An ETF that distributes dividend at 5% is rated only 1-star by Morningstar and considered low return on a historical level (by a different matrix).
However, when looking at the chart in 2017, the NAV seems relatively stable at $20. This year so far NAV also stays largely unchanged. Doesn't this mean if I purchase the ETF and hold it for a year, I will likely get a 5% return, assuming within the coming year there is only minimal (not impactful) fluctuation in the NAV.
If correct, since 5% return isn't too shabby, why does it only get a 1-star rating by Morningstar? I understand many other ETFs get a better return but most of those don't pay dividends. Thus their returns are strictly the results of increased value in the underlying assets. However, with this volatile environment, I think a 5% return should not be considered 1-star?
What am I missing?