Retiring on dividend income is more achievable today than ever before. With high-yield ETFs and consistent growth in the stock market, building a passive income stream is realistic—but there’s a catch.
Enter NAV erosion, also known as NAV decay. This happens when your initial investment slowly loses value over time—even if you’re collecting high dividends. Ouch.
In this article, we’re breaking it down: what NAV erosion is, how to spot it, and which ETFs you can actually trust to grow your money without losing your principal.
NAV Erosion: What You Need to Know
Imagine three ETFs: XDTE, XYLD, and the S&P 500. Over a certain period:
XDTE: +17.55% ✅
XYLD: +15.78% ❌
S&P 500: +17%
Even though XYLD is supposed to deliver dividends, it underperforms because of NAV erosion. Dividend income sounds nice, but if your fund’s NAV is slipping, your overall returns may disappoint.
The takeaway? Always compare the fund’s price return against its underlying index. That’s the simplest way to see if NAV erosion is happening.
The Safe, High-Yield ETF Contenders
Here’s a curated list of seven ETFs that avoid NAV erosion while giving you solid income:
1. KQQ – Curve’s Tech Titans ETF
Yield: 17%+
Expense Ratio: 1.12%
Focus: Top tech stocks (Google, Amazon, Apple, Meta)
Why it works: Covered call strategy generates dividends without eating away at NAV. Great for tech exposure and consistent income.
2. DIVO – Amplify ETF
Yield: ~6–7% (monthly)
Expense Ratio: 0.56%
Holdings: RTX, Microsoft, Apple, Visa, Home Depot
Why it works: Combines dividend-paying stocks with covered calls. Lower volatility, steady income, no NAV erosion.
3. IDVO – Amplify International Dividend ETF
Yield: 5–6%
Expense Ratio: 0.66%
Holdings: Alibaba, TSM, UK & Canada financials
Why it works: International diversification with growth potential. Total return has beaten the S&P 500 recently.
4. EGGY – High-Yield Pick (Honorable Mention)
Yield: 28.61% (special year-end dividend)
Expense Ratio: 0.95%
Focus: Nvidia, AMD, Tesla, Broadcom
Note: High yield comes with higher risk. Price fluctuations can be sharp—but still no true NAV erosion.
5. EGGS – Safer, Consistent Payout
Yield: 15.26% (monthly)
Focus: 10–25 core holdings with active downside hedge
Why it works: Lower risk than EGGY, steady growth, monthly income without NAV erosion.
6. BIGGIE – YieldMax ETF
Yield: 12% annually (monthly payouts)
Expense Ratio: 1.09%
Holdings: Apple, Nvidia, Microsoft, Amazon, Tesla
Why it works: 50 largest companies, diversified, no NAV erosion. Realistic yields without sacrificing principal.
7. SOXY – YieldMax Semiconductor ETF
Yield: 12% annually
Expense Ratio: 1.06%
Holdings: Nvidia, TSM, AMD, Intel, ASML
Why it works: Semiconductor sector focus. Targeted income, NAV stability, strong growth potential.
Key Takeaways
NAV erosion can silently destroy your returns. Always check price return vs. total return.
ETFs with covered call strategies often generate high income without eroding NAV.
Diversification matters: balancing tech, international, and dividend stocks lowers risk while maintaining steady growth.
YieldMax and Amplify ETFs have some of the best no-NAV-erosion options on the market today.
💡 Pro Tip: If you’re thinking about retirement income or building long-term wealth, start with ETFs that protect your principal and pay solid dividends. Compounding can work wonders over time.
Ready to explore these ETFs and start building your dividend income portfolio? Check out Moomoo today and start investing in ETFs hassle-free: Buy ETFs on Moomoo
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