This ETF Has a Double-Digit Yield and Could Surge 50%+ During a Recession

"You'll hear that there's genuinely no "recession-proof" asset that benefits from a broad-based downturn. Sure, you can always go short on an asset, but you'll lose out in the long run as the asset inevitably recovers. However, this is not true that there aren't assets that benefit from a recession. TLTW is one example, and I will explain why. It might be the best one in the current environment, as it comes with a 14.87% yield and a monthly distribution."

"Recessions are no cakewalk, and even the sturdiest of assets fail. That said, if the underlying asset is U.S. treasuries, recessions do benefit it. TLTW is a covered call ETF based on the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT ) . As the name suggests, it holds 20-year+ Treasuries, and they are unparalleled when it comes to safety. They carry a yield north of 4.5% right now, something that investors will rush to pay more for during a recession."

"The rationale is twofold: a recession invites rapid interest rate cuts that automatically make high-yielding assets more attractive, and a recession starts to make investors prioritize safety over all else. TLT holds long-term Treasuries, so it will benefit from a severe recession. Let's look at what happened in 2008, for example. TLT surged from ~$90 in May 2008 to over $121 in late December. Prices then moderated, but quickly rose again in the coming years as the market realized that low interest rates were becoming the norm. TLT traded north of $170 during the aggressive 2020 interest rate cuts."

TLTW is a covered-call ETF that writes calls on the iShares 20+ Year Treasury Bond ETF (TLT) and delivers a high 14.87% yield with monthly distributions. The ETF holds long-dated U.S. Treasuries, which are considered among the safest assets and currently yield north of 4.5%. During recessions, investors prioritize safety and central banks often cut interest rates, both of which raise demand for long-term Treasuries and increase their prices. Historical examples show TLT surged in 2008 and again during the 2020 rate cuts. The covered-call overlay generates elevated income but can cap upside during sharp rallies.

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