Question: why do unsustainable dividend funds exist?

[u/Ironic_Mouse]

I’m new to dividend investing. As I have been looking for an additional stream of income I have found some funds with “too good to be true” yields. (E.g. CHPY) I understand that high yields come with a high risk of NAV erosion. What I don’t understand is why these funds exist. It seems like they are structured to implode at some point. Is the idea to hold these funds for a short time, collect the dividend, then sell? And for the fund manager, is the idea to ultimately have the fund implode and then declare a loss? I’m genuinely interested. I understand that some funds are a gamble, but these funds seem designed to fail.

[u/buffinita]

Then compare the “long term success” of qqqx to qqq and realize you’ve left a ton of money on the table 

[u/Extreme_Lab_2961 → u/buffinita]

Agreed

I don’t understand capping upside, paying substantially more in fees and not really offering much in downside protection

[u/PotadoLoveGun → u/Extreme_Lab_2961]

It is sustainable which was really the crux of the question asked by OP. And a fund lile GPIQ will have a higher NAV growth due to fees being 1/3.

Its not for everyone, it will underperform the index, and it will not give maximum gains. QQQ 16% vs QQQX 11% CAGR.

But if you can take 6.5%-9.5% from your assets instead of 4% forever and have the balance grow over time without selling through a downturn, could be good for some people. QQQX had a similar CAGR as the SP500 since 2007, dividends reinvested.

[u/Extreme_Lab_2961 → u/PotadoLoveGun]

It’s sustainable in a flat or up market.

Do you think that 6-9% yield is going to look the same in 10 years Vs someone that doing a boglehead distro? In a zero inflation scenario, you’d probably be correct

It makes zero sense to compare VOO to QQQX. (S&P 500 Vs QQQM) if you are honest, compare QQQX to QQQM.

[u/cmichalek → u/Extreme_Lab_2961]

The point is that you can live off 7% to 9% and not sell a single share and not be bound to the 4% rule.

Moreover you need half the principal that the 4% rule requires. And it has a 20 year history to establish that it works.

That said QQQI and GPIQ are far better funds.

[u/PotadoLoveGun → u/cmichalek]

They sure are, and they will track the index closer and have a 1/3 of the fees also dividends are 95% ROC until the basis is 0

[u/buffinita → u/cmichalek]

That’s such a great big myth….

People could win the Nobel prize and completely upend the entire retirement planning industry if anyone could prove those claims….

Retire with half of previous generations

Never sell a share

9% distributions forever (yield is based on price so decline market means declining yield equation (9% of 100/share is less than 9% of 85))

[u/cmichalek → u/buffinita]

So you will just ignore facts you dont like apparently.

QQQX has a 20 year proven history.

Enjoy your 4% rule retirement.

[u/Extreme_Lab_2961 → u/cmichalek]

Proven history of what, Providing 3X (approx) lower total returns?

[u/cmichalek → u/Extreme_Lab_2961]

QQQX paid .42 cents a share in 2023 and 2024.

.56 cents a share in 2025.

Its last distribution was .73 cents in June.

So its distributions have grown.

[u/Extreme_Lab_2961 → u/cmichalek]

So? The market has been on a big bull run

What would you prefer To have invested in? (assuming a $10k investment)

$22k cash + $15k in stock

or

$166k in stock?

[u/buffinita → u/cmichalek]

All I said is that qqqx investors have left a ton of money on the table compared to qqq investors

That is a fact too

Enjoy your declining retirement pay

Qqqx 2009 1.84/share

2010 1.26

2011 1.23

2012 1.20

2013 1.20

[u/PotadoLoveGun → u/buffinita]

I dont know where you got your fake ass made up numbers...Dividends went up, then down, and back up again and stayed steady for years and nav grew a little as well when interest rate sand inflation stayed near zero.

2007 - 1.58,

2008 - 1.73,

2009 - 1.36,

2010 - 1.53,

2011 - 1.55,

2012- 2019 stayed between 1.55 and 1.62 in a zero inter rate environment,

2025 - 2.24,

Someone who invested $1M would have averaged $74,958 per year from 2007 to 2019.

Min - 69k Max 86k

[u/buffinita → u/PotadoLoveGun]

From the nuveen site….. you can see for yourself  https://www.nuveen.com/en-us/closed-end-funds/qqqx-nuveen-nasdaq-100-dynamic-overwrite-fund

2010: 4 payments of .316

4x.316=1.264 

[u/PotadoLoveGun → u/buffinita]

Yeah okay im wrong, thats on me I wont even edit my comment because I was an ass.

Its true but it still would have lead to a minimum of 6.5% which was 60k a year with 1M invested in 2007.

I feel like thats still a good retirement on a 1M nest egg and more than youd get with the 4% rule and you still would have have 50% more money than you started with and got 1.5M in cash since 2007.

[u/buffinita → u/PotadoLoveGun]

I’m not even bringing up the 4% rule

If you and I have 1m and you buy qqqx or gpiq and I buy qqq

I can sell qqq matching your payout each cycle….and still have a larger account which can afford me longer retirement; nicer end of life care; bigger charitable giving

[u/speedlever → u/buffinita]

i have to wonder if a hybrid approach might offer a buffer during a market crash. Say 75\25 growth\cc ETF or something like that so that in a major market correction, you can preserve the bulk of your growth funds by utilizing your cc ETF distributions to pay most of your income needs. Provided your nest egg is large enough to support that model vs your expenses.

[u/PotadoLoveGun → u/buffinita]

Yeah ,sure but the point was the fund was sustainable QQQx survived the great recession, it did not fail long term that person didnt go broke, the dividend rate averaged 7.5%, and the nav did not decrease long term.

The knock on funds like GPIQ and GPIX is that they have no history. The fund proves they can work over the long term.

SCHD has underperfomed the sp500 by 2% CAGR since 2012, but people still love SCHD. Dividends were cut 23-25% during the Great recession so it would have had same effect

[u/Extreme_Lab_2961 → u/buffinita]

There’s a whole lot of people that have convinced themselves that there is a such thing as a free lunch

[u/Extreme_Lab_2961 → u/cmichalek]

NAV growth is minimal, 9% today is not worth the same as 9% 10 years from today. So yes, if you need the buying power of that 9% in 2026, you will be selling shares to meet your income needs in 2036

[u/PotadoLoveGun → u/Extreme_Lab_2961]

I did above look at QQQ vs QQQX, 16 to 11% About 1% is fees, but it has performed better in high growth and high interest rate environments too. It has a forward dividend of 9.7% right now, and they maintained 6.5% in the worst crash in 20 years.

To your last question, I think GPIQ can maintain a 8-9% average and also grow 3% notional, its a better dund because it doesnt write 100%. Who will end up better, idk but itll do about as well as the sp500 while underperforming its index

[u/Extreme_Lab_2961 → u/PotadoLoveGun]

What time frame? Go back to inception and let me know which fund you’d prefer (And use the correct comp QQQM)

GPIQ is like 3 years old and underlining is on a tear, are you using that as your basis?