15-July-2024 — The first thing to notice about the BIL chart is that it has been trading in a range of 40 cents (less than 0.5%) from about $91.40 to about $91.80 since the start of 2023. The swings may look bigger than they actually are. The quiet area from March of 2020 to March of 2022 is when dividends were cancelled due to the COVID pandemic.
BIL moves in a regular, sawtooth pattern, rising through the month and then dropping in a single day. The pattern looks enticing, but the sawtooth price movements of BIL do not seem to lend themselves to any workable form of short‑term trading. The monthly drops are caused by dividend distributions, and if you try to time the rising part of the moves (buying at the low and selling at the high), you're going miss out on getting the dividends. So it's easier to sit back and collect the dividends instead of expending energy trying to "beat" the system.
I use BIL as a cash-equivalent investment (i.e., a place to put my money when it is not invested in a rising ETF). As of July 2024, BIL is paying an annual dividend yield around 5.2%, beating SHY and even the yields paid on Treasury bonds with maturities over one year, which are currently around 4.3%
BIL also beats "money market" fund hands down, paying a higher yield with virtually no risk. (Most money markets now include weasel words in their propectus that say their value might go down.) Compared to them, BIL offers a higher yield and a lower-risk investment. It's primarily designed for capital preservation rather than significant growth, which is what I want in a cash-equivalent fund. The yield is attractive in the current interest rate environment, especially considering its very low risk profile.
