SEC Yield vs Distribution Rate
SEC yield is a 30-day standardized income figure. Distribution rate is “what we paid lately.” Mixing them is how spreadsheets lie.
What it is
Bond and many preferred ETFs publish a 30-day SEC yield after expenses. It is meant to be comparable across funds.
Equity option-income ETFs usually advertise a distribution rate or trailing yield that includes option premium. That number is not an SEC yield.
Hypothetical: 4.2% SEC yield vs 11% distribution rate
Labeled hypothetical — not a live yield, AUM, or tax bracket.
- A credit ETF shows 4.2% SEC yield. On $10,000 that is about $420/year of standardized income if the figure held — still not a promise.
- An overwrite ETF shows an 11% distribution rate. On $10,000 that is about $1,100 of recent cash, with equity and overlay risk attached.
- You cannot say the overwrite fund “pays 7% more income” in the bond sense. Open the bond list when the job is interest income.
Who this is not for
- Using either number as a guaranteed coupon.
What people get wrong
- Dropping SEC yield and distribution rate into one ranking.
How to check it on Dividend Wealth
Bond income ETFs is where SGOV, BND, HYG and preferred-adjacent names live. Covered-call funds stay on their own list.
Related lessons
- Dividend Yield · Dividend Terms
- Why High Yield Doesn’t Mean High Income · Dividend Terms
- Preferred Stock ETFs · ETF Types
FAQ
What is SEC yield?
A standardized, annualized yield based on income over a recent 30-day period after expenses. It is common on bond funds.
What is a distribution rate?
A trailing or advertised payout rate based on recent distributions and NAV or market price. It can include option premium and return of capital.
Educational only — not investment, tax, or legal advice. Dividend Wealth does not recommend 2x daily, inverse, or single-stock YieldMax products as “best income.” Yields change. Confirm filings and your own tax situation.