Who doesn't want to buy it at the lowest point and sell it at the highest point? So why might the dividend ETF not be worth it?

Who doesn't like to get passive income from dividends. But the selection of dividend stocks is not passive, and some investors want to be rewarded without a job. Dividend ETF can be a convenient way to do this.

I went to do some research to see if I could find any interesting dividend ETF in the past week. To my dismay, their value proposition is not good enough. Let me explain.

Unlike capital gains, dividend gains are usually taxed to investors. The US provides the largest number of ETF, more than 2000, but it attracts a 30 per cent dividend tax on foreign investors. This will reduce the dividends actually received, and don't forget that ETF fees must also be paid.

I think a good dividend ETF is a widely diversified one that can distribute a dividend yield of at least 5%.

Global X Super dividend ETF (SDIV) $Global X Funds Global X Superdiv Etf (SDIV.US)$Is offering a very attractive dividend yield of 10.18%, monthly payment! Even after a 30% dividend tax, the yield is still around 7%.

After further digging, I noticed that in the past 10 years, ETF has generated only 0.93% of revenue per year. This means that ETF prices have been falling, eating up years of dividend earnings.

I can think of two reasons. One is that such high-yielding stocks tend to be junk, so underlying stocks do not perform well. Second, ETF may allocate capital outside of dividends to raise yields, causing the value and price of ETF to fall.

After considering a 30 per cent div tax, a foreign investor who holds a SDIV will actually lose money even if he holds the ETF for 10 years!

One way to lower the div tax is to invest in Irish-registered ETF, but there is no dividend-based ETF to choose from.

Or, choose an ETF that is listed and invested in a country where there is no dividend tax. Singapore is such a place where there are some dividend ETF to invest or choose from. Unfortunately, their rate of return did not reach my lowest 5%.

even if $LION-PHILLIP S-REIT (CLR.SG)$REIT ETF now has a yield of 4%. In addition, it is industry-specific and is not broad enough to be a stand-alone investment in the portfolio. It must be mixed with other investments to achieve some kind of diversification. Otherwise, any impact on the REIT industry will damage the entire portfolio.

We can also look at the dividend ETF in the UK because there is no dividend tax there. For example, the iShares UK dividend UCITS ETF (IUKD) yields 5.34 per cent, but the 0.4 per cent expense rate will be less than 5 per cent. The margin is OK, but sterling has been underperforming, so real gains will be even lower after taking into account foreign exchange losses.

Finally, we can take a look at Hong Kong. You will notice that the former British colonies are more likely to have a zero dividend tax. Global X Hang Seng High dividend yield ETF (3110) $Global X Hang Seng High Dividend Yield ETF (03110.HK)$The yield is 7.04%, but we have to consider a 10% dividend tax and a 0.68% ETF fee. After deduction, the yield was 5.66%.

Although the yield looks good, the 36.03% dividend is taken from capital, which depresses the stock price and is not a real return in itself. This means that only 3% of it is a real dividend yield.

In this way, I can hardly find a decent dividend ETF that would make sense after all the taxes, fees and capital allocations. Unfortunately, the best way to earn dividend income is to build your own portfolio.
So let nature take its course.