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SDIV delivers an 8% yield through monthly payments but has declined 3% in price since 2011 while SCHD tripled over the past decade.
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Monthly dividends fell 24% from $0.25 to $0.19 per share over two years. The fund allocates 76% to international holdings with emerging market risks.
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High 93% turnover creates tax inefficiency. The 0.58% expense ratio is nearly 10 times SCHD’s 0.06%.
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Have You read The New Report Shaking Up Retirement Plans? Americans are answering three questions and many are realizing they can retire earlier than expected.
Monthly dividend payments sound perfect for retirees on fixed budgets, but the 8% yield from Global X SuperDividend ETF (NYSEARCA:SDIV) comes with a price tag many overlook. Since its 2011 launch, the fund has gone nowhere in price appreciation while paying substantial income.
SDIV targets the 100 highest-yielding equities globally, spanning emerging markets, mortgage REITs, and distressed sectors. The result is monthly income yielding around 8%. A $100,000 position generates approximately $8,000 annually in dividends, paid in monthly installments averaging $650 to $700.
The fund achieves this through heavy exposure to Brazilian financials, Norwegian energy companies, Hong Kong property firms, and U.S. mortgage REITs. Holdings like AGNC Investment (NASDAQ:AGNC) and Western Union (NYSE:WU) exemplify the strategy: companies offering double-digit yields because the market questions their sustainability. Western Union trades at just 4x earnings with 15 of 16 analysts rating it Hold or worse, while posting a 45% earnings decline year-over-year.
Financials represent 21% of the portfolio, but the real concentration risk lies in the 76% allocated to international holdings, many in emerging markets with currency and political volatility.
This infographic details the Global X SuperDividend ETF (SDIV), outlining its high-yield income strategy, suitable use case for income-prioritizing retirees, and a balanced view of its pros and cons.
Monthly payments work as advertised but fluctuate. Recent distributions have ranged from $0.19 to $0.20 per share, down from peaks above $0.25 in 2023.
Over 14 years, SDIV has paid substantial income while the share price declined roughly 3% from its inception level around $25. Compare that to quality dividend growth funds: SCHD has tripled over the past decade while paying a lower but growing dividend.
The 93% portfolio turnover generates taxable events, making SDIV inefficient in taxable accounts. The 0.58% expense ratio, nearly 10 times SCHD’s 0.06%, further erodes returns.
Capital erosion is the central risk. Extracting 8% annually from an asset that doesn’t appreciate slowly depletes principal in real terms. The dividend itself has declined from $0.25 to $0.19 monthly over the past two years, a 24% cut that retirees depending on fixed income will feel acutely.
Emerging market exposure creates sequence-of-returns risk. A retiree who bought SDIV in early 2022 watched the price collapse from over $22 to under $8 by November 2022 before recovering. That volatility can be devastating when drawing income.
Early retirees with 20 to 30 year horizons need growth to outpace inflation. SDIV’s stagnant price and declining dividend work against longevity. Conservative investors requiring principal preservation should look elsewhere. The fund’s international concentration and sector tilts toward distressed high-yielders create volatility that contradicts conservative goals.
The Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) offers a compelling alternative for retirees who can accept quarterly rather than monthly payments. With a 3.8% yield and 0.06% expense ratio, SCHD focuses on quality U.S. dividend growers rather than the highest current payers. The fund has delivered 199% total returns over the past decade compared to SDIV’s total return of approximately 100% when including reinvested dividends.
The key difference: SCHD grows both dividends and principal over time, while SDIV trades capital appreciation for current income. For retirees with diversified portfolios, SCHD’s lower yield paired with capital growth often produces better long-term outcomes than SDIV’s high yield with stagnant prices.
SDIV works for retirees who need maximum current income, understand the capital erosion risk, and hold it as a small portfolio slice rather than a core position, but most would benefit more from quality dividend growth that preserves purchasing power over time.
You may think retirement is about picking the best stocks or ETFs, but you’d be wrong. Even great investments can be a liability in retirement. It’s a simple difference between accumulating vs distributing, and it makes all the difference.
The good news? After answering three quick questions many Americans are reworking their portfolios and finding they can retire earlier than expected. If you’re thinking about retiring or know someone who is, take 5 minutes to learn more here.
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