How Often Does YYY Pay Dividends?

The Amplify High Income ETF (YYY) is a dividend-oriented fund that offers double-digit yields to its shareholders.

Intended to provide a regular flow of income, the fund also notably pays out its dividends much more frequently than most individual stocks.

Here’s what investors should know about YYY and whether its high, frequent dividends make it worth buying.

What Is the Amplify High Income ETF?

Amplify’s High Income ETF is a portfolio consisting of 60 funds that prioritizes current income for its shareholders. Although the fund’s main goal is to produce immediate income, it also attempts to create the potential for growth by buying funds that trade at a discount to fair value.

YYY is also reasonably diversified, having a roughly 60% allocation to bonds and a 40% allocation to stocks. The largest of the fund’s holdings accounts for just 4% of the total. This level of diversification offers YYY a decent amount of protection from any single asset’s risks.

It’s important to note that YYY invests in what are known as closed-end funds. These funds raise money one time via an IPO. After that, the shares of the funds trade publicly, but no new shares are created and no new money is raised.

This differentiates them from most ETFs and mutual funds, which can continue to scale up as investors pour additional money into them.

Because of their ability to use leverage and deploy cash aggressively, closed-end funds often offer higher yield rates than many other investments. The funds chosen for the YYY portfolio fall into this category and account for its ability to maintain outsized yields.

YYY categorizes eligible closed-end funds into two tiers, then ranks them based on yield, discount and liquidity. This methodology is used to construct a portfolio of both tiers, with the top tier allowed to account for more of the portfolio than the bottom tier.

What Is the YYY Fund?

YYY is the symbol under which the Amplify High Income ETF trades.

As an ETF, YYY can be bought and sold like an individual stock through public markets during ordinary market hours.

This differentiates it from high-income mutual funds, which offer less liquidity due to not trading publicly.

How Often Does YYY Pay Dividends?

YYY pays dividends monthly, making it one of a handful of stocks and ETFs to do so. The payout is made in the final few days of each month.

Monthly payouts enable shareholders to plan on a reliable source of periodic income, potentially making it easier to budget in retirement.

What Is a High-dividend Equity Fund?

High-dividend equity funds like YYY use stocks, bonds and other investments to generate income for shareholders on a regular and ongoing basis. Generally, the purpose of these funds is to prioritize current income as opposed to future dividend growth.

As such, high-dividend funds usually focus on investments like real estate investment trusts, blue-chip stocks with high yields, corporate bonds and other reliable income-generating assets.

A wide variety of dividend ETFs exist to cater to various investment goals, strategies and levels of risk tolerance.

What Is the Annual Dividend Payment?

YYY currently pays $1.44 annually, equating to 12 monthly payments of $0.12 each. At the time of this writing, the fund’s yield is about 11.8%. This places it well above the majority of other high-dividend investments.

For reference, Vanguard’s High Dividend Yield ETF currently yields just 2.6%. Even Realty Income (NYSE:O), a REIT known for both its monthly payouts and its high yields, is only yielding 5.1%.

Is YYY a Buy?

For investors focused on generating immediate income, YYY may appear to be a tempting option. There is no denying that the fund’s yields go far beyond even most benchmark dividend income investments, and its diversification seems to limit its risks in any one investment.

The problem, though, is that YYY shares have consistently underperformed the broader market. Since inception, YYY’s share price has appreciated at an annualized rate of just 5.5%.

Even discounting the effects of dividend reinvestment, the S&P 500 has grown at an annualized rate of 11.7% since June of 2013 when YYY launched. When reinvestment is taken into account, that rate jumps to 13.7%.

YYY also carries a very high expense ratio that nullifies some of its appeal. The total expense ratio of YYY is 4.6%, a markedly high rate in an ETF market that is increasingly focusing on low-cost funds.

For comparison, the average expense ratio across ETFs is about 0.5%, and even costlier mutual funds average about 0.8%. As such, those who invest in YYY may find that the high costs of the fund eat into the income they can earn from owning shares.

In part, this is a by-product of YYY’s selection criteria, which allow the funds it invests in to carry expense ratios of up to 6%.

Finally, YYY has been unable to produce dividend growth during its time as a publicly traded fund. In fact, the fund’s monthly dividends have shrunk over time.

When YYY went public, each share paid $0.18 per month. The payout got a slight bump to $0.20 in late 2013, but the trajectory has been almost uniformly downward ever since.

Though the last cut from $0.13 to the current $0.12 per month occurred in 2021, investors may not be able to bank on the payout staying at its current level indefinitely. This lack of dividend growth or even stability is another disadvantage YYY has when compared to the broader stock market.

Between an unusually high expense ratio and a history of low growth rates, YYY appears less attractive than it would seem at first glance.

Although the fund does offer a high yield, investors who have held it up to now have consistently lost ground compared to what they could have made in the S&P 500 or a similar benchmark index.

Meanwhile, high expenses reduce the income that YYY generates. While the fund’s yield is still quite impressive, its negatives may well outweigh its positives over a longer time horizon.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.