Government Bonds at the 2% Level. Why Hold High-Dividend ETFs? — After 26 Years of Investing, I Took Stock of My Reasons for Holding HDV and SPYD
1.95%.
Seeing this number made me think a little.
In September 2026, looking at Japanese government bonds for individuals, the interest rate for the 10-year floating rate bond is 1.95%. The 5-year fixed rate bond has reached the 2% level.
Until now, I had somewhat taken it for granted that “if I want a yield of around 2%, I should just get it from stocks.”
But now, things are a little different.
I can get this much yield in yen without taking on currency risk.
Moreover, with government bonds, there is no need to buy dollars like with U.S. ETFs. There is no need to consider foreign tax credits. There is no need to worry about exchange rates every time I receive a distribution.
So, I suddenly paused.
“So, why do I hold HDV and SPYD?”
I have been investing for 26 years.
Even so, the need to reconsider this question has arisen.
In 2023, I bought HDV and SPYD
I have held HDV and SPYD since 2023.
I have been receiving distributions for about three and a half years now.
Both are well-known as U.S. high-dividend ETFs.
However, looking back at myself when I purchased them in 2023, I hadn’t decided as clearly as I do now that “this ETF will have this specific role.”
At the time, it was about:
-
How to view the exchange rate level
-
How to utilize the dollars I already had
-
Wanting to receive regular dividends from U.S. stocks
That is what I was thinking.
That in itself is not wrong.
However, thinking about it now, I had not fully articulated the reason why it had to be this specific product.
This was a somewhat surprising discovery for someone like me who has been investing for 26 years.
“Because the yield is high” is not a sufficient reason
When choosing high-dividend ETFs, I think the first thing many people look at is the yield.
I was the same way myself.
For example,
“This ETF has a yield of X%”
“This one is increasing its dividends”
“This one has a high distribution amount”
These are the kinds of comparisons I make.
Of course, yield is important.
But in the current interest rate environment, that alone is not enough.
This is because options have emerged that allow you to earn a yield of around 2% in yen.
In the case of U.S. high-dividend ETFs, looking only at the nominal distribution yield does not constitute a true comparison.
There is withholding tax in the U.S., and it is also taxed in Japan.
Furthermore, if you use the foreign tax credit, you also have to deal with filing a tax return.
And above all, you receive it in dollars.
In other words, for those living in yen,
It is necessary to consider not just “what percentage you receive,” but also “what you are taking on in order to earn that yield.”
You need to think that far.
“2% in Yen” and “High-Dividend in Dollars” are not the same.
I want to make sure there is no misunderstanding here.
Individual government bonds and U.S. high-dividend ETFs are fundamentally different in nature.
Government bonds are not stocks.
They are not intended to target stock price appreciation either.
On the other hand, since HDV and SPYD are stock ETFs, their prices fluctuate daily.
Dividends are not fixed either.
Exchange rates also fluctuate.
Therefore,
“Since government bonds are at 2%, U.S. high-dividend ETFs are unnecessary if they are also at 2%”
is not a simple matter.
What I started thinking about is a more fundamental issue.
“Why do I hold these ETFs, even taking on more risk and effort than government bonds?”
That is the question.
When looking at it after taxes, the perspective for comparison changes.
When comparing high-dividend ETFs with yen-denominated assets, it is better not to judge based solely on pre-tax yield.
For example, with U.S. ETFs,
Dividends
↓
Taxation in the U.S.
↓
Taxation in Japan
↓
Foreign tax credit as needed
↓
Yen remaining in hand
That is how the flow goes.
Furthermore, if the dollar-yen rate changes, the value when converted to yen also changes.
In other words,
“Because the yield is 4%, it is twice as good as a 2% government bond”
is not the case.
When comparing, you need to:
1. Look at it after taxes
2. Look at it on a yen basis
3. Consider currency risk
These three things are necessary.
This is not to deny high-dividend ETFs.
Quite the opposite.
If you can still feel like holding them even after considering all this, it means that the ETF has a proper “role”.
So, what role do high-dividend ETFs play?
This is the main subject of this stock-taking.
I have come to think of the role of high-dividend ETFs in three main categories.
1. Obtaining dollar-denominated cash flow
Receiving cash flow regularly in dollars, not yen.
This has a certain meaning even for me living in Japan.
Not concentrating assets only in yen, but having a source of income in foreign currency.
If you clearly assign that role, currency risk can be thought of not as “unavoidable trouble,” but as “something you accept to obtain that role.”
2. Expecting future dividend increases
The appeal of high-dividend ETFs is not limited to current dividends.
If companies grow their profits and increase their dividends, there is a possibility that the dividends you receive will increase the longer you hold them.
Of course, future dividend increases are not guaranteed.
Even so,
if you hold them expecting “long-term cash flow growth” rather than “current yield,”
they take on a different meaning than government bonds.
3. Accepting stock price fluctuations
And one more thing.
As long as high-dividend ETFs are stocks, their prices will rise and fall.
While this is a risk, it is also a reason to hold stocks.
By accepting fluctuations in principal value, you can expect not only dividends but also future appreciation in asset value.
In other words,
they also serve the role of “holding as stocks” rather than “just for receiving dividends.”
I decided to think in terms of “roles” rather than “yields”
Organizing it this way makes the reasons for holding high-dividend ETFs a little easier to see.
For example,
“buying because the yield is higher than government bonds”
is not a strong enough reason on its own.
On the other hand,
“I want dollar-denominated cash flow.”
“I want to expect long-term dividend growth.”
“I want to receive dividends while capturing stock price movements.”
If you have these objectives, the story changes.
In other words,
The product itself is not the reason; the role you have assigned to that product is the reason.
By adopting this way of thinking, I have been able to view HDV and SPYD differently than before.
“Cannot buy in NISA” was not actually the essence
In June 2026, because HDV switched to monthly distributions, it could no longer be purchased in the NISA growth investment quota.
When I first learned this, I didn’t care much.
“If I can’t buy it in NISA, I’ll just buy it in a taxable account.”
That is what I thought.
In fact, that alone is not a major problem.
NISA is, after all, just a “vessel.”
However, thinking about it later, I realized something else.
The reason “why I buy HDV” had not been sufficiently articulated in the first place.
That is why I wasn’t very moved by the fact that it could no longer be bought in NISA.
This is not a story about
“not being swayed by the system.”
Rather,
it is
“because the reason for purchase was vague to begin with, I did not react strongly to the system change.”
That is also a possibility.
This was the point that made me think the most during this stock-taking process.
If there is no “reason to buy,” there is no “reason to sell”
I have written many times before about investing that,
“If the reason for buying is not clear, the reason for selling will not be clear either.”
I have written this many times.
However, I hadn’t fully put that into practice myself.
This is a bit embarrassing.
But these things happen in investing.
Knowing something as knowledge is different from putting it into practice with your own money.
When I bought them in 2023, I had my reasons.
However, with the interest rate environment changing in 2026, I needed to re-examine those reasons.
Therefore, this stock-taking exercise is not about deciding
“whether to sell HDV and SPYD”
it is not for that purpose.
Before that, it is about confirming
“what I expect from these ETFs”
it is for that purpose.
I want people who hold high-dividend ETFs to check just four things.
After taking stock of my own situation this time, I arrived at some fairly simple items to check.
If you hold high-dividend ETFs, I would like you to check these four points once.
1. Why did you buy that ETF?
Are you stopping at just,
“Because the yield was high”?
Try putting your own reasons into words, such as exchange rates, dividends, dividend growth, stock price appreciation, or regional diversification.
2. What role are you assigning to that ETF?
For example,
-
foreign currency cash flow
-
long-term dividend growth
-
investment in stocks
-
portfolio diversification
and so on.
You don’t need to narrow it down to just one.
However, you want to avoid “just holding it for no particular reason.”
3. Is that role necessary even when considering it in yen and after taxes?
This is where you first compare it with other options, such as government bonds for individuals or yen deposits.
Think not just about the nominal yield, but about
“what you actually receive.”
4. Are you satisfied with the difference in yield?
This might be the most important thing.
US ETFs come with
.
After accepting all of those, can you think,
“Even so, there is a reason to hold this ETF.”
If you can think that far and come up with your own answer, that is fine.
I myself have not yet reached a “final answer.”
In this article, I do not intend to decide which is superior, HDV or SPYD.
I will not reach a conclusion here about whether to sell or buy more, either.
In the first place, even if investors hold the same ETF, its role differs for each person.
Those who want dollar income.
Those who expect long-term dividend growth.
Those who also want to aim for stock price appreciation.
Or simply, those who look forward to receiving dividends.
This is what I have learned.
Each is fine as it is.
What I did this time was just one thing.
I made ‘the me who bought in 2023’ and ‘the me of 2026’ face each other for a moment.
With the change in the interest rate environment, I began to see comparison targets I hadn’t paid attention to before.
As a result,
instead of ‘holding because it’s a high dividend,’
I realized that
I needed to rethink it as ‘holding because it fulfills this role.’
I realized that I needed to rethink it.
In investing, decide the ‘role’ before choosing the product
I have been investing for 26 years.
During that time, I also did short-term trading.
I also did FX.
I also did automated trading.
I also had painful experiences with leveraged trading.
Each time,
I came to think that
‘rules are important in investing.’
But this time, I learned one more thing.
Not only are rules important, but roles are also important.
If you don’t know why you are holding something, you will be confused when the market goes up.
You will be confused when it goes down.
You will be confused when the system changes.
And you will be confused when products that look more attractive appear.
Conversely,
if you have decided that “this asset has this specific role,”
it is easier to maintain your own decision-making criteria even when the surrounding environment changes.
Not “yield,” but “what are you paying for that difference?”
We have entered an era where yields in the 2% range are visible for yen-denominated assets.
That does not mean that the value of high-dividend ETFs has disappeared.
However, it has become harder to explain them just by saying,
“I hold them because the yield is high.”
as we did before.
This is how I think about it now.
I believe that when looking at high-dividend ETFs, what is necessary is
not “what percentage will I receive,” but “what am I taking on in order to earn that difference in yield?”
that perspective.
Is it currency risk?
Is it stock price volatility?
Is it the hassle of taxes and filing tax returns?
Or is it about dollar-denominated cash flow or future dividend increases?
If you think it through to that extent and still feel it is necessary, then that asset has a role for you.
Finally, ask yourself one more time:
“Why do I hold these high-dividend ETFs?”
And,
“Even when considering it in yen and after taxes, does that role still make sense?”
Try writing these two things down on paper once.
After 26 years of investing, I myself have had to rethink this regarding the HDV and SPYD I have held for three and a half years.
Investing does not end once you buy.
When the market changes, the environment changes too.
When interest rates change, the objects of comparison change as well.
That is why I take stock from time to time.
Instead of reviewing the products, first review the ‘role assigned to those products.’
My stock-taking this time started there.
And moving forward, including whether or not I will continue to hold HDV and SPYD, I want to remain an investor who can explain ‘why I hold them.’