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Many investors are turning to dividend exchange-traded funds (ETFs) for reliable streams of income as well as capital preservation. But there are hundreds out there to choose from.
And simply going with the ETFs that offer the highest yields may not always be your best bet. In fact, some distressed companies may boost their dividends in order to attract shareholders.
But there are ETFs out there that mix high yields with solid performance and reliability. These ETFs seek out companies that offer more than just high yields. They also screen for firms with strong financials, past performance, low fees and more. Some also take different approaches to generating income for investors including selling options in addition to investing in high-quality stocks across multiple industry sectors.
So to clear the air, we divided a list of 5 monthly dividend ETFs with yields over 6%—and real staying power.
JPMorgan Equity Premium Income ETF (JEPI)
First on our list is the JPMorgan Equity Premium Income ETF (JEPI). Unlike several other dividend ETFs, this fund provides income in two ways. It invests in large-cap stocks and sells options. It’s also run by fund managers with 90+ years of combined experience.
JEPI’s main holdings are in the information technology, healthcare and industrial sectors. So far, the fund has maintained a high yield of about 8.25% and has delivered a five-year return of over 5%. The fund also has an impressive $41.49 billion in net assets, indicating some strong staying power. And even though it’s an actively managed fund, JEPI offers a competitive expense ratio of 0.35%. Furthermore, this ETF has earned a Silver Medalist rating from Morningstar.
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
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The JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) currently pays an impressively high yield of over 10%. And it couples this with a high performance. It has generated a five-year return of over 19%.
Like JEPI, it earns income through selling options and investing in high-quality, large-cap stocks. However, JEPQ focuses on the Nasdaq 100 index. This may give it more exposure to the tech industry, which has been benefiting from the artificial intelligence (AI) boom. Among its main holdings are companies in the information technology, communication services and consumer discretionary sectors.
JEPQ holds about $32.49 billion in net assets. And it has an expense ratio of 0.35%.
Global X SuperDividend ETF (SDIV)
The Global X SuperDividend ETF (SDIV) generates a yield of about 9.60%. It invests in 100 of the highest dividend paying equities around the world, giving investors access to high income and global exposure. And it’s known for consistent dividend payouts. In fact, it has delivered monthly distributions for 14 consecutive years. Its holdings are mostly concentrated in the financials, energy and materials sectors. Moreover, it has a competitive expense ratio of 0.58%.
And even though the fund has a negative five-year return, it has been performing relatively well recently with a 1-year return of over 23%. Additionally, the fund has about $1.08 billion in net assets. But some experts note that its concentration in emerging markets may open investors up to some risk. This fund may be most suitable to income-focused investors with high risk tolerance.
Global X U.S. Preferred ETF (PFFD)
The Global X U.S. Preferred ETF (PFFD) invests in preferred stock with strong track records of offering high yields. It currently pays a yield of around 6.35%. Most of its holdings are in the financials, utilities and communications services sectors.
It’s important to note, however, that the fund has negative five-year returns. But it has delivered a year-to-date return of about 3%. So despite its high-yield and diversification, investors may want to consider factors like their risk appetite and income needs before approaching this fund.
Invesco KBW High Dividend Yield Financial ETF (KBWD)
The Invesco KBW High Dividend Yield Financial ETF (KBWD) invests in high-yielding financial companies like banks and asset management firms. It currently delivers a high yield of nearly 13%.
Financial companies tend to operate well and overperform when the economy is healthy. However, it’s important to note that investing in an ETF that focuses heavily on one market sector could be risky and it may be best to use KBWD as a complement to an already diversified portfolio.
Moreover, this fund has a relatively high expense ratio of 5.39%. The fund has net assets of $419.95 million. It’s also important to note that it has a negative five-year return. So it may be best to approach this ETF with some caution and perform your due diligence despite its very attractive yield.