Key Points
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JEPQ and QQQI offer hefty yield and broad technology sector exposure.
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DIVO and SPYI also provide good yield, but they also feature multi-sector diversification.
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Exchange traded funds (ETFs) can benefit investors in multiple ways. They can immediately diversify your portfolio by providing exposure to a wide variety of stocks. Plus, some ETFs offer fabulous dividend yields and pay monthly distributions so you can grow your wealth quickly.
The passive income ETF revolution is here and it’s unstoppable. Are you ready to board the high-yield train with four fantastic funds that pay cash every month? To make it all easier to digest, I’ll divide the ETFs into two categories and you can try some or even all of them.
Two Tech-Focused Funds
Today’s topic is diversified ETFs that send you a check (in the form of a cash distribution to your investment account) every month. These ETFs are convenient because the fund managers do all of the stock picking for you.
Large-cap technology stocks tend to perform well over the long run. Therefore, I would like to feature two ETFs that provide big monthly cash payouts but also concentrate on tech stocks.
Don’t get the wrong idea, as these funds are focused but are also diversified. For example, the JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) is centered around the NASDAQ 100 index and comprises 108 stocks.
JEPQ’s holdings include many large-cap technology names that you’ll surely recognize. You’ll find tech leaders like Amazon (NASDAQ:AMZN), NVIDIA (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), and Meta Platforms (NASDAQ:META).
Like the other ETFs discussed here, the JPMorgan Nasdaq Equity Premium Income ETF uses option trading strategies to juice more yield for the shareholders. Don’t worry if you’re not familiar with complex options strategies, as you can let the fund managers handle that.
You’ll have to pay expenses totaling 0.35% per year, which will automatically be deducted from the share price. On the other hand, the JPMorgan Nasdaq Equity Premium Income ETF features a rolling 12-month dividend yield (which is similar to an annual dividend yield) of 11.36%. So, the annual expenses aren’t too band when you consider JEPQ’s diversification and high yield, which is distributed on a monthly basis.
A similarly tech-centered fund that pays you every month is the NEOS NASDAQ-100 High Income ETF (NASDAQ:QQQI). This ETF includes approximately 100 stocks in its holdings, and it revolves around the NASDAQ 100 index, much like the JEPQ ETF does.
The percentage weightings toward Microsoft stock, Apple stock, and other tech leaders vary slightly between JEPQ and QQQI. The main differences, really, are the yield and the expenses/fees.
The NEOS NASDAQ-100 High Income ETF involves an expense ratio (i.e., annual fees) totaling 0.68% of the share price. However, the QQQI ETF’s current annual distribution rate is an eye-catching 15.35%, so the monthly payouts can be substantial with this fund.
Two Multi-Sector ETFs
JEPQ and QQQI are great for investors seeking tech sector exposure and monthly paychecks. However, to de-risk your portfolio, it’s a good idea to add some ETFs that pay monthly dividends but also diversify beyond the technology sector.
To that end, I’ve got three terrific monthly payers that include some technology stocks but also involve a variety of non-tech-focused names. The first of these three picks is a passive income powerhouse called the Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO).
You’ll find technology giant Microsoft stock in the DIVO ETF’s holdings. Yet, the fund has 34 diversified holdings in total, including the stocks of non-technology firms like McDonald’s (NYSE:MCD), Goldman Sachs (NYSE:GS), Procter & Gamble (NYSE:PG), and Chevron (NYSE:CVX).
DIVO’s annual expense ratio is 0.56%, and the fund’s distribution rate is 4.81% per year, which is broken down into monthly cash payments. The annual yield might not be huge, but there’s a safety factor here as the Amplify CWP Enhanced Dividend Income ETF provides exposure to reliable, “steady Eddie” businesses like Visa (NYSE:V), JPMorgan Chase (NYSE:JPM), and Caterpillar (NYSE:CAT).
Finally, we can really ramp up the diversification factor with the NEOS S&P 500 High Income ETF (BATS:SPYI). This fund invests in stocks that you’ll find in the S&P 500 index, and its holdings include around 500 stocks from many different market sectors.
This means SPYI comprises tech names like Microsoft and NVIDIA, but also a slew of stocks from various fields. Some examples include Coca-Cola (NYSE:KO), McDonald’s, Bank of America (NYSE:BAC), Exxon Mobil (NYSE:XOM), and Home Depot (NYSE:HD).
The NEOS S&P 500 High Income ETF deducts an annual expense ratio of 0.68% but provides a head-turning distribution rate of 12.5% per year. The distributions are paid out each and every month, so the SPYI ETF is an enticing portfolio diversifier that can be mixed and matched with JEPQ, QQQI, and/or DIVO.
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