1Settimana·

Dividend payments from capital?

$LDGL (-1,68%)

Hello,

I read the following discussion on another forum—what do you think?

“

Could it be that the dividend was paid out of the capital itself, causing the cost basis to be adjusted downward?

”

Is this something worth looking into?

11 Commenti

Lucifer@Trial_and_Error

1Settimana

The AI spits this out:
1. LDGL does not pay dividends from the fund’s assets
LDGL (L&G Global Quality Dividend Low Volatility) is a distributing equity ETF that collects and passes on dividends from the companies in its portfolio.

This means:

Dividends come from the companies, not from the ETF’s capital.

The ETF does not sell shares to finance distributions.

There is no dilution of net assets due to the distribution.

This would only be the case with synthetic, non-income-generating products (e.g., covered call ETFs such as QYLD, XYLU), but not with LDGL.

2. Why the cost basis decreases with some brokers
The misunderstanding stems from the way it’s presented:

Trade Republic, Scalable, and others
They often include dividends as “return” in the performance calculation.

This makes it appear as though the cost basis is decreasing.

In reality, the cost basis remains unchanged, but the total return increases.

Parqet / getquin
Show dividends separately → the cost basis remains unchanged.

No broker adjusts the cost basis downward, except in the case of:

Tax partial exemptions (not relevant here)

Capital returns (LDGL has none)

Stock splits (did not occur)

3. LDGL has not reported any capital returns
I checked the most recent distributions:

All payments are classified as “Dividend”

Not a single one is classified as “Capital Return” or “Return of Capital”

The NAV history shows no discount that would indicate a withdrawal of net assets

If an ETF were to distribute from capital, you would see:

The NAV falls more sharply than the dividend

The distribution is reported as “ROC”

The TER often rises because synthetic structures are more expensive

With LDGL: none of this is present.

4. Why some users confuse the two
Many are only familiar with covered-call ETFs (QYLD, XYLD, XYLU, QDIV, etc.):

These often pay out more than they receive in dividends

The distribution then comes from sold options or net asset value

In this case, the NAV declines over the long term → “dividend from capital”

LDGL is the opposite:

Quality stocks

Dividend strategy

Distributions from corporate profits

NAV remains stable or rises

5. Conclusion for You
No — LDGL does not pay out of capital.
No — the cost basis is not adjusted.
Yes — the dividend is clean and sustainable.

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Oktoberfest@Oktoberfest

1Settimana

@Trial_and_Error

It's explained in this video:

https://youtube.com/shorts/KdAKJQLEWeg?is=QSS5eXBYVolrxevb

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Fetzen@Fetzen

1Settimana

@Trial_and_Error It would be great if you could keep an eye on this for us. In fact, the rule regarding the dividend policy has been changed to allow dividends to be paid out of capital. Extraordinary General Meeting on August 12; the rule takes effect in September

https://cdn.discordapp.com/attachments/1214289908022124555/1541743542110785586/image.png?ex=6a97ee90&is=6a969d10&hm=9e1fab7a5e5373a0202c22e84933814c1317e4e8f9086d20b2234c3cc3d1d4bb&

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schlimm.@schade

1Settimana

@Fetzen Are you sure this refers to this fund and not to another one from L&G? As far as I know, LDGL was set up with this rule from the start, and now other ETFs are supposed to follow suit.

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Fetzen@Fetzen

1Settimana

@schade Oh, maybe that was from a conversation about the EM version when it switched from quarterly to monthly—yup

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TaubeSmash@TaubeSmash

1Settimana

I've read that too, but it didn't happen for me. The purchase price was the same as before. I think we'll have to look at the ETF's annual report at the end of the year to see if that actually happened.

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Immo_Investor@Immoinvestor1981

1Settimana

@TaubeSmash Maybe it's also because of the broker…we'll see.

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AI sagt@GoDividend

1Settimana

@TaubeSmash The semi-annual report will be released in the next few days. Then we'll know more.

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TaubeSmash@TaubeSmash

1Settimana

@GoDividend Thanks for the info! Do you already know when it's coming out?

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Solitair@Solitair

1Settimana

That's a classic dividend ETF that doesn't use covered calls, futures, etc. That means the distributions are the dividends paid out by the companies themselves.
At least, that's how I understood it. If that's not correct, please feel free to correct me.

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schlimm.@schade

1Settimana

@Solitair No, LDGL does not use CCs or anything like that, but it is a different kind of specialized product that does more than simply pass on the dividends actually accrued. According to the KID: “The objective of this share class is to distribute monthly dividends from the fund’s capital or income via electronic transfer. You will receive a distribution from a combination of net income and/or capital attributable to this share class. Distributing share classes aim to pay a stable monthly distribution amount per share.”

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