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 ETFâs 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 âforeverâ to avoid selling at a loss. It also seems to me itâs 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 âMagnificent 7â 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 âexperimentâ in the title purposefully - I donât know the outcome going in.
Good point about the âMagnificent 7â, my brain apparently glossed over that one while perusing the list of ETFâs. Contemplating a similar âexperimentâ 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 âcomponentsâ 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 donât know. What I do know is that each month has at least 4 weeks and YieldMax has groups A, B, C, & D. Thatâs 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 âinvesting involves riskâ, I just opted for 48 - 52 payouts, rather than a firm 52.
I finally figured-out the Monthly vs Weekly vs 48 vs 52 conundrum!
With YMAX making 52 payments vs 12 each for the 4 component âweekâ payments per âmonth.â
The A, B, C & D funds pay every 4 Weeks, not once per Month!
I noticed the âBâ funds pay twice this month, on Jan 6 and Jan 31.
Looking further âCâ funds pay twice in May, 5/2 and 5/30. The âDâ funds do it Aug 1 and Aug 29. The âAâ funds Oct 3 and Oct 31 plus Dec 1 and Dec 29. (The "Aâs"were the last to start paying this year which probably accounts for this.)
I have the straight monthly/quarterly oriented dividends so ingrained on my brain that a pure week-oriented scheme went right over my head.
Feb 2025 wrapped up for YMAG. This shortest month has four weeks
The payouts looked something like 1.2X, 0.3X, 0.95X, 1.1X
There is definitely a weak payout in the sequence.
If I had decided to sell when prices dropped, I would be setting myself up to Buy High and Sell Lower which I believe is a self distributive investment plan.
I do expect the cash flow to change as the target trajectories change, so share price would follow. While I donât follow YMAG, it seems to behave as I expect.
What I want to see is how they recover when the targets increase in value again.
The various pages all state there may be periods when their payments may be zero.
The âDâ group is declared tomorrow which has MSTY (MSTR which has been hammered).
In looking at the site to verify the above, I noticed that ULTY has moved from group âCâ to Weekly in the list. That would put our portfolio dividend payments over 800 this year.
Yes it does. So you are not worried about them going bankrupt but you do think that a payout of 0 could happen. Then when the market starts coming back their payout would come back. Is that correct Gene?
No change on my end. Lower price of ETF was expected for some portion of the investment cycle. I probably do need to set a level of ârednessâ that is acceptable.
For NYSE traded individual companies, the exchange only allows a companyâs shares to trade below $1/sh for a certain number of consecutive days. After that, the exchange sends the company a warning letter âremedy the situation or delistâ. I would think YieldMax would receive a similar letter
