i'm still struggling to understand mutual fund payouts. if the value of the fund drops by the amount of the dividend, then when exactly do you see the benefits of the dividend?
When the value of the fund increases back to what it was before the dividend.
shouldn't you be 2% ahead of where you started with a 2% yield, instead of back to square one? does this occur with ETFs as well?
Ah, good question. This does apply to mutual funds, ETFs, and individual stocks (which, after all, are the building blocks of mutual funds and ETFs).
For a stock, yield is a combination of dividends paid and price increase. If the price never increases - but also never decreases - the yield equals the dividend rate.
If the price continually decreases when each dividend is paid, the yield is zero because the dividends and price changes are equal and opposite.
See
Dividend Facts You May Not Know | Investopedia for more.