Investors who are planning for long-term income often want more than just a high headline yield. The goal isn’t just to make money quickly, but to have a predictable income strategy that can hold firm through both bull and bear markets, corrections, recessions, and everything in between.
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Schwab U.S. Dividend Equity ETF (SCHD) yields 3.72% and tracks the Dow Jones U.S. Dividend 100 Index.
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JPMorgan Equity Premium Income ETF (JEPI) yields 8.15% and uses covered calls to generate monthly income.
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iShares TIPS Bond ETF (TIP) yields 3.27% and adjusts principal value with inflation to protect purchasing power.
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The ETFs on this list stand out not just because they tend to attract the most attention or pay well, but because they combine strength with disciplined construction. These funds are screened for quality companies that make steady interest payments, and the result, for investors, is that you keep the income coming even when signs of volatility start to look more real.
If you are someone who really wants staying power, you’re likely going to be looking for a few different factors across any income-focused ETF. First and foremost is wanting to avoid something that has excessive concentration in a volatile sector like tech. Instead, you’ll want to look at something that selects companies that have pre-existing and established dividend records.
Better yet, you’ll want to identify ETFs that have payout patterns that are built on predictable cash generation. Consistency is more important than just chasing high yields, which is why funds tend to make sure they have a balanced portfolio. The good news is that repeatable strategies often deliver the biggest and most reliable results over the long term. This is going to be especially helpful for two sets of individuals. The first being those who want passive income to arrive monthly or quarterly to help out with bills, and the second group being retirees, who are looking to stop saving and start earning and potentially living off dividend income, along with other sources like Social Security, pensions, etc.
Below are three ETFs that not just fit this approach, but are widely agreed upon as being some of the most prominent ETFs for long-term investing.
It shouldn’t come as any surprise to see the Schwab U.S. Dividend Equity ETF (NYSE:SCHD) on this list, as it’s a mainstay whenever the discussion comes up around high-yield ETFs. The 3.72% yield won’t knock any socks off, but it’s one of the most purchased dividend ETFs for all the right reasons.
Paying out $1.03 per share over the past year, it’s not going to make you any wealthier than Jeff Bezos, but you know that for every share you own, you’re going to receive approximately $1 back every year. The fund tracks the Dow Jones U.S. Dividend 100 Index, which screens for profitability, strong balance sheets, and consistent dividend payments, which in turn gives it exposure across a variety of sectors like financial, industry, and consumer staples rather than just chasing the highest yields available.
Another staple name on any list of high-yield stable ETFs, the JPMorgan Equity Premium Income ETF (NYSE:JEPI) looks to appeal to investors seeking high yields with low volatility. The 8.15% dividend yield is admittedly more in line with high-yield, as it’s broadly defined, which makes it all the more appealing.
Of course, what’s most appealing about this ETF is that it’s delivering a $4.69 annual dividend, paid out monthly, and has dividend growth of 10.31%. Using covered calls to produce monthly income, this ETF is focused on owning large-cap stocks, then selling options to capture even more premiums. This helps give it a cushion against market pullbacks and creates a stable distribution that combines for a strong mix of income, risk management, and long-term consistency.
The iShares TIPS Bond ETF (NYSE:TIP) is a little different from the first two options on this list, although it has equally strong staying power. This fund is built to protect both purchasing power and paying out monthly income. To that point, it currently offers a 3.27% yield and pays out $3.62 per share annually.
The fund holds Treasury Inflation Protection Securities, so the principal value of the bonds adjusts with inflation. As inflation rises, income rises too, which means that TIP can play a big role in long-term income planning. This is especially true for retirees who want protection against rising prices without additional risk.
As a bonus, look at the Vanguard Total Corporate Bond ETF (NASDAQ:VTC) for long-term holding. Offering investment-grade corporate bond exposure, as interest rates fall on government bonds, attention is going to turn to corporate bonds, which pay out more, so there is long-term potential with the Vanguard Total Corporate Bond ETF, so long as interest rates continue to turn lower. It’s hard to ignore its 4.74% dividend yield and $3.70 annual payout as well.
You may think retirement is about picking the best stocks or ETFs, but you’d be wrong. Even great investments can be a liability in retirement. It’s a simple difference between accumulating vs distributing, and it makes all the difference.
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