3 Monthly-Paying Dividend ETFs Perfect for Retirement Income

Investing

Published: July 27, 2025 2:06 pm

After over a decade of ultra-low yields, retirees are finding themselves much more comfortable due to Treasuries yielding sub-5% interest rates. Many investors are locking in that rate. It may be a good idea if you are someone who is very elderly, but stocks have a history of outperforming Treasuries long-term. They also protect you much better against inflation.

Futures markets are pricing in two Federal Reserve rate cuts before year-end, and history shows that when the policy tide turns, the first assets to reprice are the ones investors abandoned during the hiking cycle. Monthly dividend ETFs fit that description perfectly. Their current yields are anchored by real businesses that continue to churn out reliable cash flow even when the economy stumbles. In other words, these funds are already stress-tested for the next slowdown.

Once the Fed pivots and Wall Street rotates back into income equities, you will realize capital appreciation on top of the steady income. It’s also a good idea to look for monthly dividend ETFs. They give you a lot more flexibility with your personal expenses and compound better if you choose to reinvest them.

Here are the three monthly dividend ETFs to look into.

Amplify CWP Enhanced Dividend Income ETF (DIVO)

Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO) gives you exposure to high-quality dividend stocks with a low beta by writing covered calls on individual stocks. The day-to-day swings are noticeably calmer than the broader market.

The team sells short-term covered call options on individual stocks when they believe the market is over-pricing future gains. Each time they collect a premium, the cash flow contributes to the monthly dividend.

The ETF’s top five holdings are IBM (NYSE:IBM), RTX (NYSE:RTX), Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), and Apple (NASDAQ:AAPL). All of them are blue-chip cash cows, and each stock in the top 10 has ~5% (±0.31%) exposure. The fund caps any single stock at around 8% of assets and no sector at more than 25%.

The trailing dividend yield is 4.63%. The biggest caveat here is that DIVO comes with a 0.56% expense ratio, meaning you’re paying $56 per $10,000 invested. That’s mainly because the covered-call strategy involves active management, but it’s worth it due to the safety and the yield you’re getting.

If you’re unwilling to pay that amount, I’d go with Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) for a 3.79% yield. Net expense ratio is just 0.06%, it is managed passively, and you get quarterly dividends..

Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)

Invesco S&P 500 High Dividend Low Volatility ETF (NYSEARCA:SPHD) is a solid ETF if you want the familiarity of big-name companies but without the volatility. It tracks an index that filters the S&P 500 twice. It first looks for the highest-yielding dividend stocks, which are then sorted by the 50 least volatile stocks among that group.

Because the index is rules-based and rebalanced only twice a year, there is little day-to-day tinkering. The fund simply owns the same 50 stocks in the same proportions as the index, which helps keep the annual expense ratio down to 0.30%, or $30 per $10,000 invested.

The exposure is well-balanced across real estate, consumer staples, utilities, healthcare, and communication services. Many of the stocks here are trading at depressed valuations, so there’s plenty of upside potential once the economic cycle shifts.

SPHD comes with a 3.73% dividend yield. If you’re willing to forego some yield for extra safety, it’s worth taking the deal.

iShares Preferred and Income Securities ETF (PFF)

iShares Preferred and Income Securities ETF (NASDAQ:PFF) is quite unique since it does not own regular common stocks like the first two ETFs in this list. Instead, it owns preferred shares. These sit halfway between a bond and a stock. They are mainly issued by banks, real estate investment trusts (REITs), and utility companies.

Preferred shares are legally required to pay their dividend before common shareholders. Thus, the income stream tends to be steadier. It currently holds 444 different preferred and hybrid securities. 67.52% are issued by financial institutions, 20.57% by industrial companies, and 10.09% by utilities.

That financial exposure may scare some people, but the Fed is more than willing to step in if something goes wrong. Banks themselves are much stronger compared to 2008 due to stress tests.

On top of that, PFF is trading at a 20%-plus discount. You should get plenty of upside as interest rates come down and yield hunger kicks in. The dividend yield is 6.7%, and the net expense ratio is 0.46%.