No. of Recommendations: 11
These investment vehicles are not indexes but rather they use options and other techniques to amplify the dividend.
I would be *extremely* weary of these techniques. Value cannot appear from nowhere, and you will have the loss of principal with such high dividend yields where the underlying is not necessarily growing (economically, if thinking of the constituent book value as a business).
Another thing to consider is that the tax on dividends is generally more (often twice) than the capital gains tax, so if you want value to be accumulate over many decades it is better to have most of that value accumulated through the capital gain rather than the dividend, if framing the comparison purely from the tax perspective.
If you want a high dividend yield along with high capital gain, there is an interesting discussion on the Brookfield Corporation (BN) board with an offshoot named BAM. It yields 5% now (will take 6 months to see this) normalized, but unlike most dividend firms this one is actually increasing the distributable earnings reliably.
- Manlobbi
