7 ETFs to Buy That Pay 7 Percent or More

A path for investors seeking more income.

Some dividend investors look for world-class companies that withstand the test of time and provide reliable income potential thanks to quality products or massive scale. But others are happy to take on additional risk and volatility with the goal of supercharging their portfolio’s yield — even if the principal value may suffer declines. Those in this latter camp scoff at sleepy dividend payers like Johnson & Johnson (ticker: JNJ), which yields 2.7 percent. There’s stability, but not a lot of income potential. Instead, these investors seek double or triple that yield. If this sounds like you, then consider these seven exchange-traded funds that each yield more than 7 percent annually.

YieldShares High Income ETF (YYY)

This fund seeks to provide high yield via a portfolio of 30 closed-end funds. For those unfamiliar with CEFs, they operate much like a mutual fund in that you buy a stake in a larger pool of investments. But the key difference is CEFs have a fixed number of shares outstanding, and are sold via IPO like a stock and then trade on exchanges. Think of YYY as a fund of funds, with component investments that hold a variety of high-yield investments. This approach offers a lot of diversification, and easy access to some of the highest-yielding CEFs on the market, including the DoubleLine Income Solutions Fund (DSL).

Current yield: 8.8 percent

Global X Nasdaq 100 Covered Call ETF (QYLD)

One way to supercharge your portfolio’s income is to use covered calls. This involves selling options on investments you own, granting you a guaranteed premium and only executing a sale of those assets if the value rises above a set price. It’s a win-win — get paid by selling options, then lock in a guaranteed gain if stocks rise or walk away with the premium if they don’t. Your upside is capped in such a trade, and the strategy can be complex. However, the QYLD removes the guesswork by regularly selling covered calls on the Nasdaq 100 index to generate income. The result is a tremendous yield.

Current yield: 12.4 percent

InfraCap MLP ETF (AMZA)

One subsector of the stock market that regularly pays a big yield is energy stocks known as master-limited partnerships, or MLPs. These investments are pass-through entities where shareholders are partners. They are typically gas pipeline companies or oil trusts where a big capital commitment is required up front, but then the operations just run — and deliver constant dividends — after the business is set up. AMZA uses an actively managed approach in pursuit of the very highest yielding names in the space such as Energy Transfer (ET). The portfolio is biased toward a few choice stocks based on subjective analysis, but the result is a phenomenal payout.

Current yield: 9 percent

iShares Commodities Select Strategy ETF (COMT)

A similar but slightly different strategy is employed by this fund that offers exposure to a broad range of commodities through active management. The difference is that this fund looks well beyond MLPs and includes futures and popular commodity-related stocks. That means futures investments in materials like cocoa, copper and crude oil, as well as shares of popular stocks like integrated energy giant Exxon Mobil Corp. (XOM) and miner Rio Tinto (RIO). The mix is an eclectic slice of many raw materials and equity investments, but more importantly is set up to deliver impressive regular income through monthly distributions to shareholders.

Current yield: 11.7 percent

Invesco KBW Premium Yield Equity REIT ETF (KBWY)

Another high-yield corner of the stock market are real estate investment trusts, or REITs. This special class of real estate companies get preferential tax treatment from regulators because of the capital-intensive nature of purchasing big properties, but in exchange a REIT must deliver 90 percent of its taxable income back to shareholders. That’s a mandate for huge dividends. This fund is focused on the biggest yielding REITs, including commercial real estate operator Office Properties Income Trust (OPI) and health care property operator MedEquities Realty Trust (MRT). The reliable payments from tenants adds up to reliable — and impressive — dividends for ETF shareholders.

Current yield: 7.9 percent

iShares Mortgage Real Estate ETF (REM)

A twist on the REIT strategy is to focus on those that deal with mortgages and related debt instruments. While this is certainly a business that requires a lot of cash to operate through the many loans, this subset of real estate investment trusts owns properties on paper and doesn’t operate malls or office buildings. Mortgage-focused REITs do, however, offer a tremendous dividend stream as they take the interest payments on those loans and pass on a large portion to shareholders. The REM fund holds only this focused family of REITs, such as Annaly Capital Management REIT (NLY), and thus has a mandate for big dividends.

Current yield: 10 percent

Global X SuperDividend ETF (SDIV)

This fund invests in 100 of the highest dividend yielding equity securities in the world, including REITs and MLPs as well as more well-known companies including retail stock GameStop Corp. (GME) and international dividend payers like Australia’s Bank of Queensland Ltd. (BKQNY) that many U.S. investors might overlook. The result is a powerful portfolio that places yield above everything else, but also manages to stay diversified across individual companies and sectors of the stock market. Long-term income investors may like this approach because it gives wide access to dividend stocks without relying on a single flavor to generate its high yield.

Current yield: 8.1 percent

7 ETFs that pay 7 percent or more.

Here are seven ETFs that pay income investors 7 percent or more:

— YieldShares High Income ETF (YYY)

— Global X Nasdaq 100 Covered Call ETF (QYLD)

— InfraCap MLP ETF (AMZA)

— iShares Commodities Select Strategy ETF (COMT)

— Invesco KBW Premium Yield Equity REIT ETF (KBWY)

— iShares Mortgage Real Estate ETF (REM)

— Global X SuperDividend ETF (SDIV)

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