SPYI viable long-term investment? Dividend yield


Aime
NEOS S&P 500 High Income ETF (SPYI) appears to be a viable long-term investment, and here's why:
- High Dividend Yield: SPYI offers a high dividend yield of 10.7%, which is significantly higher than the average dividend yield of most ETFs and stocks. This indicates that the ETF is returning a substantial portion of its profits to shareholders, which can be attractive to income-focused investors1.
- Tax-Efficient Income Stream: The ETF capitalizes on core equity allocations and provides a tax-efficient income stream for portfolios. It achieves this by writing covered call options on the S&P 500 Index, using section 1256 contracts, which are taxed at a blended rate due to the 60/40 rule. This tax efficiency can provide investors with a noteworthy advantage over time2.
- Strategic Portfolio Composition: Unlike its competitor, JPMorgan Equity Premium Income ETF (JEPI), SPYI employs a dual strategy that not only involves writing out-of-the-money SPX index options but also capitalizes on tax loss harvesting opportunities. This approach allows SPYI to potentially outperform JEPI, especially in bullish markets3.
- Diversified Holdings: SPYI holds a diversified portfolio of 506 stocks, including a significant allocation to tech and growth stocks that have driven returns in the S&P 500. This diversification helps mitigate risk and provides exposure to various sectors of the market3.
- Active Management: SPYI's management is active, seeking to minimize losses and capture gains in the underlying assets through the options strategy. This active management can potentially outperform passive index funds over time2.
In conclusion, SPYI offers a high dividend yield, tax-efficient income stream, strategic portfolio composition, diversification, and active management, making it a viable long-term investment option for income-focused investors.
Source:
more
less
Continue this conversation 

Explore
Screener
Analysis
Learn
News