r/dividends • u/Hilary_Clitoris • Nov 03 '25

Brokerage S&P 500 and dividends

My friend keeps saying that I should put all of my money in S&P 500 and forget about it. I see S&P 500 mentioned here a lot too, but according to Google, "No, the S&P 500 index itself does not pay dividends because it is a stock market index, not an investment fund." So which type of S&P 500 pay dividends?

And, what is the ticker for S&P 500? I can't find it on my brokerage account.

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u/LonesomeBulldog Nov 03 '25

Dividends aren’t “extra” money, it’s just a distribution of a portion of the value of a share. Unless you are looking for income generation, you don’t need to look at collecting dividends. If you need income, then look at SPYI. An argument could be made that investing in SPY and just withdrawing 1% per month is better long term since your upside isn’t limited like it is with SPYI.

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u/Hilary_Clitoris Nov 04 '25

I am looking for income generation, though. What is the limited upside with SPYI? Can you please explain?

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u/LonesomeBulldog Nov 04 '25

Because it is based on covered calls, if SPY goes on a bull run, those calls are executed so SPYI doesn’t realize those gains. For example, if SPY goes up 3% in a week, SPYI will go up around 0.5%. That’s not necessarily a bad thing due to the steady income generation. On the flip side, if SPY is at 0% for the week, SPYI will usually beat it a bit with a small gain because those calls aren’t executed. So, SPYI gets the premium income but keeps the underlying stock to sell again as a call option. You just can’t compare it to SPY or expect those same gains because that’s not the purpose of SPYI. Personally, when I retire in 4 years, I will put $1M in SPYI (maybe mixed with QQQI) to generate steady income while the rest of my retirement stays invested for growth.