What Retirees Should Watch Before Buying Into AMZA’s 7.51% Yield This Year

Most income-focused ETFs force a trade-off: yield or growth. InfraCap MLP ETF (NYSEARCA:AMZA) tries to sidestep that tension by combining actively managed MLP exposure with leverage and a covered call overlay to push distributions higher than the underlying partnerships alone would deliver. The fund’s 7.51% dividend yield reflects that structure, and its 15.33% year-to-date gain through February 20 suggests the strategy is resonating. Two factors will determine whether that momentum holds over the next 12 months.

Macro Factor: The Fed’s Next Move

MLPs compete directly with bonds for yield-seeking capital, making the Federal Reserve’s rate trajectory the most important external variable for AMZA. The Fed has cut rates 75 basis points over the past year to a current target of 3.75%, and the 10-year Treasury has pulled back to 4.08% after peaking at 4.29% in early February. That decline has widened the spread between MLP distributions and risk-free alternatives, contributing to the rally across holdings like Energy Transfer (NYSE:ET) and Enterprise Products Partners (NYSE:EPD).

If the Fed resumes cutting before mid-year, AMZA’s leveraged structure amplifies the benefit: lower borrowing costs reduce financing expense while falling Treasury yields make distributions relatively more attractive. The inverse is also true. Watch the Fed’s dot plot and the monthly BLS CPI release for signals. A 10-year yield climbing back above 4.50% would likely pressure the fund’s NAV meaningfully.

Micro Factor: Leverage and the Covered Call Overlay

AMZA’s 122.2% energy sector weighting is the clearest sign of how leverage shapes this fund. That amplification works both ways: the +9.5% one-month price gain likely reflects the levered structure capturing the MLP rally in full. The covered call overlay generates additional premium income that supports distributions but caps appreciation when holdings surge. With ET raising its annualized distribution to $1.34 per unit and MPLX (NYSE:MPLX) paying $1.0765 per quarter, the underlying income stream is strong. The question is whether option premiums remain rich enough to justify the upside cap.

Monitor InfraCap’s monthly fact sheet for leverage ratio updates and strike levels on written calls. If implied volatility compresses, option premium income shrinks and the covered call trade becomes less accretive to the distribution.

Bottom Line

Watch the Fed’s rate path against the 10-year Treasury for the macro signal, and track AMZA’s leverage ratio alongside covered call premium income in issuer fact sheet updates to gauge whether the fund’s yield-enhancement mechanics are still firing.