Will ULTY's 90% Dividend Stick Around, Go Up In Smoke?

"There've been quite a number of unique ETFs that have popped up over the years. For income investors and those seeking to retire early, the YieldMax line of ETFs has been among the most exciting. There are high yields (think in the ballpark of 5-6%), ultra-high yields (7-9%), and then, there's the YieldMax levels of yield (more than 80%). In this piece, we'll check out the YieldMax Ultra Option Income Strategy ETF ( NYSEARCA:ULTY), which has numerous income investors talking."

"Indeed, the massive dividend will go into the pockets of shareholders, but unlike traditional yields, they're subject to greater near-term volatility. In many ways, their yields can be like a moving target that's difficult to pin down. And while the dazzling yield may cause some risk takers to punch their ticket to shares without even understand how it was possible to command such a payout to begin with, I do think that the ETF should be viewed as a "bonus" source of income, rather one that is to be leaned too heavily on, especially for those living on a fixed income."

ULTY, the YieldMax Ultra Option Income Strategy ETF, currently shows a distribution rate near 90.8%, up from roughly 80% a few weeks earlier. The YieldMax family spans moderate to extreme yields, with ULTY delivering an exceptionally large payout. The ETF’s distributions are dynamic and can fluctuate significantly in the near term. Dividend payments go to shareholders but differ from traditional, stable yields because of elevated volatility. ULTY is suitable as a supplemental, bonus income source for sophisticated investors rather than a primary, reliable income stream for those on a fixed income.

Read at 24/7 Wall St.