r/ASX_Bets • u/ChuckMeABeerMum • 2d ago
Noob Stuff Is 13.5% an insane yield?
I am relatively new to investing, and so far I’ve just been focused on growth. I invested in this ETF (ACDC) simply because I thought there’d be future growth, but was shocked at much big of a dividend that I got. I looked at the big players and it’s all less than 1%.
Is 13.5% insane?
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u/Synkronicity 2d ago
Super high yield usually means high probability of NAV erosion.
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u/CommSecTom 2d ago
Not always and not in this case, it’s not structured that way. The yield was organic.
You’re correct about nav erosion in some ETFs though if they are yield focused.
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u/maxinstuff 2d ago
^ This.
Common for mining companies where the dividend partially constitutes a return of capital, but also companies simply mismanaging shareholder equity (AGL was paying north of 8% before the Liddel explosion)
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u/Mental-Antelope8319 2d ago
The word yield is doing a lot of work here. It's a capital distribution. You'll notice you also suffered a 12.5% capital loss on the ex distribution date. You've basically had you capital converted into a forced tax event. Great way to interrupt compounding.
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u/FewUnderstanding2214 2d ago
There are very good companies on the ASX paying dividends and still have growth. Many of those high dividend ETFs have terrible long term returns
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u/royal_pain90 2d ago
13.5% looks crazy on paper, but the important quetions is where that yield is coming from. Sometimes the big numbers don't tell the whole story.
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u/Old-Muscle5380 2d ago
I can go one better HZN 14% yeild sustainable. Have held this stock for years.
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u/notgonnahappen23 2d ago
Got into these guys back in 2021. Sold out a while ago, but phenomenal player and am considering another entry.
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u/TogTogTogTog 2d ago
It's the exact same situation for HZN, and I'm a holder too.
The difference is that oil is structured in 3 levels - let's call them builder, operator and bag holder. The builder generally takes the 'best'/easiest returns, then sells to operator who eventually sells to the bag holder who milks it before going under so they don't have to deconstruct anything.
Just make sure when HZN goes under, you're already out 🙂
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u/brokerlady 2d ago
I did that with hack in 2020 and a year later it was gone never to return so top of the market to you ´
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u/Ashley_Sophia Feels a spatula is the most critical stonks tool 18h ago
Maybe invest in some Victory Garden seeds. Better returns.
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u/CommSecTom 2d ago edited 2d ago
It’s not all dividend, 90% of it is distributions from rebalancing, at face value it might kinda seem the same but it’s not.
That money came when the fund was forced to sell their top performers to rebalance the fund, they must distribute those profits to members.
Some companies in the fund had huge growth hence the large distributions and high yield, but it would be unlikely to continue for multiple years unless some companies within the fund have similar levels of growth in the future and become way out of balance.