Should I Buy NVDY (NVDY)? Finance YouTuber Analysis

The YouTuber advises against buying the NVDY ETF, despite its high advertised dividend yield, because its dividend payments are inconsistent and unpredictable, making it difficult to plan income. Furthermore, the dividends from NVDY are non-qualified for tax purposes, meaning investors will always pay higher income tax rates, unlike a DIY covered call strategy on Nvidia stock which can qualify for lower capital gains rates after a year.

“before you see that 47% dividend yield and get excited I'm going to show you why that do-it-yourself approach is a much better option”

The YouTuber advises avoiding NVDY due to significant risks. He notes that the fund underperforms direct stock ownership when Nvidia shares jump, as calls get exercised, and if Nvidia shares fall, the premium and yield will also decrease. Additionally, as a single-stock ETF, its volatility and risks are multiplied compared to broader index funds.

“There are a few things that worry me here though one is just looking at the price chart in this and we do have very limited data on this yield Max ETF only being out for about a month now but you can see that when shares of Nvidia have jumped and this you see this in all those income ETFs that it has underperformed just a straight ownership of those shares basically those shares jumped past the call options that they were writing on that stock those those shares got called away they lost money on those call options so while they were able to pay out a very strong dividend yield you actually lost money from just compared to just owning the stock outright beyond that I think it's going to be very difficult or if not impossible for the managers of these funds to keep up that high of a dividend yeah 20 30 40 dividend yield you do not do that without taking the substantial risk and positioning in the market on on a single stock here to create that dividend yield”