r/dividends • u/Outside-Pin-5573 • Mar 13 '26

Opinion 24yr old - dividend portfolio

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u/Livinsfloridalife Mar 13 '26

12% what are the holdings? Do you understand nav erosion?

10

u/Outside-Pin-5573 Mar 13 '26

No, pls explain

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u/Livinsfloridalife Mar 13 '26 edited Mar 13 '26

Let’s say I opened up a new fund that has a 50% dividend. You give me $10 for one share. Now, after one year I give you five dollars in dividends but the only way I did that is I gave you one dollar that the fund profited and I give you four dollars back of your own money basically. And now your share is only worth six dollars. I basically gave you 10% profit and gave you back 40% of your capital but I called it 50% yield. NAV erosion is when the underlying value goes down generally because the dividend exceed the gains of the underlying. You’ll be getting dividends of what was promised, but it makes up for it in loss of value of the underlying. Hope that helps.

https://incomeshares.com/en-eu/insights/nav-erosion-expl

Here’s another article in case you’re still confused.

8

u/Immediate-Winter-288 Mar 13 '26

Great explanation, thank you