Distribution Yield Isn’t Return: 00878 Yields 14%, but 90% of Its Distribution Is Realized Capital Gains | Ex-Dividend and Total Return Explained

Data as of: 00878’s Q4 distribution is the NT$1.25 estimate announced by Cathay SITE on 2026-11-02; rely on the issuer’s formal notice and your distribution notice. Total returns are my own calculation from yfinance adjusted prices, as of 2026-10-13. Past performance doesn’t guarantee future results.

I made three shorts on this topic, with 170,000 Facebook plays combined. There have always been two views on distributions: “dividends feel great” and “dividends just move money from one pocket to the other.”

The conclusion in three sentences:

• Distribution yield isn’t return. 00878’s 14% annualized figure is “distribution ÷ price,” not 14% that you earned.
• Distributions aren’t extra profit. On the ex-date the price drops by the same amount; about 90% of 00878’s last distribution was earlier price gains.
• Look at total return with distributions. If you’re still building wealth, total return matters, not the size of the payout.

Where I stand: I don’t own 00878. I’m a growth investor myself, dollar-cost averaging into 0050, QQQ and the S&P 500, and selling a little when I need money. I don’t pick investments by how much they pay out.

1. Where does the 14% come from?

00878 expects to pay NT$1.25 in Q4, versus only NT$0.40 in the same quarter last year.

The “14.37% annualized yield” in the news is calculated like this:

1.25 × 4 ÷ 34.8 (11/2 close) = 14.37%

It only means “if every quarter paid NT$1.25 and the price didn’t move, the cash you’d receive in a year would be 14% of the price.” It doesn’t tell you where that money comes from.

Where does the money come from?

Last quarter (2026Q3), 00878 paid NT$1.01, broken down as:

So 90% of the distribution is profit the ETF realized by selling stocks that had risen, then paid out to you. Over the past year 00878’s price rose from NT$21.69 to NT$34.31, and that rise is where the bigger distributions came from.

2. On the ex-date, your principal is deducted

This is what most people overlook: on the ex-dividend date, the price drops by the same amount.

Say you hold one lot of 00878, priced at NT$35 before ex-date, with a NT$1.25 distribution:

At the moment of ex-dividend your total assets don’t grow; part of your stock just turns into cash. If the price later recovers, that’s real gain — but it’s thanks to the price rising, not the distribution.

And Taiwanese investors may pay two more costs on distributions: the NHI supplementary premium (2.11% once a single dividend income payment reaches NT$20,000 — see 200 Lots of 00878, Why No NHI Premium?), and income tax on dividend income.

3. Compare total return with distributions

Total return = price change + distributions, counting the payouts back in. That’s what you actually earn.

My own calculation from yfinance adjusted prices (as of 2026-10-13):

00878 actually did fine over this period, nearly tripling over 5 years. But 0050 did better, and the 3-year gap is over 150 percentage points.

Yet in September 2026, the stock exchange’s regular investment statistics showed 0050 accounts dropping an unusual 0.32%, while 00878 gained 24,532 accounts in one month, reaching 337,000 and overtaking 0056 as the second-largest ETF. People were drawn in by record distributions, without comparing total return.

4. Buffett did the math: selling shares beats taking dividends

In his 2012 Berkshire Hathaway shareholder letter (pages 19–20), Buffett ran an example:

A company with US$2 million in net worth, a 12% ROE, and a share price of 1.25× book value. Comparing two approaches, after ten years:

With no dividend and selling shares when you need money, after ten years you have both more stock and more cash. That’s because the company keeps the money compounding at 12%, and you sell at 1.25× book value.

That’s also why Berkshire doesn’t pay dividends.

5. So why do people still love dividends?

A classic behavioral finance paper addresses this: Shefrin & Statman (1984, Journal of Financial Economics). They found three reasons:

1. Self-control. “Spend dividends, never touch principal” is a simple rule that helps people avoid overspending.
2. Mental accounting. Dividends go into an “income” account and share sales into a “capital” account, so the same money feels different.
3. Regret aversion. Sell shares to buy a TV and you’ll regret it if the stock then rises; buy it with a dividend and you won’t.

The paper also cites a real story: in the 1960s, the president of the US utility General Public Utilities proposed replacing cash dividends with stock dividends, saving shareholders at least US$4 million a year in taxes. The share price plunged, a shareholder suggested he see a psychiatrist, and the plan was withdrawn.

My view: “spend only the dividends, never the principal” is an illusion. Distributions come out of principal; money left inside is what keeps compounding.

So are high-dividend ETFs bad?

No. The trade-off depends on your stage of life.

• Retirees who need steady cash flow: distributions are practical, saving the hassle and stress of selling shares.
• People still building wealth: you have to reinvest distributions yourself, and may pay the supplementary premium and income tax along the way. Look at total return, not payout size.

If you’re new and don’t know where to start, I’d suggest starting with a broad market-cap ETF rather than chasing distribution yield.

FAQ

The short videos

00878 yields 14% — is that what you earned?

First distribution above NT$1 — do this math first:

Why does everyone chase dividends?

Further reading

Lazy conclusion

懶大

金融科技新創 CEO | 獨立財務顧問

1. Distribution yield ≠ return: 00878’s 14.37% is distribution ÷ price, and 90% of last quarter’s payout was realized gains
2. Ex-dividend deducts principal: the price drops by the same amount, so distributions don’t grow your total assets
3. Look at total return: over 3 years, 0050 +279.4% vs 00878 +122.5%
4. Buffett’s math: no dividend and selling 3.2% a year leaves you more stock and more cash after ten years
5. Loving dividends is human: self-control, mental accounting, regret aversion

Distributions aren’t extra profit; they come out of principal. Leave the money inside so it keeps compounding.

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Sources

• 00878 Q4 estimated distribution, annualized yield and prior-year distribution: Business Today 2026-11-01/02, Business Next, FTNN
• 00878 2026Q3 distribution breakdown: Cathay SITE second-stage notice (via Business Today, CMoney, Business Insider)
• September 2026 regular investment accounts: Taiwan Stock Exchange statistics (Economic Daily News, 2026-10-12)
• Total returns: own calculation from yfinance adjusted prices
• Warren Buffett, Berkshire Hathaway 2012 Shareholder Letter, pp. 19–20
• Shefrin, H. M., & Statman, M. (1984). Explaining investor preference for cash dividends. Journal of Financial Economics, 13(2), 253–282.

This post shares opinions and example math. It is not investment advice. Past performance doesn’t guarantee future results.