To The Moon

Global X SuperDividend ETF (SDIV) $Global X SuperDividend ETF(SDIV)$ is offering a very attractive dividend yield of 10.18% that is paid out monthly! Even after a 30% dividend tax, the yield is still good at around 7%.

Upon further digging, I noticed that the ETF has only generated 0.93% per year for the last 10 years. This means that the ETF price has been falling and ate up the dividend gains over the years.

I can think of two reasons. One is that such high yield stocks tend to be trashy and hence the underlying stock performance are bad. Second is that the ETF might be partly distributing capital, on top of the dividends, to improve the yield, causing the value of the ETF and the price to go down.

After considering the 30% div tax, a foreign investor in SDIV will actually lose money even after holding the ETF for 10 years!

One way to reduce the div tax is to invest in Irish-domiciled ETFs but there aren't dividend-focused ETFs to choose from.

Or, pick ETFs that are listed in, and investing in, nil dividend tax countries. Singapore is one such place and there are a few dividend ETFs for investors to choose from. Unfortunately, their yields didn't make my minimum 5% cut.