Very few people have the luxury of owning a portfolio that generates thousands per month. Exchange-traded funds like STF Tactical Growth & Income ETF (NASDAQ:TUGN), Global X Dow 30 Covered Call & Growth ETF (NYSEARCA:DYLG), and Global X Alternative Income ETF (NASDAQ:ALTY) can make that happen.
A $5,000 a month income can cover rent, groceries, and the plane ticket you promised yourself for years. It’s enough to live comfortably and makes for a smooth retirement.
If you want to build that sort of income all the way from zero, it’s going to take time. It will take time until your dividends cover a utility bill, then a car payment, then $5k of monthly living expenses. And if you already have a big enough portfolio, you’ll be able to get there much faster.
These monthly dividend ETFs can even snowball your portfolio if you reinvest.
STF Tactical Growth & Income ETF (TUGN)
The STF Tactical Growth & Income ETF is an actively managed ETF that provides a very solid monthly yield while mitigating downside risk. It uses its own proprietary algorithmic model called the Tactical Unconstrained Growth (TUG) Model to do this.
The fund invests across three main asset categories: U.S. equity securities or ETFs that replicate the NASDAQ-100 Index, long-duration U.S. Treasury securities, and short-term Treasury bills or cash equivalents.
It has an income overlay strategy by using a call spread options strategy on the NASDAQ-100 Index (NDX) with one-month expirations. This adds another 1% in monthly yield. There’s another ETF with the ticker TUG if you don’t like your ETFs using options.
This model makes use of the stock market’s upside when the broader market is bullish. And when the market turns bearish, the fund tilts more towards treasuries to keep downside risk low.
All in all, you get a 10.96% dividend yield from the ETF. The expense ratio is moderate at 0.65%, or $65 per $10,000.
Global X Dow 30 Covered Call & Growth ETF (DYLG)
The Global X Dow 30 Covered Call & Growth ETF is passively managed and gives you exposure to the Dow Jones Industrial Average (DJIA) with a covered call strategy for more income.
DYLG holds all 30 stocks in the Dow Jones Industrial Average at their respective index weights and then writes one-month, at-the-money call options on up to 50% of the portfolio’s value. Half the portfolio is fully exposed to the market upside, and the other half is where the bulk of the cash comes from.
Moreover, the Dow Jones is a better place to bet if you are safety-focused. This index has shallower downturns and gets you moderate gains, something that should be perfect for a retirement portfolio.
DYLG currently comes with a 16.23% yield. The expense ratio is low at 0.35%, or $35 per $10,000.
Global X Alternative Income ETF (ALTY)
The Global X Alternative Income ETF gives you exposure to a variety of income assets by tracking the Indxx SuperDividend Alternatives Index, while giving you a solid dividend yield to boot.
The fund allocates at least 80% of its total assets to securities within its underlying index. These categories include Master Limited Partnerships (MLPs) and infrastructure, real estate, preferred stocks, emerging market bonds, and covered call strategies.
The biggest components here are other ETFs from Global X that give you exposure to the aforementioned categories. It also holds utilities plus limited partnerships.
ALTY has underperformed from 2021 to 2022 but has been creeping up since. Interest rate cuts are likely to make the ETF more attractive as Treasury yields decline.
ALTY gives you an 8.1% dividend yield and has an expense ratio of 0.50%, or $50 per $10,000 invested.
The image featured for this article is © Brian A Jackson / Shutterstock.com