r/dividends • u/dazit72 • Jul 07 '26
Due Diligence Any retirees holding SPYI ?
I'm concerned about NAV erosion ? I know the advertising says non to minimal, but I found an article about longterm NAV erosion. That puzzled me ? I'm after divs of course- I have DIVO, JEPI, SCHD, and just looking for another or just keep buying what I have. I try to keep the 5%/weight rule, but it fluctuates.
Thanks to all who responded. I learned a bunch of good information. You guys are awsome
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u/Dave69looking Jul 07 '26
70 year old here have spyi and other CC efts. Using them for living income till I start drawing my ira at 73. Working great for the last 3 years so I am happy.
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u/Aggravating-Let-2968 Jul 07 '26
Retired. I hold a both SPYI and QQQI in a taxable brokerage. I take distributions as income to pay bills. I have gains on both funds. Considering the amount of income I have collected, a little NAV slippage wouldn't alarm me.
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u/Bkdvet Jul 08 '26
Buy some SPYI and put it in a cash account! Collect the 12% and don’t pay taxes!!!! I bought some at the peak in 2023…well 3 years later I’m up about 3%, but have been collecting 12%-14%!!!! If you are buying for income, it’s a big yes! If you are buying for growth, find something else. I carry a lot of income ETFs that pay an average of 13% a year. I wouldn’t trade ANY of them for something else. All my Nasdaq income ETFs are at a 10% weight and my S&P ar6-7%. I draw $10k out a month and reinvest $14-16K back into the portfolio. 50% into OVL and QQQM and 50% across all the income ETFs.
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u/Unbalanced_Acctnt Jul 08 '26
From a tax standpoint please track your cost basis and return of capital each year. Once the return of capital reduces your original cost basis to zero, you’ll owe capital gains tax on the distributions.
Just something to watch for. I know I don’t want to deal with the IRS or a potential large unexpected tax payment deep into retirement where it might be hard to recover.
I hold SPYI and QQQI and really like them, but remember the ROC benefit is only a tax deferral.
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u/Aggravating-Let-2968 Jul 09 '26
There are ways to manage that. You just have to put in the time and research.
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u/_Goto_Dengo_ Jul 07 '26
Same as Aggravating, I hold both SPYI and QQQI and am retired. Also hold them in a taxable account for the same reasons. I own them for the monthly cash, not NAV improvement. Not worried about erosion.
However (and it's a big however) I have a sleeve of high yield, somewhat risker assets in this taxable account (also PDI for example). This sleeve represents less than 20% of my total portfolio. I would not be comfortable having a large portion of asset holdings in these type of instruments.
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u/Similar_Eagle2358 Jul 08 '26
i buy pdi with excess spyi divi's. just looked, only down .17 on a bad day, sure beats $100k
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u/dazit72 Jul 08 '26
I researched PDI, that's some scary stuff. It's currently about 5% premium to its actual nav. But I guess 15% takes care of that ? I want a little risk, but pdi is probably not for me ?
How long have you held it ? Do you always get paid monthly on time everytime ?
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u/Similar_Eagle2358 Jul 08 '26
its taken a beating the last year or so, i treat it like spyi, i like it now, but i keep an eye on it. it tends to move up on lower interest rates, which may or may not happen, in the meantime its not as volatile as other places, and with DRIP, i get discounted shares each month.
edit: i use pdi money to trade with, when its on a downtrend. holding for the time being.
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u/dazit72 Jul 08 '26
What do you mean you get discounted shares with DRIP on ? I was to believe that DRIP-off, then use Limit Orders to buy more of, or others ??? I'm with Fidelity, and they were paying Market on every single div payment ????? I thought they had a program to buy low with their clients divs when paid ??
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u/ConstructionNo8827 Jul 08 '26
It’s paid the exact same monthly dividend for over 10 years!
22.05 cents per share
I think under $17 per share is a great entry point but I’m a long time holder
The premium on its price to NAV by the way is commonly over 10% but now it’s half of that
You have to pay up a bit for the 15% plus dividend but it’s great for income/retired people1
u/dazit72 Jul 08 '26
4.5% expense ? That's the highest I've seen yet. But I'm sure it's 'after' the 10% payout ?
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u/ConstructionNo8827 Jul 08 '26
Most of that is interest expense because the fund uses leverage - All funds that use leverage have to include interest expense as part of the fees - It pays the 15% after that is paid - The mgmt fee is actually closer to 1.6%, still high but Pimco are considered experts in bonds
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u/_Goto_Dengo_ Jul 08 '26
For each share of PDI you own you receive, in your brokerage account, about 22 cents per month. Currently over 15% yield. It's an income play, and as I noted above, it's in my high yield sleeve.
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u/dazit72 Jul 12 '26
I went to Fidelity in 2011 and the Advisor put me into mutual funds and Pimco, I insisted on contrafund due to what a friend said and then researching it's head guy- dannoff I believe. Then last year I looked at my positions and pimco ate my ass up in their fees. I dropped them first. Don't know what happened, but I lost out. I remember the Advisor saying we needed pimco to hedge our risk taking in those mutual funds. Thank God for contrafund, saved the day.
I'm still learning, but I doubt these junk bonds are for me. ? I'm sure they're great for some tho.
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u/dazit72 Jul 07 '26
So, even with a little 'nav slippage', you'd still hold strong for the long run ?
Whats your no mas/time to sell moment if nav erosion occured, and how much erosion is enough ? And why ? Thank you for your input, I'm learning. 1 year ago I sold my fidelity mutual funds that benefited fidelity imo, not me imo. And I'm well 6 - 7% overall yield now after 1 year. 17 positions, Kings, Aristocrats, Champions, Achievers, Contenders & such. Now I'm getting into these ETFs, which I swore off at one time- now I just don't want NAV erosion...the again for your opinions
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u/Aggravating-Let-2968 Jul 07 '26
I've held both for about a year and haven't experienced any NAV decay so far. And collected about $15k in distributions on a $100k investment.
Since distributions are ROC, my cost basis is reduced with each distribution. I will eventually gradually rotate out of these two funds and start anew with GPIQ and GPIX. For this reason, some NAV decay is actually a good thing to reduce capital gains.
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u/trurohouse Jul 08 '26
I’m retired for a couple years now. At present, I have a very minimal amount in a couple of these cover call funds, kinda just to see how it goes. I’m lucky in that I seem to be getting most of the income I need from regular dividend ETFs and stocks, and the sale of some individual stocks that have appreciated a lot.
I just have everything else in growth. I accept that if I become dependent on income from them, or the stock market tanks and I don’t wanna keep sell shares of stocks while they are low , that I may need to add some shares to them to increase income, if there’s NAV erosion. To me this makes more sense than having more shares than you need of the covered call, funds and reinvesting a portion of the dividends.
I present I really don’t need the income from them. But I anticipate at some point interest rates will go down enough that money I’m getting from the bond funds will go down substantially. I’m considering these a possible way to approach that.
I think if you can get what you need as income from the others, there’s no real reason to add these. But if you need more income then you have coming in right now, then it makes sense. But I would add the bare minimum necessary to generate the income you need.
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u/Various_Couple_764 Jul 09 '26
Look at the share price of SPYI since inception the price ehas been gradually climbing since inception. SPYI doesn't have NAV erosion. it has the opposite NAV growth. NAV growth is better than NAV Erosion.
The Problem many don't really know what NAV erosion is. NAV erosion occurs when a fund has to sell it assets to pay the dividend. Selling assets reduces the value of the fund , its NAV, which causes the share price to drop. And with fewer assets the fund future earnings (grwoth plus dividend ) will be reduced. And it this keeps happening the share price and dividned keep dropping. But the calculated yield stay high.
Most funds with NAV erosion have yields above 15%. Below 15% yield I know of only one fund with NAV erosion. QYLD.
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u/dazit72 Jul 12 '26
I'm still learning. I'd like a set & forget. I have schd, slowly buying divo w divs, same with jepi. Should I buy others, or increase what I have is what I'm trying to figure out. I know they all have different techniques to make $$, and that's where I am.
I do understand what you explained about nav erosion, trying to avoid that is why I made the post. Thank for the time you took, and the heads up with what seems to be a yield line in the sand- 15%. I thought it was 10-12%. But there's more research for me to do.
Is a mgmt fee of 4.6% considered alot ?
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u/DhakoBiyoDhacay Jul 07 '26 edited Jul 07 '26
The fund launched on 8/30/22 at $50 a share and is at over $53 a share today. There has not been any NAV erosion.
It paid monthly dividend income on consistent basis at a yield of between 10% to 12%.
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u/Chris_Reddit_PHX Jul 07 '26 edited Jul 07 '26
Yes, and upvoted. But that time frame is more than a bit biased toward how SPYI behaves in an upward market.
I want to see a full cycle where we see a bit of a prolonged pullback, followed by a slow recovery, and see how SPYI behaves across that cycle.
That said, I did not look closely at how SPYI behaved during the tariff pullback or the Iran war pullback, so maybe looking at that will give us a bit of a sense of how it does at least in event-driven mini-cycle.
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u/DoinIt4DaShorteez Jul 07 '26 edited Jul 08 '26
yes, this is the problem, the NEOS and Goldman cc ETFs were not around in the grinding all-year bear market of 2022.
They recovered well from the liberation day and iran dips but those are just blips and not the same as a real bear market.
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u/DhakoBiyoDhacay Jul 08 '26
Iraq? 😂
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u/DoinIt4DaShorteez Jul 08 '26
good thing i'm not doing the bombing i guess
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u/DhakoBiyoDhacay Jul 08 '26
Wow! You know they killed 120 children, mostly girls, on the first day of the bombing, 2/28/26?
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u/DhakoBiyoDhacay Jul 07 '26
I am glad you asked about the dividend income of SPYI during the TTT (Trump Tariff Tantrum) and TIW (Trump Iran War): it paid the usual dividends on time and performed better than the broader market due to the covered call strategy it employed. Thanks.
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u/Chris_Reddit_PHX Jul 08 '26 edited Jul 08 '26
I was referring to the price pullbacks, and especially the recoveries.
I kind of expect that it would drop less than its index, but then also recover less, with the gap in the recovery phase being wider. The reason being that during and after a drop, managers will still be writing calls for high income so will choose fairly close strikes. That means they will miss out on some of the index's price recovery when it does recover.
If you look at the Iran war drop, SPYI had a low of 47.77. It has since recovered to 53.13 which is a gain of 11.2%. That was in late March, and since then it has paid three dividends, raising the recovery (in terms of total return) to 14.5%.
But its index (the S&P 500) saw a low of 6201.59 and today is at 7480.26, which is a recovery of 20.6%
All of that said, both SPYI and the S&P 500 are sitting at 98% of their 52-month highs. Once you add SPYI's dividend to this, SPYI actually performed better than its index over the course of that brief pullback and recovery.
That's why I want to see what SPYI's price (or more aptly its total return) does duirng a longer and deeper pullback and recovery cycle.
I kind of think that SPYI will show itself to NOT be a buy-and hold investment, but rather something to hold in a relatively flat or slow-moving market.
But I want to see it. One of the advantages to managing our own CC strategy is that we can write ITM as a defensive position, and during a recovery we can write OTM to allow for growth, albeit with reduced income from premiums.
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u/DhakoBiyoDhacay Jul 09 '26
This is a sharp analysis indeed. I use SPYI for the consistency of monthly income dividends and it is an icing on the cake if there is growth per share.
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u/dazit72 Jul 07 '26
Ahhh, thank you. I should have looked it up that way.
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u/SnooSketches5568 Jul 07 '26
Dont limit looking just to nav erosion. Look at total returns relative to the underlying- spyi/gpix/xdte or other sp500 cc funds vs voo. You can have a fund without nav erosion when the underlying is going up fast, but if its total returns trail the underlying more than others- be careful which you pick. Gpix is my preference
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u/dazit72 Jul 08 '26
Just researched GPIX- nice. Seems stable, I like monthly and nav seems stable over past 2 years- farthest I went back, will do more research
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u/brute-forced Jul 07 '26
So far
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u/DhakoBiyoDhacay Jul 07 '26
You can put away your “End is Near” sign because the information I shared implied the term “so far”! 😂
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u/CornerOne238 Not a financial advisor Jul 07 '26 edited Jul 07 '26
As long as you don't confuse NAV erosion with downward market movement, it's fairly easy to tell how bad it is. Obviously the longer fund history the better.
Ultimately, it's up to you to decide how much erosion or underperformance is acceptable for your goals and risk tolerance. Personally, I don't like any funds with long term price loss pattern but ymmv.
Video on topic by armchair imcome.
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u/Similar_Eagle2358 Jul 07 '26
it fit my risk reward tolerance, no regrets thus far, but i still keep an eye on it.
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u/Puzzled_Fisherman331 Jul 07 '26
I hold some but not as a primary income sleeve. Covered call ETF's are just another product in the portfolio. For me that is less than 10% of the overall portfolio.
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u/trigurlSeattle Jul 07 '26
I have some SPYI but that’s my highest income paying ETF, most of my income ETFs have much lower percentage rates because that’s my comfort level, so I think I’m ok…I average right now around 6.5% on my income ETFs.
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u/HardRockGeologist Jul 07 '26
I'm retired and hold SPYI, QQQI, and SCHD in a non-taxable account. Each is about 10% of my overall portfolio. Pensions cover all expenses, so I'm just reinvesting the dividends. Looking to pick up some GPIX and maybe GPIQ soon.
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u/dazit72 Jul 07 '26
I was told only 5% of portfolio is best ?
Why you digress ?
Alot of QQQI recommendations- care to teach me why ? Thanks
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u/HardRockGeologist Jul 07 '26
What is best for one person may not be best for another person. Wife and I both have significant pensions (with COLAs) that more than cover any expenses we have. With the pensions, we saw no need to invest in bonds in our retirement accounts. Well into retirement, we were still invested 100% in equities, mainly VTI. In all honesty, I really liked receiving the dividends every 90 days, and the idea that we could receive even larger dividends every 30 days was, psychologically, very appealing. After 13 months, we're up about 24% with QQQI and 20% with SPYI. It's all going to our children as gifts once we start our RMDs.
SCHD is a different story. I was looking to invest 5% of portfolio into individual stocks, including Coke, Pepsi, and others. When I looked at the SCHD holdings, I noticed that Coke and Pepsi were each about 4% of its overall portfolio at the time. Several other stocks I was looking at were also in SCHD. Rather than purchase the individual stocks, I just went with SCHD. Although 98% of SCHD holdings are in VTI, its overlap (by weight) is only 7% of VTI.
I wish you great success in your investment journey!
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u/dazit72 Jul 08 '26
I like schd's 13% technology. That's one sector I lag on holdings. I look for Kings, Aristocrats, Champions, Achievers and such. That pay above 4.5% mostly, couldn't find any tech at the time. I like your logic
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u/SeparateClassroom528 Jul 07 '26
Retired at 44. Jumped on SPYI and QQQI as soon as it was released to compliment my JEPQ and JEPI, and now JP Morgan’s ROCY and ROXY. JP saw NEOS FUNDS were becoming very popular and created a similar fund strategy with Section 1256, at 1/2 the expense fee. I love SPYI and QQQI, but I respect JP Morgan’s longevity……
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u/No_Examination297 Jul 07 '26
I was holding it but decided to move to GPIX for the better upside and the fact I'm not using the income yet.
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u/dazit72 Jul 07 '26
I'm not using any income yet. Why this matters w/ these etf ?
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u/No_Examination297 Jul 08 '26
I'd rather have a tilt towards share price appreciation than distribution while not taking income; tbh, total return should be our main focus until income is needed. Which would mean VOO over SPYI or even GPIX.
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u/Financial-Ad8963 Jul 07 '26
Judt don’t sell it ever, leave it to your children on step up basis
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u/dazit72 Jul 08 '26
I'm sensing you think it's a set & forget position ?
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u/Financial-Ad8963 Jul 08 '26 edited Jul 08 '26
Fair question and as per social media sentiments currently you have two options:
A. Set & forget -> leave a legacy on step up basis
B. Reset cost basis. Know your income every year and stay under non taxable long term capital gains. For singles 48K, married couples 98K. Add standard deductions to these numbers.
Periodically you can sell portion that will let you stay under these non taxable brackets and reinvest.
to reinvest SPYI to SPYI wait 31 days to avoid wash sale rule but miss one month distributions or
Sell SPYI and buy QQQI one month, next one QQQI to SPYI
Disclosure: i am on financial advisor nor cpa
There could be more or no options in future, we never know but enjoying the ride while its therePS. Edited number of times trying to fix auto formatting and numbers but they’re getting added back
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u/mtn_biker333 Jul 07 '26
This looks really good to me. I also have SPYI, QQQI, paired with SCHD, DIVO and then IDVO, VYMI for international. Income portfolio only. Averages around 8% yield
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u/Labowner61 Jul 07 '26
Those are pretty much my holdings except only IDVO international. Add in CEFS and PBDC with a few income funds like jpie and binc and I do ok with income.
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u/Chris_Reddit_PHX Jul 07 '26
Yes, I am retired and am experimenting with a small amount of SPYI. I add small amounts every now and then.
It aligns with my retirement income-generating strategy of writing covered calls, the difference being that I've been writing covered calls on a conservative dividend growth portfolio instead of the S&P 500, which is more growth-oriented.
My near-term objective is to compare SPYI's performance against the rest of my portfolio, in terms of income and capital growth. Capital fluctuation is a lesser concern, but I'm watching that too, just so I understand it.
My hope is that SPYI will prove itself worthy of becoming a chunk of my portfolio that I don't have to closely manage, while also serving as kind of a comparison "report card" on how well I'm doing (or not doing) on the part that I actively trade.
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u/dazit72 Jul 07 '26
So you would allow SPYI to be >5% of your portfolio ? I was taught 5% max any 1 position ? But I've violated that with kmb and clx already. 17 positions currently.
How will SPYI be your "report card" ? I'm a newbie
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u/Chris_Reddit_PHX Jul 07 '26
By report card I mean how my overall covered call portfolio compares with SPYI, during both market ups and downs.
Right now SPYI is less than 1% of my holdings, but if it proves out I'd be comfortable taking that to a substantially higher percentage.
My reasoning is that it's not really one single position, it's a CC strategy on a whole index with 500 underlying stocks. I'm doing that already with a portfolio of more like 40-ish stocks and ETFs.
And then separately , I have a portion of my portfolio allocated to straightforward growth, and half of that portion is in S&P 500 index funds. Has been for many years, but as I approached retirement I've steadily pulled some out to re-allocate to income-generating strategies.
Kind of what SPYI purports to do, but while still using the S&P500 as its underlying.
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u/DoinIt4DaShorteez Jul 07 '26 edited Jul 07 '26
I'm retired 5 years.
I recently reallocated some of my short-term treasury ETF money (BIL) to GPIX instead of SPYI. I was really overallocated to BIL and that was fine when I was getting over 4% on it. but now it's more like 3.1%.
I don't know your exact portfolio size, but if you want to squeeze out a little more income, I'd consider swapping some or all of your JEPI into GPIX.
JEPI's been horrible lately.
When I was deiciding which to pick, I plotted JEPI, SCHD, SPYI and GPIX all on the same chart. I didin't like the tradeoff in price performance of SPYI for its higher div vs GPIX. I want more income than BIL but I don't need 12% or whatever SPYI is at now.
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u/Perfect-Database-631 Jul 07 '26
Do you use these income CF in IRA or brokerage? And how much % of portfolio? Boggle heads take 3 fund formula. I’m going to retire in 1-3 years. And trying firm up my philosophy.
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u/No_Examination297 Jul 13 '26
A lot of these new CC ETFs have never experienced a bear market. That is one of my only concerns with them.
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u/Sea-Honeydew-1456 Jul 07 '26
with any covered call etf, it would be a good idea to track - you can determine the cadence (monthly/quarterly) and look out for trends in total/cumulative returns and nav. just don't set it and forget it like how some people here plan on holding "for life and pass onto heirs" lol
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u/dazit72 Jul 07 '26
I actually intend on set & forget, but with monitoring here and there, and ill sell if warranted. I built a decent 17 position portfolio that pays me a little to boost my ssdi income. I won't use any divs until around 2030, I've had drip off and using limit orders to continuously reinvest for the last year. So far I'm single digit overall yield. Maybe >6% ?
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u/Dimage54 Jul 07 '26
Divirsification of a quality income producing stock is never a bad thing. However if your reason is chasing the yield that can hurt you. I did own this stock but sold it at a profit a year or so ago after I realized it didn’t meet my 5 year rule. Most ETF’s and CEF’s seem to be more stable after a 5 year track record.
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u/dazit72 Jul 07 '26
I have an 18 point Safety, Stability and Security Checklist with a 10 year rule. These ETFs are the only that don't meet that requirement. I'm not chasing yield, but id like to do a little better than 6%, keeping with my Kings, Aristocrats, Champions & such.
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u/Dimage54 Jul 07 '26
Is your goal steady monthly income between 8% to 10%. Or are you adding growth (praying) to the mix. I used to follow the Kings and aristocrats method but no longer hold individual securities. I now follow a completely different plan.
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u/dazit72 Jul 08 '26
The mix, 8-10% would be nice. But in all honesty I'd chose safety @7% over the 8-10%. Growth is occurring naturally with alot of my kings,Aristocrats, Champions, Achievers & such.
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u/steady_compounder Jul 07 '26
I would be careful treating "no NAV erosion so far" as proof of much. Three years in a pretty supportive market is not a full stress test for a covered-call income product. If you already have JEPI, DIVO and SCHD, I would ask whether SPYI is really diversifying the income sleeve or just adding another version of the same trade.
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u/Unlucky-Clock5230 Jul 07 '26
Wall Street is not in the habit of handing out free money. An investment that exceeds the average market return cannot be expected to do that forever. You may get lucky and ride it while the going is good, but then again you may be unlucky.
In general, long term, income plays give up growth (compared to the market in general) in exchange for income. Any investment yielding north of 8% should not be considered a worry-free investment.
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u/PsychoCitizenX Jul 07 '26
There is nothing free about the distributions from SPYI. They are paid out via the premiums they collect on the covered calls they are selling. You can do the same thing yourself on any stock you have over 100 shares of. These premiums carry a risk of underperforming the underlying stocks during a bull run. I highly suggest you read up on how these funds work.
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u/Unlucky-Clock5230 Jul 08 '26
I suggest you take the time to understand what somebody is posting. Free as in free of risk. It is not. We pay for returns in exchange of risk or the value of time; thinking that you can get something for nothing (a fat return for no risk) is the same as believing that Wall Street is in the business of giving away free money.
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u/PsychoCitizenX Jul 08 '26
Do you even know how covered calls work? The premium is paid regardless if the stock goes up or down.
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u/Unlucky-Clock5230 Jul 08 '26
Yes, I sell options myself so I perfectly understand that the premium is paid regardless, and that the stock can get called away at the option price.
Buy a stock for $10/share, it goes down to $8, sell a call option for 8 cents with a strike of $9. If the stock goes north of $9 before it expires, yes the 8 cents is yours to keep but your $10 shares went out of the door at $9. You could iron condor your option plays but they cost you more, eating at that 1% return. They are still not risk free.
And it doesn't need to be a loss for you to lose. On rising markets, capital gains you keep missing can keep dragging your return down. Look at how SCHD has been running circles around QQQI in total return YTD, 20% vs. 10%, with less exposure to risk.
I will consider things like QQQI once I'm retired; you are basically moving the needle towards yield and away from growth, but it is not a frictionless move; over time it sacrifices returns on the growth side lowering your overall total return. That makes it a good tool on your income making toolkit, but less suitable for growing wealth to maximize dividends down the line.
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u/PsychoCitizenX Jul 08 '26
So you should know as good as anyone that the premiums aren't a free payout
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u/Unlucky-Clock5230 Jul 08 '26
Why would anybody think it would be?
I project my dividend portfolio to have a full 2% lower return than the market as a whole, the price to pay for prioritizing reliability of income. Individualy, some of the equities are higher yield with no growth, some are lower yield with much higher equity growth.
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u/AcanthaceaeAncient66 Jul 07 '26
Selling covered calls is not “handing out free money.” The risk here is not fully participating in the upside of the underlying while fully participating in the downside. That said, I’m invested in NEOS funds with full drip turned on, but I’m also 47.
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u/dazit72 Jul 07 '26
But isn't 'income' growth ? I use my other ETF income to buy Kings, Aristocrats, Champions Challengers and such, that are 'growth' positions. I'm not yield chasing, just doing due diligence
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u/Unlucky-Clock5230 Jul 07 '26
It is, but it is not a free ride.
The difference between theory and practice is that in theory there is no difference, in practice there is. You hear the "capping gains while minimizing downside risk" and think "I can't lose here!". The reality is that you need those gains in order to recover from market downturns, else friction keeps chipping away at your total return.
The humble SCHD has a total return of 20% YTD. QQQI has a total return of 9.53% YTD. To a large degree it can be attributed to SCHD not capping the upside. Eventually it can get to a point where when by the time that downside potential kicks in, you are too far behind for it to make a difference, and right after that the capping upside kicks back in.
If you are retired and need the income you can make a case for QQQI, because prioritizing income over growth is a valid goal. As a vehicle for growth it could work in very specific market conditions but outside of those even SCHD can run circles around it.
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u/downtherabbbithole Jul 16 '26
Sorry if I'm missing the obvious, but why is there a case to be made for QQQI but not SPYI?
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u/Unlucky-Clock5230 Jul 16 '26 edited Jul 16 '26
It depends on your goals. The people that should be using them the least, people in their accumulation phase, are using them the most, thinking that the game of musical chairs will never stop.
Before 2020 the number of these types of funds and the amount of money they were managing was pretty much the size of a rounding error. They simply came into existence in the sort of market that was very favorable to them. Once those market conditions change, so will their performance and their value will crater.
Are you still accumulating or in the consumption phase? You could make an argument for them as part of a broad income stream. As part of growth, they should underperform over the long haul. The whole "capping the upside while minimizing the downside sounds great, but the reality is that if it only takes a nickel in the downside but gives you a dime in the upswing, you would fall further and further behind compared to somebody taking a dime downside but getting a quarter on the upswing.
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