First Trust Rising Dividend Achievers ETF (RDVY) Covered Calls

First Trust Rising Dividend Achievers ETF (RDVY) is an exchange-traded fund that tracks the NASDAQ US Rising Dividend Achievers Index. The fund targets 50 large-cap companies with a proven history of increasing dividends and the financial strength to sustain future growth. Using a rigorous screening process for earnings quality and payout ratios, RDVY provides exposure to high-quality equities across sectors like financials and technology, aiming for long-term capital appreciation.

You can sell covered calls on First Trust Rising Dividend Achievers ETF to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for RDVY (prices last updated Fri 4:16 PM ET):

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First Trust Rising Dividend Achievers ETF (RDVY) is a passively managed exchange-traded fund that focuses on U.S. large-cap "quality" dividend payers. Unlike traditional dividend yield funds that may fall into "value traps," RDVY uses a forward-looking methodology designed to identify companies with the cash flow capacity to continue raising dividends. The fund is widely utilized by investors seeking a "growth at a reasonable price" (GARP) approach to income, offering a middle ground between high-yield defensive funds and pure growth strategies.

Core Business and Products

The fund’s investment strategy is governed by a strict multi-factor screening process:

1. Dividend Growth History: Every security in the portfolio must have paid a dividend in the trailing 12-month period that is greater than the dividend paid three and five years prior.
2. Financial Health Filters: Companies must exhibit positive earnings per share (EPS) growth and maintain a cash-to-debt ratio greater than 50%, ensuring they are not funding dividends through excessive leverage.
3. Payout Ratio Cap: To protect against unsustainable distributions, the fund excludes any company with a trailing 12-month payout ratio greater than 65%.

Competitive Landscape

RDVY competes in the crowded dividend-growth category against established giants. Its primary rivals include the Vanguard Dividend Appreciation ETF (VIG) and the iShares Core Dividend Growth ETF (DGRO). While VIG and DGRO often carry lower expense ratios (0.04% to 0.08%), RDVY differentiates itself through its more concentrated portfolio (typically 50 stocks) and a higher tilt toward the Information Technology and Financials sectors. This concentration has historically allowed it to capture more upside during bull markets, though it can result in higher volatility than its broader-market peers.

Strategic Outlook and Innovation

The strategic outlook for 2026 is centered on "Quality-Driven Resilience." As market conditions fluctuate, the fund's focus on low debt and strong cash flow is intended to provide a buffer against rising interest rates. A notable area of portfolio innovation is the fund's ability to capture dividend-paying tech leaders that have recently transitioned from pure growth to mature, income-generating entities. In February 2026, the issuer, First Trust, expanded this successful suite with the launch of an international version (IDVY) to meet growing demand for global dividend achievers. By maintaining a disciplined, rules-based rebalancing schedule, the group aims to provide shareholders with a tax-efficient vehicle that compounds wealth through both share price appreciation and steadily increasing distributions.

Want more examples? RDNT Covered Calls | RDW Covered Calls