Rewards token are those which you only need to hold on your wallet and receive dividends just by holding.
there's tax when you buy the token and part of that tax get distributed to the holders.
examples are:
$EGC which you receive BUSD as dividends
$SFM which you receive SFM as dividends
$ALTS which you receive any BSC token of your choose as dividends
What you described is literally a ponzi scheme where latter investors are paid by earlier investors. If true, I would not touch that with a 1 metre stick.
Anyhow, I think that there are legitimate dividend tokens out there, but they are all primarily casinos (e.g. Betfury's token).
They distribute tokens based on actual profit, not because other people are buying into the token.
It's not a ponzi scheme because there is a clear Tax protocol that runs the dividends, So it's totally something different.
Maybe it's new protocol that people are not familiar with, so the path of this protocol is not accepted among people yet?