Warren Buffett buys businesses that compound dividends rather than businesses that pay the biggest dividend they can squeeze out today. That single preference explains why Global X SuperDividend ETF (NYSEARCA:SDIV) would never sit in his portfolio. SDIV holds roughly 100 of the highest-yielding stocks on the planet, equal-weighted, with no quality screen worth mentioning. The roughly 9.36% trailing yield is the entire pitch, and for a specific kind of retiree, that pitch still works.
What SDIV is built to do
SDIV exists to solve one problem. Monthly cash flow. The fund has paid every month since 2011 out of a global pool of utilities, mortgage REITs, telecoms, business development companies, and emerging-market dividend payers spanning more than 35 countries.
The return engine is straightforward. Buy stocks with extreme current yields, equal-weight them, rebalance, send the cash out the door monthly. No dividend-growth screen, no payout-ratio filter, no quality tilt. If a $4 stock pays $0.40, it qualifies.
The income works, the principal does not
On the income mandate, SDIV delivers. Fourteen straight years of monthly distributions. In 2026, monthly payments have ranged from $0.18 to $0.197. Against a recent share price near $24, that pencils out close to the advertised 9% yield.
Total return is where the math turns ugly. SDIV trades at $24.25 today. Ten years ago it changed hands at $24.08, a 0.56% price-only move across a decade in which the broader U.S. market roughly tripled. Five-year price change is negative 3.7%. Since the 2011 inception, the price is up 16%, or roughly 1% annualized capital appreciation. Dividends bring total return higher, but the headline pattern is clear. Investors collect rich monthly checks while principal slowly bleeds.
Compare that to Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD), the quality-dividend-growth fund that sits closer to Buffett’s stated preferences. SCHD has returned 231% over the past decade in price terms alone and 51% over the past five years. Its top ten holdings are names with durable cash flows wrapped in a 0.06% expense ratio. The yield runs lower, perhaps half SDIV’s, but the underlying businesses actually compound.
The dividend trajectory tells the same story from the other side. SCHD’s quarterly payment grew from $0.12 in 2011 to consistent $0.25-plus payments today. SDIV’s monthly distribution moved the opposite way. Payouts ran $0.21 to $0.255 in 2023, stepped down to $0.19 to $0.21 in 2024, and have hovered near $0.19 since.
What you actually give up
Three concrete costs travel with the strategy.
- Principal erosion. A 9% yield on a share price that loses ground is partially a return of your own capital. Across long holding periods this is a structural feature of the strategy.
- Distribution variability. The fund has cut its monthly payout more than once. Retirees budgeting against SDIV income should plan for the payout to drift lower during stress periods.
- Concentration in rate-sensitive, deep-value sectors. Mortgage REITs, BDCs, and emerging-market telecoms dominate. When credit spreads widen or local currencies weaken, the same NAV gets hit twice.
Who SDIV actually fits
If you have $400,000 you want to convert into $3,000 a month of taxable income starting now, SDIV does that. It is a legitimate use case for a retiree who has accepted the trade. Lifetime cash flow today, with the understanding that the $400,000 will likely be worth less in real terms a decade from now. As a 5% to 10% income sleeve inside a broader portfolio, the math holds.
For an investor who wants dividends to grow with inflation and capital to compound alongside, SCHD does the job for 0.06% a year without the NAV decay. Buffett’s preference is the second one, and the ten-year scoreboard backs him up.
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