Author

Jonathan Hobbs, CFA

Date

12 May 2025

Category

Market Insights

Reinvesting Dividends Makes a Difference

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.



Cover image - SPY dividends reinvested vs not reinvested

Most investors know that dividends matter. But what’s less obvious is just how much difference reinvesting them can make over time. Take the SPDR® S&P 500 ETF Trust (SPY). It’s one of the most widely held ETFs in the world, tracking the performance of the S&P 500 Index.

Example: Dividends reinvested vs not reinvested in the SPY

Between April 2015 and April 2025, if an investor simply held the SPY without reinvesting dividends, it returned 10.30% per year – turning $1,000 into $2,660.

With dividends reinvested, the return rose to 12.20% per year – growing that $1,000 to $3,165 (source: Portfolio Visualizer).

SPY dividends reinvested vs not reinvested

Why this matters for income strategies

This shows the power of compounding. Each reinvested dividend bought more shares, which then earned more dividends – creating a snowball effect.

For income-focused investors, it also illustrates a potential trade-off: spending the income may reduce long-term total returns.

The IncomeShares approach

The IncomeShares S&P 500 Options (0DTE) ETP (SPYY) aims to generate monthly income by selling daily put options on the S&P 500 Index or the SPY ETF. That income is not automatically reinvested back into the ETP.

Key takeaways

  • Reinvesting dividends may boost long-term returns through compounding.

  • Income strategies like SPYY aim to pay out monthly income – and do not automatically reinvest income.

  • Income-focused strategies may involve trade-offs between regular payouts and long-term growth.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

Related Products:

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S&P500 Options ETP

Strategy

Cash-Secured Put + Equity

Distribution Yield

49.40%

This is a marketing communication. Please refer to the Prospectus of the ETPs and to the KIID before making any final investment decisions.

This information originates from Investium Limited, which has been appointed as distributor of Leverage Shares products in Europe by Leverage Shares Management Company Limited (the “Arranger”). Investium Limited with registered address at 6 Nikou Georgiou Street, Office 302, 1095 Nicosia Cyprus, is a financial services provider regulated by the Cyprus Securities and Exchange Commission (CySEC).

The information is intended only to provide general and preliminary information to investors and shall not be construed as investment, legal or tax advice. Investium Limited and the Arranger (together referred as “Leverage Shares”) assume no liability with regards to any investment, divestment or retention decision taken by the investor on the basis of this information. The views and opinions expressed are those of the author(s) but not necessarily those of Leverage Shares. Opinions are current as of the publication date and are subject to change with market conditions. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results. Information provided by third party sources is believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed.

All performance information is based on historical data and does not predict future returns. Investing is subject to risk, including the possible loss of principal. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Leverage Shares.

© Income Shares 2025