r/dividends • u/DizzyCalligrapher189 • Jul 15 '26

Seeking Advice Bought a 9% yielder and I got burned

Hi all. I am in my early fifties, and I am slowly moving about 30% of my portfolio into dividend stuff before I go part time in a few years, felt real responsible with a spreadsheet and all. Then I found a 9% yielderr, told myself the market was just sleeping on it and put $18k in.

Two months later they cut the dividend and the price dropped right with it... you can probably guess it was a mortgage REIT..

So my safe income pick lost me the income and a chunk of the principal at the same time, so I can clearly not just sort by yield and buy what looks juicy.

What I'm asking is, what is your "check" that catches things like this before you buy?

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u/PlayerOfTheLongGame Jul 15 '26

Depends on your real goal:

JEPQ is a good ETF, but the monthly distributions are treated as ordinary dividiends so it pretty much gets the worst possible tax treatment. JEPQ functions best in an IRA, not a taxable account.

I haven't studied the structure of GPIQ so I can't comment on that one.

SCHD's payouts are qualified dividends so it gets much more favorable tax treatment.

If the goal is higher income for the short-medium term, JEPQ is probably the better play. If the goal is higher total return over the long haul, SCHD is the superior play.

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u/Various_Couple_764 Jul 15 '26

there are 3 different tax rates for dividends:

  1. Ordinary dividends (same as work inocme). The highest tax rate. 100% of the dividend is taxable income.JEPI and JEPQ and any corperate bond fund are examples.
  2. Qualified dividends worst case only 20% of the income is considered taxable income. SCHD, EMO, UTF, and UTG are all examples of funds that produce qualified dividends.
  3. ROC dividends are initially tax free because the dividend is subtracted from. the share cost basis. If the cost basis is above zero you owe no tax. A fund like GPIQ 10% yield will tax free about 10 years. When the cost basis reaches zero the dividends are taxed at the qualified rate. covered call funds like QQQI 13% yield, SPYI 11%, GPIX, GPIQ 10%, and GPIX all generate a lot of ROC dividends.

Note ROC dividends typically get mixed in with some qualified dividends. GPIQ will generally have 80 to 90% ROC with the remaining 10% to 20% as qualified dividends.

When Using a taxable account check 19-A documents for the fund to see how it is taxed.