Warren Buffett is one of history’s most celebrated investors, leading Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) to a 20% annualized return since 1965, doubling the S&P 500’s 9.9%.
His disciplined value approach — investing in buying undervalued companies with strong fundamentals — would have grown a $10,000 investment at the time he took over the company into a massive fortune worth $622.8 million today.
Buffett favors dividend stocks like Coca-Cola (NYSE:KO) and American Express (NYSE:AXP) for their consistent payouts and durable business models, believing they provide steady income and long-term growth. However, he famously avoids dividends at Berkshire Hathaway, preferring to reinvest cash to maximize shareholder value, a stance that frustrates some income-seeking investors.
Berkshire’s 13% year-to-date return in 2025, outpacing the S&P 500’s 1% gain, underscores Buffett’s market acumen. Yet, there may be a way to capture Buffett’s strategy and earn a 15% annual yield: the VistaShares Target 15 Berkshire Select Income ETF (NYSEARCA:OMAH).
It’s a new exchange-traded fund (ETF) that launched in March with the goal of paying dividends monthly to achieve a 15% annual yield. Let’s see if OMAH is a good fit for your portfolio.
Income and Growth
The VistaShares Target 15 Berkshire Select Income ETF offers investors a unique way to “invest like Buffett” while targeting a 15% annual yield through monthly distributions of 1.25%.
OMAH’s strategy is twofold: an equity portfolio and an options overlay. The equity component tracks the Solactive VistaShares Berkshire Select Index that holds 21 of Berkshire Hathaway’s top publicly disclosed equity holdings, such as Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Chevron (NYSE:CVX), plus an allocation to Berkshire Hathaway itself through its Class B shares.
These selections reflect Warren Buffett’s value investing philosophy, focusing on companies with strong fundamentals, low debt, and sustainable competitive advantages, or “moats.” The portfolio is actively managed to balance exposure, ensuring diversification across large- and mid-cap stocks, which supports long-term capital appreciation.
The income component, managed by Tidal Financial Group’s experienced options trading team, drives OMAH’s high yield through a data-driven options strategy, primarily selling covered call options against its equity holdings. This generates premium income, distributed monthly and targeting 1.25% monthly to achieve the 15% annual goal. OMAH has made one distribution so far of $0.25 per share and hit their target.
How Do Covered Calls Work
Covered calls involve selling options to collect premiums while holding the underlying stocks. This strategy benefits from stable or slightly rising markets, but limits potential gains if the stocks surge significantly. While this approach can be effective in volatile or flat markets, it carries risks. Distributions may include a return of capital, which could reduce the net asset value (NAV) over time, as VistaShares notes in its disclosures.
The ETF’s 0.95% expense ratio is higher than many other ETFs, but it’s not unreasonable given it reflects active management costs. It could, however, erode returns if income targets falter.
It is also important to note that income is the ETF’s primary objective, with capital appreciation secondary.
What Could Go Wrong?
OMAH’s $100 million AUM milestone within two months of launch signals strong investor interest, fueled by Buffett’s legendary returns. However, risks abound.
The index relies on delayed public data. Companies like Berkshire Hathaway only have to file their reports with the SEC once every three months, and certain investors like Buffett can ask for permission to not disclose certain acquisitions immediately if they want to accumulate large positions and not have other investors pile in and run up the stock price. This happened last year when Buffett was building his 27 million-share, $6.7 billion position in Chubb (NYSE:CB).
As a result, OMAH’s holdings won’t precisely mirror Berkshire’s current portfolio and will likely miss Buffett’s real-time adjustments.
The options strategy’s success also hinges on market conditions, suggesting unfavorable volatility could lower yields. There is also the question of its sustainability given the return-of-capital component.
Key Takeaways
While OMAH’s Buffett-inspired approach and high yield are intriguing, it’s too new to invest in confidently. Launched just months ago, its long-term success remains unproven, and the options strategy’s reliance on market conditions introduces uncertainty.
Additionally, with Buffett stepping back from daily oversight of Berkshire Hathaway’s investments in 2025, his replacement, Greg Abel, may not be able to replicate his unparalleled success. This could potentially impact the index’s performance, indicating investors would be better off waiting for a longer track record to assess OMAH’s viability before committing
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The post Berkshire Hathaway Doesn’t Pay Dividends—But This BRK-B ETF Yields an Ultra-High 15% appeared first on 24/7 Wall St..
