The 3 Most Reliable Monthly Dividend ETFs for a Lifetime of Cash Flow

Key Points

• JPMorgan Equity Premium Income ETF (JEPI) generates an 8.37% yield by combining large cap stocks with options selling.

• JEPI holds $41.32B in net assets with top positions in Nvidia, Alphabet and Microsoft.

• Global X SuperDividend ETF (SDIV) delivers a 9.72% yield through 100 global high-dividend stocks.

• If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire earlier than expected. take 5 minutes to learn more here

Whether you’re just walking into the world of investing or getting closer to retirement, generating a powerful stream of regular income is a key goal for any investor. To do this, many turn to dividend paying stocks. Dividends are regular payments some companies make out of their profits. But you can also invest in dividend-paying ETFs. These are professionally managed funds that can invest in hundreds or even thousands of dividend paying ETFs.

But even here, there are plenty to choose from. So to cut through the noise, we selected three powerhouse ETFs that pay monthly dividends and that could lead to a lifetime of cashflow.

So let’s dig in

JPMorgan Equity Premium Income ETF (JEPI)

The JPMorgan Equity Premium Income ETF (JEPI) is a bit different from standard dividend paying ETFs. Part of its income strategy involves investing in high-quality large caps stocks. But it also derives income from selling options. This strategy may offer steady cash flow, while potentially providing a certain degree of downside protection in volatile markets.

The fund managers aim to build a diversified, low volatility equity portfolio through a proprietary research process that’s designed to find over and undervalued stocks with impressive risk/return profiles.

And it also offers an impressive yield of 8.37%. Among its top holdings are magnificent seven members like Nvidia (NASDAQ:NVDA), Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT). It holds $41.32 billion in net assets, indicating wide popularity in the fund.

However, its expense ratio is a bit on the high side of 0.35%. This is likely because the fund is actively managed. Rather than passively managed funds, which aim to mimic the return of a broad stock market index like the S&P 500, actively managed funds attempt to outperform a given index.

SPDR S&P Dividend ETF (SDY)

The SPDR S&P Dividend ETF (SDY) is designed to track the S&P High Yield Dividend Aristocrats Index. This index contains the highest dividend yielding S&P Composite 1500 Index members that have consistently increased dividends every year for at least 20 consecutive years.

The fund generates a yield of 2.60%. And it holds net assets of $20.27 billion. Additionally, it has an impressive five-year return of about 28.54%. Its main holdings are in industrials. Its top holdings include Verizon Communications, Chevron and Realty Income Corp. The index components are reviewed each year in January for consideration of continued inclusion in the index.

The fund’s expense ratio is also on the higher end of 0.35%.

Global X SuperDividend ETF (SDIV)

Unlike the other two ETFs on our list, the Global X SuperDividend ETF (SDIV) provides global exposure. It invests in 100 of the highest dividend paying stocks from around the world. Its top holdings are in the financial, energy and real estate sectors. The SDIV generates a high yield of 9.72%, the highest on our list. It holds net assets of $1 billion. And it boasts a 1-year return of about 9.74%.

The bottom line

All three of these funds standout for reliable monthly dividend payouts, which could offer lifetime income. But you can diversify your portfolio with all three based on your investment goals and risk tolerance.

How to choose dividend ETFs

Two main strategies to consider when evaluating dividend ETFs are whether they are high-yield or dividend growth. High-yield ETFs cover companies with the highest current dividend yields. These may benefit retirees who are focusing on regular income through their Golden Years. These ETFs may include SDIV. On the other hand, you have dividend-growth funds. These ETFs focus on companies with a history of increasing their dividends over time. While they may have lower yields, they could offer reliable, long-term income appreciation. These ETFs may be suitable for younger investors seeking long-term capital appreciation. Such funds can include SDY.

But you should also consider other factors like holdings and sector allocation. A well diversified fund will contain stocks from multiple sectors, thereby potentially offering downside protection.

You should also look at a fund’s expense ratio. These are fees that could diminish your returns. Additionally, you should pay attention to dividend yield.

This is the fund’s annual dividend income as a percentage of the share price. A higher yield isn't always the most beneficial, as it may indicate higher risk. But overall, make sure your dividend paying ETF aligns with your risk profile, investing goals and time horizon.

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