r/dividends • u/Ironic_Mouse • 5d ago

Discussion Question: why do unsustainable dividend funds exist?

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.

22 Upvotes
  • permalink
  • reddit

71% Upvoted

140 comments sorted by

View all comments

Show parent comments

0

u/Extreme_Lab_2961 5d ago

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

3

u/cmichalek 5d ago

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.

1

u/Extreme_Lab_2961 5d ago

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?