The world of exchange-traded funds (ETFs) is vast and ever-expanding. With several options to choose from, it can become overwhelming to pick the right fund. However, if you’re looking to gain diversified exposure at a low cost, there are many to consider. But if you’re looking for a monthly check from your investments, JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI), Invesco S&P 500 High Dividend Low Volatility ETF (NYSEARCA:SPHD) and Global X SuperDividend ETF (NYSEARCA:SDIV) are worth considering. Here’s why they can be an ideal pick for retired and income-focused investors.
Quick Read
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JPMorgan Equity Premium Income ETF (JEPI) yields 8.25% through a strategy combining fundamental stock selection with S&P 500 call options.
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JEPI maintains high yield by selling out-of-money call options on the S&P 500 index through equity-linked notes.
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Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) yields 3.65% and avoids technology stocks entirely.
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JPMorgan Equity Premium Income ETF
The JPMorgan Equity Premium Income ETF is managed by the highly experienced and professional managers at JPMorgan. It is one of the many monthly dividend ETFs with a juicy yield of 8.25%. It is an actively managed fund that employs a two-step strategy. It invests in stocks using a bottom-up fundamental research process and ranks stocks based on volatility, risk/return profile, and value.
The fund manager identifies the top stocks and invests in them. For the second part of the strategy, it uses an options overlay to sell out-of-money call options on the S&P 500 index. The premium generated through the call options allows JEPI to maintain a high yield.
Instead of directly writing call options, the fund manager buys equity-linked notes that offer exposure to a profit on these options. It has the highest allocation in information technology (15.8%), healthcare (12.3%), and industrials (11.7%). Its top 10 holdings include Alphabet, Johnson & Johnson, AbbVie, Amazon, Apple, and Microsoft. JEPI has the right mix of growth and income stocks.
JEPI pays monthly dividends and recently announced a dividend of $0.370. The ETF has an expense ratio of 0.35%, which means you pay $35 for an investment of $10,000.
Invesco S&P 500 High Dividend Low Volatility ETF
The Invesco S&P 500 High Dividend Low Volatility ETF has a yield of 3.65%. While it is lower than JEPI’s yield, it offers a low volatility option to ride the market. It identifies the top dividend companies and picks the ones with low volatility. The fund picks the top 75 highest-yielding stocks and then keeps 50 that have shown the lowest volatility in the past year. This fund offers top-quality stocks at little risk.
That said, it has a limit of 25% in each sector and 10 stocks for each, ensuring a well-balanced portfolio. The fund has an expense ratio of 0.30%, or $30 for $10,000 invested. As compared to the tech-focused funds, SPHD sets itself apart by investing in real estate (22.71%), consumer staples (17.04%), and utilities (14.73%).The fund doesn’t invest in the technology sector. The heavy tilt towards utilities and real estate could benefit the ETF in the long term.
Its top 10 holdings include Pfizer, Healthpeak Properties, United Parcel Service, and Verizon. SPHD pays a monthly dividend and recently announced a dividend of $0.19. It has generated a 3-year return of 7.62% and a 5-year return of 12.15%. Trading below $50, the ETF is too cheap to ignore.
Global X SuperDividend ETF
The Global X SuperDividend ETF is a super fund built for passive income. It picks the 100 highest-yielding stocks and weighs them equally. The fund gives an opportunity to own the best stocks in the world. It has a yield of 8% and an expense ratio of 0.58%, meaning $58 for an investment of $10,000. Its annual dividend for 2024 stood at $2.33.
SDIV invests in 118 stocks across the world and makes the highest allocation in the United States (26.3%), followed by Brazil (15.4%) and Hong Kong (12%). In terms of industry allocation, it has the highest share in the energy sector (23.3%), followed by financial services (22.7%) and materials (12.3%). It recently announced a monthly dividend of $0.19 and has outperformed the S&P 500 this year.
The fund has some smaller companies that often see ups and downs over time. However, the ETF has maintained a steady yield. SDIV is a combination of high risk and high reward. If you can handle a little volatility, this ETF will not disappoint. Besides the obvious advantage of a monthly paycheck, SDIV also offers an opportunity to hold the best dividend stocks in the world. Ultimate diversification at low cost and low risk.
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