Every month SPYI goes ex-div, the share price dips by that month's distribution value. I get the benefit is that for the 8 to 10 years it will take you to get your cost basis down to zero that you avoid taxes. However, you quietly build up a tax bill on your invested principal.
Would you be better off investing that money is SPY or VOO and selling the equivalent monthly distribution yield to create income? Yes, for the first year, the portion that is gains will be ST capital gains, but it quickly turns into LT capital gains, which the dividends on SPYI will eventually as well.
Over a 20 year period, might the total return of the latter strategy be higher given 1) cost basis remains the cost basis and 2) upside is not capped, or would the tax advantage of SPYI still overwhelm these forces?
Wondering if anyone has done the math's. Thank you!