Regular income is crucial for retirees. Most exchange-traded funds pay shareholder dividends quarterly, but a small number pay monthly.
“When I think about ETFs that generate monthly income, my first question is: What is this fund? What is it investing in, and how is it generating income?” says Diana Richey, certified financial planner, author of “The Loving Truth About Money” and host of the Diana Richey Podcast.
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She points out that some ETFs simply use dividend-paying common stocks, while others buy preferred shares. Various strategies can add complexity or can determine the yield an investor receives.
“Another important consideration is: Are the distributions sustainable? As investors, we tend to assume that, when the fund pays us a monthly dividend, the fund managers are simply passing through dividends and income that the fund has earned,” Richey says.
Some funds use a managed distribution policy, which allows the manager to draw from principal to keep monthly payments steady.
When that happens, it’s worth understanding why, because a return of capital isn’t automatically a red flag. But if a fund is consistently paying out more than it earns, the net asset value can erode, and that’s a problem for long-term income investors.
Here are seven ETFs using various methodologies that generate monthly income:
| ETF | 30-day SEC yield |
| iShares Preferred & Income Securities ETF (ticker: PFF) | 6.3% |
| JPMorgan Equity Premium Income ETF (JEPI) | 9.8% |
| JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) | 12.7% |
| Amplify CWP Enhanced Dividend Income ETF (DIVO) | 1.6% |
| Global X SuperDividend ETF (SDIV) | 8.7% |
| WisdomTree U.S. LargeCap Dividend ETF (DLN) | 1.8% |
| Global X SuperDividend U.S. ETF (DIV) | 6.5% |
iShares Preferred & Income Securities ETF (PFF)
This ETF tracks an index of U.S. preferred stocks, which trade like stocks but pay income like bonds.
Its 30-day SEC yield is 6.3%. Preferreds often pay high yields because of the lower price appreciation, and because they have lower standing than bonds in the event of a corporate bankruptcy.
Also contributing to PFF’s high yield is a tilt toward securities at the lower end of investment grade and even some below investment grade.
Top sector holdings are financial institutions, industrials and utilities.
JPMorgan Equity Premium Income ETF (JEPI)
This ETF generates income through a combination of selling options and investing in U.S. large-cap stocks. It aims to limit volatility relative to the U.S. large-cap market, as well as pay a monthly income.
The strategy depends heavily on options income, not just stock dividends. It generates cash by selling covered-call options, and the amount of income depends partly on market volatility.
The options income can help cushion market losses, and volatile markets often produce higher income payments.
Its 30-day SEC yield is 9.8%.
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
This ETF also uses a covered-call strategy and aims to deliver a lower-beta, lower-volatility return compared to the Nasdaq-100 index.
“In terms of reliable returns, there’s no better option than JEPQ, which regularly provides yields that beat 10% and is an attractive rate for investors looking to maximize their potential for returns,” says Ivan Marchena, senior economist at Just2Trade, a trading platform for stocks, futures, foreign exchange and bonds.
“The fund focuses on tech-heavy Nasdaq-100 stocks, meaning that you’re adding stocks with higher economic moats that are less likely to be exposed to the same high levels of risk that some more speculative funds could take on,” he adds.
JEPQ boasts a 30-day SEC yield of 12.7%.
Amplify CWP Enhanced Dividend Income ETF (DIVO)
This is another ETF that owns dividend-paying stocks and produces additional income by writing covered calls on those stocks.
As with other covered-call strategies, DIVO uses the dividend and option income to lower share price volatility during broad market downturns.
The largest holdings are RTX Corp. (RTX), American Express Co. (AXP) and Microsoft Corp. (MSFT). The portfolio consists of 31 holdings and has an expense ratio of 0.56%. The fund screens for characteristics including market cap, company management track record, earnings, cash flow and return on equity. The current 30-day SEC yield is 1.6%.
Global X SuperDividend ETF (SDIV)
This ETF invests in 100 of the highest dividend-paying stocks from around the world. Its 30-day SEC yield is 8.7% and it boasts a 14-year track record of paying monthly dividends.
Top country representations are the U.S., Brazil, Britain and Norway.
To qualify for fund selection, a stock must have a minimum market capitalization of $500 million and yield between 6% and 20% at the time it’s added. Existing companies must maintain a yield of at least 3%. Closed-end funds, partnerships, trusts and business development companies are excluded.
This fund isn’t designed for conservative investors: It deliberately screens for the highest yielders globally, which by definition pulls in companies whose elevated yields often reflect investor skepticism about whether those dividends are sustainable.
WisdomTree U.S. LargeCap Dividend ETF (DLN)
For investors looking for something less risky, the DLN ETF may fit the bill. It yields 1.8% by tracking an index of large-cap domestic stocks.
The index tracks the 300 largest U.S. dividend-paying companies by size, but instead of weighting them equally or by market cap, it gives more weight to companies expected to pay out larger dividends in the coming year.
That said, at any given time, the highest weights might not necessarily be the companies paying the highest dividends, as the underlying index rebalances just one time a year. Currently, DLN’s three largest holdings are Nvidia Corp. (NVDA), Apple Inc. (AAPL) and JPMorgan Chase & Co. (JPM). The fund’s expense ratio is 0.28%. That’s lower than funds that include non-U.S. companies, which carry additional trading costs.
Global X SuperDividend U.S. ETF (DIV)
As the name suggests, this fund holds higher-yielding stocks that trade on U.S. exchanges. This includes a number of American depositary receipts. While the focus on these stocks may reduce risk relative to funds holding mostly overseas-listed companies, the mandate to screen for higher yields adds risk.
However, the fund screens for stocks with low betas relative to the S&P 500, as part of its objective to create low-volatility returns. That can help mitigate the inherent risk of many higher-yielding stocks.
To qualify for the fund’s underlying index, a company must have a dividend yield between 1% and 20%, a beta below 0.85 and a history of consistent payments over the past two years. Companies must also meet minimum size and liquidity requirements. You won’t find the usual familiar dividend names here, as its top three holdings are Tsakos Energy Navigation Ltd. (TEN), CBL & Associates Properties Inc. (CBL) and Millicom International Cellular SA (TIGO).
DIV has a 0.45% expense ratio and a 6.5% 30-day SEC yield.
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7 Best Monthly Dividend ETFs to Buy Now originally appeared on usnews.com
Update 05/27/26: This story was published at an earlier date and has been updated with new information.
