Key Points
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A “more is better” approach can help you diversify your portfolio while generating passive income.
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Five fascinating funds will tempt income seekers with potent yields and strong growth prospects.
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Stock picking is fine, but exchange traded funds (ETFs) can enable immediate diversification without sacrificing growth and income opportunities. By selecting multiple funds instead of just one, you can achieve an extra measure of safety while also turning your portfolio into a veritable income-generating machine.
The idea is to pick out ETFs with notable distribution yields (i.e., annualized cash payment percentages), but also to focus on a wide variety of funds with share-price growth potential. Now, let’s drill down on five fabulous ETFs so you can start accumulating shares for your income-machine portfolio today.
NEOS NASDAQ-100 High Income ETF (QQQI)
The name of the NEOS NASDAQ-100 High Income ETF (NASDAQ:QQQI) might lead you to assume that this fund only offers a hefty yield. There’s more to the story, though, as the QQQI ETF also enables investors to participate in strong technology-focused growth opportunities.
Based on the NASDAQ 100 stock index with approximately 100 holdings, the NEOS NASDAQ-100 High Income ETF includes many large-cap tech names you’ll surely recognize. Some examples are NVIDIA (NASDAQ:NVDA), Apple (NASDAQ:AAPL), Meta Platforms (NASDAQ:META), Amazon (NASDAQ:AMZN), and Broadcom (NASDAQ:AVGO).
There’s no denying that technology giants like Apple and NVIDIA are robust revenue generators. Consequently, the NEOS NASDAQ-100 High Income ETF share price could grow substantially over the long term.
At the same time, many investors flock to the QQQI ETF for its eye-catching 13.92% distribution yield. Granted, the fund subtracts an annualized management fee (also known as the expense ratio) of 0.68% from the share price.
Still, even after the expense ratio is taken out, investors can look forward to outstanding annual income with the QQQI ETF. Along with that, you’ll get to participate in the growth prospects of terrific tech titans when you hold the NEOS NASDAQ-100 High Income ETF.
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
There’s another passive income machine that’s similar to QQQI, but it’s not identical. Brought to you by famous financier JPMorgan Chase (NYSE:JPM), the JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) squeezes extra income from a range of high-confidence technology leaders.
Much like the QQQI ETF, the JPMorgan Nasdaq Equity Premium Income ETF focuses on the NASDAQ 100 and includes around 100 stocks (108, to be exact). From Microsoft to Apple, Amazon, and many more, you’ll find plenty of high-growth tech names in JEPQ.
There’s a trade-off with the JPMorgan Nasdaq Equity Premium Income ETF when compared to the NEOS NASDAQ-100 High Income ETF. On the negative side, JEPQ has a rolling 12-month dividend yield of 11.01%, which isn’t as impressive as QQQI’s 13.92% distribution yield.
On the positive side, however, the JPMorgan Nasdaq Equity Premium Income ETF has an annualized expense ratio of 0.35%. This is lower than the NEOS NASDAQ-100 High Income ETF’s 0.68% annual management fee.
Perhaps most importantly, you’ll have the reassurance that comes with well-established fund management by JPMorgan Chase. Thus, for an interesting alternative to the QQQI ETF, the JPMorgan Nasdaq Equity Premium Income ETF is absolutely worth considering.
Schwab U.S. Dividend Equity ETF (SCHD)
Maybe you’re seeking a passive income machine that’s not as technology-heavy as QQQI and JEPQ. In that case, you’ll want to check out the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD).
This fund includes has 103 stocks in its portfolio, but SCHD doesn’t track the NASDAQ 100 index. Instead, the Schwab U.S. Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100 Index.
Take a look at the fund’s top 10 holdings and you’ll find some technology firms, such as Cisco Systems (NASDAQ:CSCO) and Texas Instruments (NASDAQ:TXN). Yet, you’ll also see names from other sectors, including Home Depot (NYSE:HD), Coca-Cola (NYSE:KO), Lockheed Martin (NYSE:LMT), and Conoco Phillips (NYSE:COP).
Moreover, the Schwab U.S. Dividend Equity ETF offers a trailing 12-month distribution yield of 3.72% with an annual expense ratio of just 0.06%. The ultra-low management fees allow investors to grow their accounts steadily with the SCHD ETF.
Two More Picks for Low Volatility
To cap off this list of passive income machine picks, I’ve got two relatively low-risk funds to show you. First, there’s an ETF that concentrates on dividend-growing businesses instead of gigantic yield.
The Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO) features a 4.81% annual distribution rate but also a 0.56% expense ratio, so the income opportunities are good but not jaw-dropping. On the other hand, DIVO tends to be low-volatility as it holds a diverse array of safe names, such as Home Depot, Visa (NYSE:V), Caterpillar (NYSE:CAT), Microsoft, and Goldman Sachs (NYSE:GS).
The Amplify CWP Enhanced Dividend Income ETF emphasizes “high-quality large cap companies with a history of dividend and earnings growth.” This approach will typically reduce share-price volatility, so investors can sleep well at night while collecting passive income with DIVO.
In a similar vein, the NEOS S&P 500 High Income ETF (BATS:SPYI) is de-risked because it holds well-known large-cap stocks in multiple sectors. Indeed, SPYI might be the least risky fund on this list as it includes approximately 500 stocks in its holdings.
Because the NEOS S&P 500 High Income ETF generates income from the S&P 500 index, it is a widely diversified fund. So, there’s a safety factor built into the SPYI ETF.
In addition, the NEOS S&P 500 High Income ETF is an enticing passive income machine with a 12.11% annual distribution rate. The fund’s 0.68% annual expense ratio isn’t super-low, but the fees may be justified as SPYI brings high yield and instant diversification to the table. All in all, I like DIVO and SPYI for reduced volatility, SCHD for low management fees, and QQQI and JEPQ for technology-sector exposure.
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The post These 5 ETFs (QQQI, JEPQ, SCHD, DIVO, SPYI) Are Passive Income Machines appeared first on 24/7 Wall St..
