I’d like to be a know-it-all for a moment 😇 Stop talking about dividends when it comes to covered call ETFs. These are distributions on just about anything that can be called income—option premiums and swap income, among other things, are the main sources. These payments aren’t an indicator of the quality of genuine corporate earnings and, at such high levels, can actually erode equity. This is an options product, not an income product. You can buy these shares, but you should keep a close eye on them and pull the plug in time.
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@Dividendenopi You’re right, of course. They’re not dividends—they’re distributions. If these were really earnings from ongoing, regular operations, such high distribution percentages could probably only be achieved through drug and arms trafficking, protection rackets, or prostitution 😅.
All of this is generated through options. At least, that’s how it’s sold… but you never know… maybe it really does come from drug and arms trafficking after all. 🧨💥😉
All of this is generated through options. At least, that’s how it’s sold… but you never know… maybe it really does come from drug and arms trafficking after all. 🧨💥😉
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•@NichtRelevant I don't really want to know, as long as the money keeps coming in... 🤫🤭😇 Joking aside, dividends often give the impression of potential underlying value and, perhaps, the sustainability of the investment. Dividend-paying stocks are a nice tool—especially for income-oriented investors—for generating regular, often monthly, cash flow, and it’s a good idea to include them as part of a diversified portfolio. I do it myself, too. But it’s not for a long-term savings plan or even a “buy and hold forever” strategy. Dividends always sound so harmless in this context, but we’re actually dealing with a very risky investment product here.
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