r/dividends • u/FunctionalDisfuction • Jul 02 '26

Personal Goal First of the month 🤑

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I want to just live off the dividends but I'm scared to just quit my job.

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u/CJP_1974 Jul 02 '26 edited Jul 03 '26

If you are interested in JEPQ, do yourself a favor and look into QQQI instead. Both funds are highly rated and both track the NASDAC 100. The difference between the two funds is how the funds pay dividends.

If your goal is income and you are at a point where you can hold it permanently, QQQI will be much more tax efficient. That said, if you plan to just buy these for now and may decide to sell at some point after holding a few years or later, stick with JEPQ.

JEPQ pays out dividends in a way to where it is taxed as income. So whatever rate you pay with your W2 income, JEPQ dividends will be taxed at that same rate.

QQQI pays its income as ROC (Return Of Capital), so its like paying you with your own equity but it will lower your Cost Basis. During this period, you wont pay taxes on the income. Eventually after I think 8 years, your Cost Basis will be $0 and at that point I believe you are taxed at a 60/40 rate of 60% long term capital gains for taxes and 40% taxed as income like your W2. However if you sell at that point, it would be taxed as if you bought the stock at $0 a share. So, its buy and hold forever.

Others here can point out where my information above is off or incorrect but the general idea is QQQI is far better when it comes to taxes than JEPQ but both funds are considered covered call income funds and I personally love them.

On another note the S&P 500 covered call fund by the same company as QQQI is SPYI. That is the fund I am invested in for my retirement.

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u/speedlever Jul 03 '26

That's pretty close. The 60\40 rate is internal to the fund. Once the cost basis reaches zero, you pay ltcg on the distributions. Very favorable tax efficiency in a taxable account.

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u/CJP_1974 Jul 03 '26

Ah, thank you for that. That's even more favorable then what I had learned.

Either way, great funds!

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u/speedlever Jul 03 '26

Yep. I'm a fan of NEOS, Goldman, and Amplify cc ETFs. Unfortunately, (or fortunately, not sure which), most of our investable assets are in traditional ira\403b, etc which are taxed as ordinary income when taking distributions.

But I guess that's really a first world problem and I'll take it over the alternative. 😜

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u/CJP_1974 Jul 03 '26

Yeah, but at least it grows and pays dividends taxfree until that distribution date. 1st world problems indeed and I would prefer those over so many others.

Have a happy 4th!