Quick Take
High-yield “option-income” ETFs—think YieldMax or single-stock option-trading funds—look tempting with their double-digit and sometimes eye-popping yields. But the hidden trap is that their NAV (Net Asset Value) often erodes over time, even while they pile up dividend-like payouts. Dividend Capture, on the other hand, offers a way to capture impressive income without slowly draining your capital—and in some cases, you can even grow NAV.
How High-Yield ETFs Actually Generate Those Payouts
Many of these ETFs don’t hold the underlying stock at all. Instead, they sell options, particularly covered calls, to generate income. That’s why you see big yield numbers—even on stocks that don’t traditionally pay dividends—like Tesla or Amazon.
The issue? These strategies cap your upside and expose your capital to erosion. If the underlying stock rallies, the ETF doesn’t follow; if the stock dips, the ETF still takes the full hit. Over time, the NAV can slide—even as distributions roll in.
NAV Erosion in Action
TSLA vs TSLY Rate of Return comparison showing NAV erosion in TSLY. A gain of 8.7% in TSLY vs a gain of 25.7% in TSLA.
TSLY vs. Tesla stock—This chart dramatically shows how the loss of Net Asset Value turns a hurricane yield into a whimper.
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Return of Capital Shredder: TSLY’s distributions are mostly return-of-capital, essentially giving investors back their own principal—slowly decaying NAV
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Upside Cap, Downside Exposure: Its covered-call strategy caps gains when Tesla jumps, but offers no protection when TSLA falls
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Long-Term Underperformance: Analysts note that TSLY has “not outperformed TSLA since inception,” with annualized returns underwhelming
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Real Reddit Voices: In r/YieldMaxETFs, one user bitterly observed, “Just because you happen to have a temporary profit doesn’t erase that this has experienced NAV erosion. $40 to $17 in two years is pretty ugly.”
Why Dividend Capture Avoids the Trap
Here’s where Dividend Capture shines:
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No NAV drag: You aren’t sacrificing principal for yield.
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Possible NAV growth: On well-chosen stocks, your asset may recover or appreciate post ex-div.
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Stackable income: Want more yield? You can gently layer in covered calls—but on your terms.
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Strategic freedom: You pick your timing, entries, and risk.
A Raider’s Reality Check
I’ve experimented with ultra-high yield ETFs during temporary surges. They worked sometimes—but they also punished me when NAV slipped. With Dividend Capture, I get the payouts and peace of mind knowing I’m not eroding my core. That’s the careful, repeatable approach I break down in my book.
The Smart Way to Earn Without Erosion
This post raises the alarm. Want the full blueprint to capture income without shrinking your capital? That’s exactly what Get 20% Returns with Dividend Capture provides—including:
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Dividend Capture Trade Log for tracking outcomes
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Capture Chain Calendar to line up ex-dates
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Trade Tracker, Stock Selection Checklist, and more custom tools
Grab the book and toolkit today—then stack income safely, without the decay.
Final Word
High yields aren’t always high returns if your capital is sliding. Dividend Capture offers a smarter, controlled way to build income and safeguard value. It’s not magic—it’s strategy. And it’s the system that keeps you raiding with confidence.
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