It's because you can't take out more than the expected growth per year and expect your buying power to stay the same. Even something like
$OVL, that keeps up with
$VOO really well will drop more than
$VOO in a down market. Since the CAGR for the S&P500 is around 8% and
$OVL pays around 11% - spend 8% and do one of the following: reinvest the 3% back into
$OVL right away, keep the 3% in cash for
$OVL dips, invest the 3% into
$VOO.
Just because it pays a high yield doesn't mean that the price never recovers.
Reinvesting helps with keeping pace with the underlying as much as possible.
Even
$XDTE went down to $40 in April 2025 and rose to to $44 in October 2025. Now its $38.93, but I'm still price return positive because I bought it in March. Time will tell which ones will appreciate in value and which ones are yield traps.