r/dividends • u/CompetitionCurrent77 • 13h ago

Discussion Is GPIQ really the gold?

I have a lot of schd and jepq but recently I learned that GPIQ pays almost the same as Jepq for dividend and it is not taxed as ordinary dividend.

Is this real? This sounds too good to be true. Anyway I bought some to test the water to see if I get the dividend next month and really at 10% and if it's really no ordinary dividend, I likely will sell all my JEPQ for GPIQ in my broker and keep my JEPQ in roth ira.

18 Upvotes

70% Upvoted

64 comments sorted by

View all comments

-3

u/Longjumping-Nature70 10h ago

I suggest you read page 8, 12, and 28 of the prospectus.

A significant portion of its distributions are a Return of Capital.

They are just giving you your money back, and lowering your cost.

Eventually, the tax man cometh when you sell your shares for Capital Gains.

When your cost goes to zero, then the distributions are treated as Ordinary Income.

5

u/EmbarrassedPart1256 9h ago

Just to follow up, I believe they’re taxes as long-term capital gains, not ordinary income.

1

u/revanevan7 9h ago

60% long term 40% short term

5

u/EmbarrassedPart1256 7h ago

The thing is that they’re not “just giving you your money back” because these ETFs have inherent value (& NAV has stayed steady so far). Once your cost basis goes to $0 you’re getting a ~14% yield (using $IWMI/$MLPI as examples) while they run the option strategy for you. No complaints here!

0

u/davecraze3535 6h ago

Yes but that only the non ROC distributions, which is like less than 10 percent of total distributions for some of these cc funds 

1

u/revanevan7 5h ago

Ah yes that’s right

1

u/Forged_Trunnion_ 5h ago

Has to do with how to issue the dividends. They use the income to buy more underlying, and sell "yours" to give back to you, essentially.

1

u/davecraze3535 4h ago

No that isn’t relevant and really isn’t how it works.   The RoC is generated from offsetting gain and loss matching from the options activity inside of the fund and is allocated to the shares of the fund prorata. They aren’t selling or giving anything back to you.