SPYI ETF Offers 12% Annual Income with Return of Capital Benefits

The NEOS S&P 500 High Income ETF (SPYI) currently provides an annual distribution rate of approximately 12%. According to its August Section 19a-1 notice, around 97% of the latest distribution is classified as return of capital (ROC). This classification allows tax deferral by reducing an investor's cost basis, which can be advantageous for retirees in taxable brokerage accounts. The ETF employs an actively managed options strategy alongside its S&P 500 stock portfolio, aiming for higher potential returns. This matters for ordinary investors as it offers a potentially tax-efficient income stream.