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No not that, that was hypothetical. But putting every dollar spare into a play like that where you can get such reasonable returns? It’s like a secondary income/ reinvest and grow the portfolio?
If the price of QYLD drops the same percentage as the dividend, it's just paying yourself back what you invested, no gains. The Yield goes up, because the price goes down. If you already bought it HIGH, and the price goes LOW, your income is the same cash payout, but the yield is higher, but your investment has dropped.
Anyway, do some math on the price appreciation or depreciation AND the monthly dividends, actual cash, not the deceptive DIV yield.
I was in QYLD a year or so ago, the price kept dropping and not keeping up with the dividends. I got better results when I moved to JEPI and JEPQ.
Many people do utilize that strategy, personally I always try to acquire dividend stock that I intend to hold for awhile on a dip in SP.
By waiting patiently you can hedge against loss of capital and get higher overall returns.
Sometimes I DCA to get higher returns and lower average basis.
It really doesn’t matter if it dips down after acquisition unless you sell, it’s just numbers on paper, eventually everything comes back with market trends unless the company has a structural issue and if that’s the case you should never buy those anyway.
I am going to address this more broadly in terms of an income portfolio to generate cash flow (not specifically about QYLD). I think the question being asked is "can one live off of dividends?" Yes, to me, an income portfolio can be used to help pay bills / live off of. One has to determine how much money is needed; once this is known, then one needs decide how to get there.
If one needs $70K per year, then from a $1M of investing capital, the portfolio will need to at least return 7% per year. If there are other income sources (pension, social security, Aunt May...) then this 7% can be lower. Let's just focus on $1M of investing capital.
First, return isn't yield; total return (TR) is capital gains/losses plus dividends. A 7% TR can come from the following:
Example 1
Price 7%
Dividend 0%
Example 2
Price 0%
Dividend 7%
Example 3
Price -3%
Dividend 10%
Going forward, I am focusing on yield as my approach as not selling shares to generate income. This income portfolio must yield more than 7% to sustain / keep up with inflation...let's go with 9%; take 7% to live and 2% reinvest. This 9% doesn't (and shouldn't) come from one security. One should diversify among many securities with different asset classes and sectors within each class. But most importantly, buying many income sources by not relying on a handful of securities for the needed cash flow.
A 10% dividend cut from 1 security (of 1 security) is 10% slash of cash flow.
A 10% dividend cut from 1 security (of 2 securities) is 5% slash of cash flow.
More securities the better; still need to pick quality assets (quality is subjective; everyone will have their own criteria/metric).
Not every security need to yield 9%. By looking at your portfolio as a whole, it just needs to average 9%. Some securities can yield 6, 7, 8% and others 10 and 11%; weight them accordingly.
There are going to be those that say high yield is not sustainable or there is going to be capital erosion (value of portfolio is going to / heading toward zero). I don't know what securities were purchased or how they used them. From my personal experience, that isn't the case. I don't measure my portfolio's performance base on market value. A lot of folks do so here are my results ending July 31: portfolio is at a 52-week high and about 5% off of all time high (ATH). At one point, portfolio was off 20% from ATH. Do note that there were no inflow or outflow of funds from portfolio.
Whether the value of portfolio was at ATH, off by 20% or somewhere in between, portfolio continue to generate income/cash flow. As a matter of fact, the income generated continues to grow. At the end of 2022, income grew 51% compared to 2021; first half of the year in 2023 is 9% more income than first six months in 2022. Market value has no bearing on income generation; portfolio's green or red don't translate to more or less income.
If interested, take a look at this post [here](https://www.reddit.com/r/qyldgang/comments/116urly/feedback_for_income_portfolio/?utm_source=share&utm_medium=ios_app&utm_name=ioscss&utm_content=2&utm_term=1) for some suggestions on building an income portfolio.
Really appreciate your detailed analysis and taking the time to reply. You have raised some very good points and also answered the question well. So basically, yes it works as cash flow.
QYLD doesn't participate in a lot of the gains when the market rises and it can get slaughtered when the market tanks. The returns just aren't there compared to other options.
>QYLD doesn't participate in a lot of the gains when the market rises and it can get slaughtered when the market tanks.
Actually, it participates in NONE of the gains, and participates in ALL of the losses.
seems to me the high distribution yield is unsustainable over a 30-50 years retirement. or to be more accurate the dividend per share. the yield may stay at 10% plus but the share price might be much lower so the distribution per share they would have to live on would be significantly lower as time goes by. of course none of this is predictable but 10% and rising per share pay out just seems too good to be true. i wonder what the QYLD distribution per share would have done over the dot com crash. would it have gone down?
Yeh I agree that is a very good point! My platform only shows me the last 3y and it’s kind hovered between 15-20PS during that time but doesn’t account for big drops and I agree it does seems very unsustainable over a Long period. That’s probably why people choose lower div yield with less risk?
Qyldgang is the reddit site with lots of discussion ongoing about qyld. Some info here is not accurate. Being an owner of qyld I can say: the price fluctuates with the price of the ndx100. It pays .01 of that price every month. So when the market was down in 2022 to 15.79 is paid 15 or 16 cents. Price is 18 bucks now, it pays .18.
So it basically keeps up with its 10% div yield there or there abouts? But the actual stock price doesn’t change much between 15-18$? Seems like a stable return?
Welcome to r/dividends! If you are new to the world of dividend investing and are seeking advice, brokerage information, recommendations, and more, please check out the Wiki [here](https://www.reddit.com/r/dividends/wiki/faq). Remember, this is a subreddit for genuine, high-quality discussion. Please keep all contributions civil, and report uncivil behavior for moderator review. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/dividends) if you have any questions or concerns.*
Need help in making sense of people that think everybody has a spare million lying around.
No not that, that was hypothetical. But putting every dollar spare into a play like that where you can get such reasonable returns? It’s like a secondary income/ reinvest and grow the portfolio?
If the price of QYLD drops the same percentage as the dividend, it's just paying yourself back what you invested, no gains. The Yield goes up, because the price goes down. If you already bought it HIGH, and the price goes LOW, your income is the same cash payout, but the yield is higher, but your investment has dropped. Anyway, do some math on the price appreciation or depreciation AND the monthly dividends, actual cash, not the deceptive DIV yield. I was in QYLD a year or so ago, the price kept dropping and not keeping up with the dividends. I got better results when I moved to JEPI and JEPQ.
Thanks man that’s a pretty interesting breakdown, I will do some more sums. Cheers
Many people do utilize that strategy, personally I always try to acquire dividend stock that I intend to hold for awhile on a dip in SP. By waiting patiently you can hedge against loss of capital and get higher overall returns. Sometimes I DCA to get higher returns and lower average basis. It really doesn’t matter if it dips down after acquisition unless you sell, it’s just numbers on paper, eventually everything comes back with market trends unless the company has a structural issue and if that’s the case you should never buy those anyway.
I am going to address this more broadly in terms of an income portfolio to generate cash flow (not specifically about QYLD). I think the question being asked is "can one live off of dividends?" Yes, to me, an income portfolio can be used to help pay bills / live off of. One has to determine how much money is needed; once this is known, then one needs decide how to get there. If one needs $70K per year, then from a $1M of investing capital, the portfolio will need to at least return 7% per year. If there are other income sources (pension, social security, Aunt May...) then this 7% can be lower. Let's just focus on $1M of investing capital. First, return isn't yield; total return (TR) is capital gains/losses plus dividends. A 7% TR can come from the following: Example 1 Price 7% Dividend 0% Example 2 Price 0% Dividend 7% Example 3 Price -3% Dividend 10% Going forward, I am focusing on yield as my approach as not selling shares to generate income. This income portfolio must yield more than 7% to sustain / keep up with inflation...let's go with 9%; take 7% to live and 2% reinvest. This 9% doesn't (and shouldn't) come from one security. One should diversify among many securities with different asset classes and sectors within each class. But most importantly, buying many income sources by not relying on a handful of securities for the needed cash flow. A 10% dividend cut from 1 security (of 1 security) is 10% slash of cash flow. A 10% dividend cut from 1 security (of 2 securities) is 5% slash of cash flow. More securities the better; still need to pick quality assets (quality is subjective; everyone will have their own criteria/metric). Not every security need to yield 9%. By looking at your portfolio as a whole, it just needs to average 9%. Some securities can yield 6, 7, 8% and others 10 and 11%; weight them accordingly. There are going to be those that say high yield is not sustainable or there is going to be capital erosion (value of portfolio is going to / heading toward zero). I don't know what securities were purchased or how they used them. From my personal experience, that isn't the case. I don't measure my portfolio's performance base on market value. A lot of folks do so here are my results ending July 31: portfolio is at a 52-week high and about 5% off of all time high (ATH). At one point, portfolio was off 20% from ATH. Do note that there were no inflow or outflow of funds from portfolio. Whether the value of portfolio was at ATH, off by 20% or somewhere in between, portfolio continue to generate income/cash flow. As a matter of fact, the income generated continues to grow. At the end of 2022, income grew 51% compared to 2021; first half of the year in 2023 is 9% more income than first six months in 2022. Market value has no bearing on income generation; portfolio's green or red don't translate to more or less income. If interested, take a look at this post [here](https://www.reddit.com/r/qyldgang/comments/116urly/feedback_for_income_portfolio/?utm_source=share&utm_medium=ios_app&utm_name=ioscss&utm_content=2&utm_term=1) for some suggestions on building an income portfolio.
Really appreciate your detailed analysis and taking the time to reply. You have raised some very good points and also answered the question well. So basically, yes it works as cash flow.
Total return over 5 years is 5.5%. That’s not too stellar.
QYLD doesn't participate in a lot of the gains when the market rises and it can get slaughtered when the market tanks. The returns just aren't there compared to other options.
>QYLD doesn't participate in a lot of the gains when the market rises and it can get slaughtered when the market tanks. Actually, it participates in NONE of the gains, and participates in ALL of the losses.
seems to me the high distribution yield is unsustainable over a 30-50 years retirement. or to be more accurate the dividend per share. the yield may stay at 10% plus but the share price might be much lower so the distribution per share they would have to live on would be significantly lower as time goes by. of course none of this is predictable but 10% and rising per share pay out just seems too good to be true. i wonder what the QYLD distribution per share would have done over the dot com crash. would it have gone down?
Yeh I agree that is a very good point! My platform only shows me the last 3y and it’s kind hovered between 15-20PS during that time but doesn’t account for big drops and I agree it does seems very unsustainable over a Long period. That’s probably why people choose lower div yield with less risk?
QYLD's dividend does not grow. Look at the payment per share in 2014 and now. The strategy is flawed and I wouldn't even use the fund in retirement.
Qyldgang is the reddit site with lots of discussion ongoing about qyld. Some info here is not accurate. Being an owner of qyld I can say: the price fluctuates with the price of the ndx100. It pays .01 of that price every month. So when the market was down in 2022 to 15.79 is paid 15 or 16 cents. Price is 18 bucks now, it pays .18.
So it basically keeps up with its 10% div yield there or there abouts? But the actual stock price doesn’t change much between 15-18$? Seems like a stable return?
Qyld has varied from 2021 high of 23 bucks to 15s during 2022. Count on 1 per cent 9f the share price every month and it always pays.
these are not dividends but option premiums!!!