Hey there.
I'm not a huge fan of QYLD, nor am I a fan of any covered call ETFs for that matter.
If you're unaware of what covered calls are, they are an options contract you sell on a particular stock, in which you currently hold that stock. You agree to sell the stock at a predetermined price and collect a premium for doing so. What you're hoping is that your stock stays below your sell price (strike price as they call it) on the options contract so it expires worthless and you collect your premium.
Covered calls do best when stock prices are flat or going down. So you can imagine selling covered calls on high profile growth stocks on the NASDAQ has not been the best strategy. In fact, I've attached a chart below that shows you the returns of QYLD vs its non covered call counterpart QQQ. This includes distributions re-invested. As you can see, since inception there has been an alarming outperformance by QQQ.
Many will say that QYLD will outperform in a bear market or a flat market. However, there is no guarantee of this. The strategy seems suited for a bear market, but we have not seen one with QYLD since inception. Of note, I did some studies on a Canadian covered call ETF that tracked Canada's banks. I looked at it over a time where Canadian banks were flat or heading downwards for 2-3 years. The non covered call ETF STILL outperformed the covered call one.
The fund also does not pay a dividend, it pays a distribution. This is something that is important to distinguish. A distribution can be made up of interest, capital gains, dividends, return of capital etc.
With QYLD, most of its distribution comes from capital gains and return of capital, which can come out of the net asset value of the fund. This is why when you look at a chart of QYLD, you'll notice a gradual decline in share price.
In my opinion these covered call ETFs are suited for those that need the high monthly distribution. Someone in retirement who is willing to sacrifice overall returns for a consistent income stream.
That being said, I know plenty of investors in their 20-30's who dump a lot of money into these funds just to receive the income. Just ask yourself if you truly need it at this moment, and you'll likely have your answer as to whether or not the covered call ETFs are for you.