As mentioned in at least one 2024 thread on this board, the entity that created the YieldMax ETFs has a couple of ETFs that changed their payout frequency. Instead of the ETF paying out on a monthly basis, the company switched to paying on a weekly basis. One of the ETFs is YieldMax Magnificent 7 Fund of Option Income ETFs (Ticker: YMAG)
I started a YMAG position in May 2024, and added to the position at various times during the remainder of 2024. So far, what I have observed is one lower weekly payout and three relatively stronger payouts. Will that continue as a trend in 2025? Not sure. YMAG paid its first 2025 dividend today (01/06/25). That means 47 - 51 more payouts to follow.
Sometime in the next 2 - 3 months, I will also learn how my brokerage classifies the dividend.
I missed the initial discussions on these YieldMax ETF’s so I went back and read them now. At first blush, they seem to be a good alternative to cash accounts in a retirement portfolio, that is, the portfolio of a retiree like me.
However, I did find this thread that explains how they are subject to a declining share price (NAV erosion) due to the nature of the strategy. This may be ok for a retiree who is interested only in the income and can hold “forever” to avoid selling at a loss. It also seems to me it’s dependent upon the continued strength of the underlying business, which is never guaranteed.
Intriguing, for sure, will do a little more studying before I pull the trigger though.
@LakeEffect - Yes, this particular ETF (YMAG) is based on the “Magnificent 7” tech names - Options of Google, Amazon, Apple, Microsoft, Meta, Tesla, Nvidia. So, it has a concentrated risk in Megacap Tech. But, some of those names will not always move in sync i.e. Tesla is technology while the others are more IT focused.
As far as NAV erosion, that risk was understood and accepted going in. It is part of the trade-off for the high payout. I choose “experiment” in the title purposefully - I don’t know the outcome going in.
Good point about the “Magnificent 7”, my brain apparently glossed over that one while perusing the list of ETF’s. Contemplating a similar “experiment” of my own and just thinking out loud (typing out loud?) here.
BTW, the other YieldMax ETF that shifted to a weekly payout is YieldMax Universe Fund of Option Income ETFs (YMAX). The holdings are more diverse. But, their page specifically says this fund is a risky investment
Cannot really say one way or another whether YMAX would be choppier in behavior than YMAG. Does having more “components” increase or decrease the price behavior of the ETF?
@gdett2 - YieldMax is a newish entity for financial products. The weekly dividend has only been implemented for a quarter (or since Oct 2024). Yes, there was a YMAG weekly payment for each of the 13 weeks in the quarter. Is that guaranteed? I don’t know. What I do know is that each month has at least 4 weeks and YieldMax has groups A, B, C, & D. That’s how I get 48. Since the first YMAG div has been paid, that leaves 47 more (at least). If indeed there is a 13th weekly payment during a calendar quarter in 2025, there will then be 52 payouts. Given that “investing involves risk”, I just opted for 48 - 52 payouts, rather than a firm 52.