. The second is Currency Risk, which we are tackling through increased diversification, though this effort remains a work in progress. The third, Technological Disruption and the rise of AI, is represented by our exposure to the Nasdaq. Finally, the Energy Transition is addressed through our position in Petrobras, which reflects the impact of massive global energy investments.

However, two critical trends have not yet been incorporated: Demographic Shifts—specifically the economic effects of aging populations on interest rates and the demand for automation—and Geopolitical Risk, meaning the rising probability of global conflicts. The research has not yet been conclusive on this point. More precisely, given the stringent dividend yield requirement and current market conditions, no suitable candidate has clearly emerged to date. This remains an active area of focus.

Therefore, while the portfolio’s foundation is promising, the work is far from complete. The same applies to the full and systematic application of the I-CASH method, which will guide our future investments to ensure they are both strategic and disciplined. Remember: the I-CASH method is a disciplined investment filter focusing on Internationalization, Currency diversification, Asset class allocation, Sectoral balance, and High yield discipline.

B/ The I-CASH method is not fully respected yet

This is a fundamental and, ultimately, quite normal assessment. The primary challenge for the portfolio remains diversification. Its internationalization (I) is not yet complete, and its currency diversification (C) is similarly unfinished. In fact, whether concerning asset classes (A) or sectoral diversification (S), I have not progressed sufficiently to deploy long-term optimization techniques.

Indeed, once the portfolio’s deployment is more advanced, I will be able to optimize reinvestments in terms of currency exposure (based on forex market developments) and dividend yield. But that is another story. In the meantime, the snapshot representing the most accurate picture of the portfolio has evolved since the last portfolio update. Beyond the core trio of oil, real estate, and technology, the banking sector and private education have now joined to strengthen the income-generating engine.

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Key lessons so far

1. High Yield and Appreciation Can Coexist: This case study proves that a ~12% yield can be achieved without sacrificing capital appreciation in a bull market, challenging a common assumption.

2. Diversification is the Non-Negotiable Foundation: The primary risk to a high-income strategy is concentration. Future success hinges on systematic geographic, currency, and sectoral diversification.

3. Income Fuels Its Own Growth: The portfolio’s core mechanic—using dividends to fund new investments—creates a self-sustaining cycle that reduces reliance on new capital.

4. A Strategy in Evolution: This portfolio is a living project: the framework is set (megatrends, I-CASH), now comes execution.

And, above all, income investing is powerful because it enables continuous reinvestment during the accumulation phase without requiring any new capital. If you want to follow how this high-yield portfolio evolves in real-time—with all its wins and lessons—subscribe today.

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Source: LG America

I/ A good long term business

A/ Soon a 200 year old lady

Legal & General was founded in 1836 in London by a group of lawyers under the name New Law Life Assurance Society, before soon becoming the Legal & General Life Assurance Society. Initially focused on serving legal professionals, the company quickly expanded its services to the wider public. Over the 19th and 20th centuries, it grew into a major player in life insurance, pensions, and financial services in the UK. Today, Legal & General is one of the country’s leading asset managers, with significant investments in pensions, real estate, and infrastructure. It continues to play a key role in promoting responsible finance and long-term investment. But a long history isn’t enough — what really matters today is how Legal & General makes money.

Source: Legal and General

B/ A Three-Pillar Business Model

Far from being a traditional insurer, the group now operates as a comprehensive financial platform, structured around three complementary engines that generate predictable cash flows.

Pillar 1: Retirement solutions

A company that must pay pensions over several decades can transfer this burden to Legal & General (L&G). In exchange for a premium, the group takes on these pension obligations and invests the funds in long-term assets—government bonds, loans to solid corporations, infrastructure projects—that generate steady income. This pension de-risking mechanism creates a close match between inflows and outflows, ensuring payment stability.

This activity, known as Retirement & Institutional Solutions, is at the core of L&G’s model. In 2023, the UK pension risk transfer market reached around £50 billion of liabilities, of which L&G managed £12 billion (nearly a quarter of the market). In 2024, the group signed a further £10 billion in new deals. Its total annuity portfolio stood at £86 billion at the end of 2023, a clear sign of corporate confidence in its strength.

This pillar is built on very long-term contracts, supported by structural trends such as an ageing population, corporate balance sheet pressures, and infrastructure needs. It highlights L&G’s ability to transform complex obligations into reliable and predictable cash flows, while channeling capital into the real economy. This pillar offers reliable income. If pensions provide stability, asset management brings scalability.

Source: https://group.legalandgeneral.com/en/about-us/our-strategy

Pillar 2 : Investment management

Legal & General Investment Management (LGIM) is one of Europe’s largest asset managers with more than £1.1 trillion in assets under management. Unlike traditional insurance activities, asset management is a capital-light business, generating recurring fees without requiring significant capital commitments. This makes it an important source of stable cash flow for the group.

LGIM’s strength lies first in its scale and client base. The majority of its mandates come from pension funds and institutional investors, whose long-term investment horizons translate into stable and sticky revenues. At the same time, LGIM has successfully diversified its offering beyond conventional equity and bond funds. It is active in passive index strategies, ESG-focused investments, real assets, and liability-driven investment (LDI), which directly supports pension schemes in aligning their assets with future obligations.

Thanks to this diversification and its institutional focus, LGIM has proven to be a resilient source of earnings, relatively insulated from market volatility. It acts as Legal & General’s capital-light growth engine, providing predictable and scalable income that balances the long-term commitments of the retirement business. Finally, beyond institutions, L&G also serves millions of everyday households — its Retail arm.

Unlock the Performance History & Investment Rationale

We’ve established Legal & General’s predictable business model and its 9% yield. But what does the stock’s 189-year history tell us about dividend safety?

The remainder of this deep-dive is hosted on our main platform, where we analyze the total return and, most importantly, show why this British stock is a perfect fit for your global income portfolio.

In the full article, you will discover:

• The Brutal Truth: Why a 12.5% annual return over 15 years makes L&G a wealth compounder, but the 2008 dividend cut means it’s not a “rock-solid” dividend aristocrat.

• The Strategic Fit: A detailed breakdown of the I-CASH analysis that justifies adding UK exposure and 9% yield.

• My Final Decision: Why I am opening a position now and plan to fund it with upcoming dividends to build a long-term position.

To see the full historical performance and my rationale for adding L&G to a global high-yield portfolio, click the button below to read the complete article on our website:

Read the Full Article Here

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Disclaimer: This article is for informational and educational purposes only and should not be considered financial or investment advice. The views expressed are solely those of the author and do not constitute a recommendation to buy, sell, or hold any security. Always conduct your own research and consult with a professional before making any investment decisions.

Reminder: UCITS, a European regulatory framework, restricts access to many global funds but ensures investor protection, making JEPG a rare high-yield option.

Unlock the Full JEPG Portfolio Analysis

JEPG’s trade-off is clear: its ∼8% average yield comes with massive underperformance (20.7% vs. 41.7%) and highly volatile monthly payouts. So, why are we buying it?

The remainder of this deep-dive is hosted on our main platform, where we dissect the portfolio structure and the strategic rationale for this ETF.

In the full article, you will discover:

• The Portfolio Mix: How JEPG balances 66% US exposure with key diversification in Japan and Germany, using Tech and Financials as growth engines alongside defensive Health Care.

• The Strategic Role: Why JEPG is essential to my global income portfolio—not as a core holding—but as a counter-cyclical income hedge that generates cash when other dividends fall.

• The Verdict for Europeans: A precise breakdown of who should and should not buy this rare, UCITS-compliant, high-yield monthly income tool.

To understand JEPG’s key role as a diversified income satellite in a global portfolio, click the button below to read the complete analysis on our website:

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Disclaimer: This article is for informational and educational purposes only and should not be considered financial or investment advice. The views expressed are solely those of the author and do not constitute a recommendation to buy, sell, or hold any security. Always conduct your own research and consult with a professional before making any investment decisions.

I/ Bottom-up approach: an Education firm in full expansion

A/ A 22-year-old small cap in full growth

Edvantage Group Holdings (0382.HK) is a leading private higher education and vocational training provider in China’s Greater Bay Area — spanning Guangdong, Hong Kong, and Macau. . Founded in 2003 and publicly listed on the Hong Kong Stock Exchange since 2019, the Group is now moving beyond its home market, accelerating an international strategy that raises both opportunities and execution challenges. As shown below, the company has opened many schools since 2003.

Source: Edvantage Group

With nearly 96,000 students in 2024, Edvantage differentiates itself through a diversified portfolio

Unlock the Full Risk Profile & The Final Verdict

You’ve seen the impressive growth and the crisis-level valuation (4.5x P/E) that delivers a 10% forward dividend yield. But why has the market punished this stock so severely?

The remainder of this deep-dive is hosted on our main platform, where we switch to a Top-Down view to reveal the hidden risks and the high-conviction thesis.

In the full article, you will see:

• The IPO History: How a 40% capital loss since 2019 sets the stage for today’s value opportunity.

• The Critical Risks: A detailed analysis of the Chinese political risk (Double Reduction Policy) and currency risk that could cut the 10% yield in half.

• My Final Investment Takeaway: The three pillars that justify initiating a global income speculation on this turnaround story, collecting 10% for the wait.

To understand the full downside risks and see the logic behind this high-conviction investment, click the button below to read the complete article on our website:

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I. Recap of Previous Episodes and New Developments

I.A.1. Petrobras Weaknesses

Petrobras continues to grapple with structural challenges primarily linked to its majority state ownership. The Brazilian government controls more than 50% of voting rights and retains a golden share, allowing it to exert significant influence over strategic decisions. This often leads to policies driven by government agendas rather than shareholder value, such as delayed domestic fuel price adjustments and politically motivated executive appointments. Such interference undermines corporate governance, restricts management autonomy, and creates uncertainty for investors.

Financially, Petrobras remains exposed to currency and leverage risks. Around 70% of its revenues are in Brazilian reais, while roughly 70% of its debt is denominated in U.S. dollars. This currency mismatch means that when the BRL depreciates, debt servicing costs rise sharply, squeezing profitability and cash flows. By 2025, Petrobras carries net debt of about $59 billion, approximately 65% of annual revenues — significantly higher than peers like ExxonMobil, TotalEnergies, or Shell. This constrains its ability to fund growth projects or absorb oil price volatility when USDBRL is high.

Operationally, earnings….

• 

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  Unlock the Q2 2025 Performance Verdict

  You’ve seen the high-risk/high-reward structure of Petrobras. But what happens when the major risks—political interference, low oil prices, and currency volatility—actually materialize?

  The remainder of this deep-dive is hosted on our main platform, where we dissect the Q2 2025 results to determine if this high-yield stock is still a viable Global Income opportunity.

  In the full article, you will discover:

  • The Shockwave: How the Lula administration’s actions (like blocking the $8 billion extraordinary dividend) and the $64 WTI price affected the stock.

  • The Hard Numbers: The 24% drop in Free Cash Flow vs. the 8.7 billion BRL dividend payment, and why the “overleveraged” narrative is countered by a favorable Debt/FCF ratio relative to peers.

  • The Investment Takeaway: My personal strategy on why I am holding PBR.A and reinvesting the dividends in my global income portfolio.

  To see the Q2 2025 facts that resolve the Petrobras controversy and how it affects your portfolio, click the button below to read the complete article on our website:

  Read the Full Article Here

  ---

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  Disclaimer: This article is for informational and educational purposes only and should not be considered financial or investment advice. The views expressed are solely those of the author and do not constitute a recommendation to buy, sell, or hold any security. Always conduct your own research and consult with a professional before making any investment decisions.

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I/ JEPQ: Did the Risky Bet of 2023 Pay Off in 2025? A Deep Dive into the Debates

A. Timeline of the Debate: From 2023 Optimism to Growing Doubts

In 2023, JEPQ launched as an intriguing hybrid for investors. Its distinctive strategy—combining high monthly income with Nasdaq 100 exposure—was celebrated by optimists as ideal for a rising market with muted volatility. Advocates maintained that its actively managed covered-call strategy would outperform rivals like QYLD, offering a superior risk-reward balance compared to pure growth ETFs. Enthusiasm was strong at that stage.

(Source: Bloomberg)

However, as the year progressed, doubts emerged. Analysts contended the strategy had structural weaknesses, questioning whether JEPQ could truly fulfill its long-term promises. The main critique centered on its “capped upside, uncapped downside” profile, which, combined with historically low volatility, made it unattractive both for growth seekers and income-focused investors. Critics also pointed to design flaws, especially since other covered-call ETFs sometimes delivered stronger returns. On Seeking Alpha, critical articles have surged recently (between May 22 and June 30, 2025), coinciding with the fund’s rising popularity.

Unlock the Performance Verdict: Did JEPQ Deliver?

You’ve seen the controversy: Is JEPQ’s hybrid strategy a flawed gimmick, risking NAV erosion for capped gains? Or is it a smart compromise for passive income?

The theoretical debate ends now. The remainder of this deep-dive is hosted on our main platform, where we dissect the real-world results to find the answer.

In the full article, you will see the conclusive evidence:

• The Facts: Detailed analysis of JEPQ’s +24.89% total return in 2024 and its 11.13% yield, proving whether the NAV erosion fears were justified.

• The Performance Charts: Visual evidence on income stability, capital gains, and a comparison with key alternatives.

• The Final Verdict: Why this controversial ETF is now the largest holding in my global income portfolio and how it fits into a strategy focused on double-digit income and moderate capital gain.

To see the facts that settle the JEPQ debate and how this fund impacts your income strategy, click the button below to read the complete article on our website:

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In 2025, one ETF — JPMorgan’s JEPI — crossed $41 billion in assets. Its sibling JEPQ hit $29 billion. In China, dividend funds pulled in the equivalent of $6 billion in a single year. From New York to Tokyo, money is flowing into products that promise one thing: regular cash in your pocket.

Now picture this: a 68-year-old retiree, coffee in hand, watching dividends drop into his account every month. For him, those payments are worth more than a soaring capital curve. They’re not just income. They’re security, discipline, and peace of mind.

Every year, millions of investors make the same choice — prioritizing dividends over capital gains. This defies classical economic theory. But it’s not irrational. It’s human.

After years without doing a deep literature dive, I decided to seek both academic and market answers to a simple question: Who really are the income investors — and why do they invest this way?

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I. Demographics: Growing in Number, Older, Not Necessarily Wealthier or More Educated

If you want to understand income investors, the obvious starting point is to look at who they are — and more importantly, how many they are. And here’s the thing: they’re not a niche group lurking in obscure corners of the market. They’re a growing global force, reshaping product design and capital flows.

A. Quantifying the Population: Insights from Market Data

Since there is no global register of "income investors," their presence is often inferred through market activity and product demand.

1/ The Exploding Supply of Income Products as a Key Indicator

A primary indicator of their growing numbers is the booming market for public income products. Consider the capital flows into funds like JPMorgan’s JEPI (JPMorgan Equity Premium Income ETF) and JEPQ (JPMorgan Nasdaq Equity Premium Income ETF) in the USA. JEPI reached approximately $41 billion in AUM by July 2025, and JEPQ around $29 billion. Their European UCITS equivalents, launched in late 2024, have also collected substantial sums, indicating significant international demand. Dividend funds in China (e.g., CNY 42 billion, or ~$6 billion USD, by the end of 2023, showing a steep rise) and global dividend-focused ETFs (experiencing inflows of $23.7 billion in H1 2025, the highest in 3 years) continue to gather significant assets. This widespread collection of funds confirms a massive demand for income-oriented products.

2/ Measuring the Invisible: Proxies and Surveys

Beyond market flows into income-specific products, national household surveys, taxation data, and regional investment patterns offer robust and verifiable means to quantify this elusive population, providing crucial insights into investor behavior across regions.

Comprehensive studies from leading financial authorities directly capture the stated objectives and investment habits of millions worldwide. For instance, reports from the Federal Reserve (US) and Vanguard's How America Saves series consistently reveal a significant segment of investors prioritizing income generation and wealth preservation over pure capital appreciation. In Europe, the FCA's Financial Lives Survey 2024 (UK) similarly describes profiles of individuals whose financial stability relies heavily on regular distributions, with the lowering of the dividend allowance in the UK in 2024/25 notably bringing a record 3.7 million people into dividend tax, signaling a massive and active base of dividend recipients.

This pattern of income-seeking behavior is also observed in Asia, particularly in markets with aging saver bases like Japan and Korea, where deep listed real estate markets (REITs) play a significant role in providing distributive products. While less precise for hard numbers, the vibrant online communities dedicated to dividend investing (e.g., popular subreddits with millions of subscribers) serve as a global qualitative indicator of this engaged audience, reflecting a widespread, expressed interest in predictable income streams. Income investors are growing in numbers, but who are they?

Source: https://moneyweek.com/personal-finance/tax/dividend-tax-squeeze-to-hit-record-3-7-million-people-how-to-protect-your-investments

B. Demographic Characteristics: Older, Not Richer

Empirical studies confirm that demographic characteristics significantly influence investors’ dividend preferences.

1/ Age and Dividend Preferences: A Clear Link

The global aging trend, with increasing proportions of individuals aged 65 and over in the US, EU, and Asia-Pacific, directly fuels the demand for income-generating investments. Older investors tend to favor dividend-paying stocks more. A study by Graham and Harvey (2001) shows that older investors allocate a larger proportion of their portfolios to high-dividend stocks. This preference is even stronger among those with lower incomes, suggesting that dividends serve as a crucial source of current income for this group. Another study by Weisbenner (2005) indicates that companies located in communities with a higher proportion of people aged 65 and over are more likely to pay dividends, highlighting the importance of local preferences among senior investors. The proportion of income investors demonstrably grows with age, retirement, and longevity uncertainty.

Source: Journal of finance - https://people.duke.edu/~jgraham/website/DivClientele_JF_Final.pdf

2/ Income & Socioeconomic Status: An Observed Divergence

A notable divergence exists when examining investment preferences across socioeconomic strata. Investors with low or moderate incomes, often driven by a greater need for regular cash flows, demonstrably show a stronger preference for dividends. Research indicates that these individuals allocate a larger portion of their portfolios to high-dividend stocks. Conversely, high-income investors or those with advanced education levels (e.g., PhD holders) tend to prioritize capital growth. For instance, a study on the Pakistan Stock Exchange specifically found that PhD holders exhibited significantly lower preferences for cash dividends compared to individuals with only a secondary education. This observed inverse relationship, highlighted in academic findings, suggests that financial security and educational background can significantly shape an investor's fundamental preference for either direct income or asset appreciation. However, such correlations are complex and often subject to specific market, psychological and cultural contexts.

3/ Gender and Marital Status (Mixed Findings)

Unlock the Full Psychological and Strategic Analysis

We’ve explored the demographics, confirming that income investors are a massive, growing force of older and typically moderate-income individuals. But this only answers who they are—it doesn’t explain why they defy economic theory.

The remainder of this deep-dive is hosted on our main platform, where we dissect the psychology and future challenges of this investor segment.

In the full article, you will discover:

• The “Why”: A deep dive into the “Dividend Puzzle” and the powerful role of Mental Accounting in providing psychological comfort and discipline.

• The Global Risks: Why the passive income market is nearing saturation and the main challenges (Yield Traps, Total Return Debate) that threaten your future global income.

• Intellectual Takeaway: The final conclusion on how to position yourself for a rapidly aging world where the need for reliable income is set to explode.

To understand the unique mindset of the income investor and learn how to secure your financial future, click the button below to read the complete article on our website:

Read the Full Article Here

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Disclaimer: This article is for informational and educational purposes only and should not be considered financial or investment advice. The views expressed are solely those of the author and do not constitute a recommendation to buy, sell, or hold any security. Always conduct your own research and consult with a professional before making any investment decisions.

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Here’s a quick update on ICADE, following the release of its H1 2025 financial results.
As a reminder, I personally own 485 shares of the company, purchased at €20.50, in march 2025 with a very long-term outlook.

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I/ Investor experience since purchase in march 2025 : volatility, high yield, huge discount

Two things were certain: volatility and high yield. As always, the classic combination: high yield, high risk. First, let’s look at volatility: the price has fluctuated between 18.50 euros and 24.50 euros since the beginning of the year. Volatility has certainly been a factor. But one thing is clear: the property company’s difficulties are already priced in (see chart below for the stock price on July 25, 2025).

Source: Google finance

The high yield is certainly delivering. Unfortunately, I missed the March dividend as I was only able to purchase a few days after the ex-dividend date, but I did catch the July one.

The discount, still enormous, has narrowed, moving from 66% to 61%. To be precise: Icade's stock traded at a significant discount of approximately 61.31% as of June 30, 2025, based on its closing price of €21.90 against an EPRA NRV per share of €56.6.

15% Yield on a 60% Discount: Icade Q2 2025 Update

Icade remains the textbook definition of an Accidental High-Yielder, trading at a staggering 60% discount to its asset value (EPRA NRV) and offering a projected 15% dividend yield.

Since March 2025, the investor experience has been defined by two certainties: volatility (price fluctuating between €18.50 and €24.50) and the high yield delivery. The central question remains: is the “short-term pain” still worth the “long-term gain”?

In this update, we analyze the stock’s performance and operational execution.

➡️ Read the Full Deep-Dive to Get the Financial and Strategic Details on our archive:

Read the Full Article Here:

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Disclaimer: This article is for informational and educational purposes only and should not be considered financial or investment advice. The views expressed are solely those of the author and do not constitute a recommendation to buy, sell, or hold any security. Always conduct your own research and consult with a professional before making any investment decisions.