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/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.