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From the novice investor to retirees, earning a powerful and consistent stream of monthly income is a primary goal. To do this, many investors incorporate dividend paying stocks into their portfolios. Dividends are regular payments companies make out of their profits to their shareholders. So they can benefit from a regular stream of income in addition to potential stock price appreciation.
But you can also invest in dividend paying ETFs. These are professionally managed funds that may invest in hundreds of dividend paying stocks. Each has its own yield, investing strategy and goals. But not all are created equal. Some of the top dividend paying ETFs screen for stocks for more than just high yields. They also look for strong financials and performance. Some seek preferred stocks. And some utilize additional sources of income like selling call options.
These funds are also well diversified across powerhouses like tech and defensive sectors like consumer staples. Still, there are hundreds of dividend paying ETFs out there.
So to cut through the noise, we devised a list of 5 monthly dividend paying ETFs that you may rely on if you’re seeking a strong stream of monthly income.
With that said, let’s dig in.
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
JPMorgan is known for finding its way into several lists of top ETFs these days. And the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) is no exception. Armed with a powerful yield of over 10%, this ETF has become popular among dividend investors. The fund generates its income by investing in large cap U.S. stocks and selling options. In particular, it seeks stocks in the Nasdaq 100 Index that exhibit low volatility, potentially offering some downside protection for investors. As an actively managed fund, this ETF uses a proprietary data driven investment approach to maximize risk-adjusted expected returns. And it has proven in performance, delivering a five-year return of over 18%. And its portfolio managers have a combined experience of 70 years. In addition, the fund has generated net assets of more than $32 billion. It also has a competitive expense ratio of 0.35%.
iShares Preferred and Income Securities ETF (PFF)
The iShares Preferred and Income Securities ETF (PFF) tackles preferred stocks and aims to deliver an income that may be competitive with high yield bonds. Preferred stocks generally have higher yields than ordinary stocks. And this fund delivers a yield of over 6%. In particular, it tracks stocks in the ICE Exchange-Listed Preferred & Hybrid Securities Index. This gives investors diverse exposure to the greater U.S. preferred stock market. The PFF is heavily concentrated in the financial sector, known for driving economic growth. It holds net assets of over $14 billion. And it has an expense ratio of 0.45%.
Global X SuperDividend ETF (SDIV)
To give your portfolio international exposure, you can go with the Global X SuperDividend ETF (SDIV). It offers a strong yield of more than 9%. It achieves this by investing in the 100 highest dividend paying stocks from throughout the global market. It selects stocks from the Solactive Global SuperDividend Index. And it holds a strong track record delivering monthly distributions for 14 straight years. Moreover, the fund has net assets of more than $1 billion. As far as its holdings go, it’s focused heavily on the financials, energy, materials and real estate sectors. But it has a slightly higher expense ratio than other funds on our list at 0.58%.
Amplify CWP Enhanced Dividend Income ETF (DIVO)
The Amplify CWP Enhanced Dividend Income ETF (DIVO) is an actively managed fund that aims to deliver income by investing in dividend paying stocks and by writing covered calls on those stocks. Overall, it seeks to provide low volatility, potentially suiting the risk averse investor. It offers a yield of over 5% and has earned a five-star Morningstar rating. It also stands out for performance. The fund has delivered a five-year return of more than 35%.
The ETF seeks high-quality large cap stocks with track records of high dividends and earnings growth. Its holdings consist of 20 to 25 stocks screened for features like strong financials. It’s heavily concentrated in the financials, information technology and consumer discretionary sectors. This means they have been known to generally remain strong even in times of market downturns. Moreover, the fund holds net assets of more than $5 billion. But being an actively managed fund, it has a slightly high expense ratio of 0.56%. Actively managed funds use resources like property data and research in an attempt to outperform a market benchmark.
Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) generates a yield of over 4%. And it screens for low high yield and low volatility stocks in an attempt to avoid value traps. This could also make it ideal for investors with low risk tolerances. Its holdings primarily focus on real estate, consumer staples and utilities. The fund has net assets of more than $3 billion and it has a competitive expense ratio of 0.30%.