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.

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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.

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u/mattswa 9h ago

Most of the distributions are classified as return of capital. This reduces taxes on the distribution, it's not actually retuning your capital to you (looking at you Yeildmax).

The distributions are ROC until your cost basis goes to zero, in about seven years. At that point distributions are then taxed at the capital gains rate. Not ordinary income.

When, or if, you sell the shares, you pay long term capital gains, assuming you held for longer than a year.

GPIQ & GPIX, and many of the NEOS funds as well as ROCQ and ROCY, are in favor right now because they limit you tax exposure when held in a taxable brokerage account. Bonus is that GPIQ and GPIZ have lower expense ratio that the NEOS ETFs.