Investment Strategies for Passive Income

• JEPQ, an ETF with $32 billion in assets, offers an impressive yield of 11.42% by selling call options on low-volatility NASDAQ-100 stocks.

• SDIV is a global fund investing in 100 high-yield stocks, achieving an annualized return of 28.27% over the past year.

• DIVO employs a moderate covered call strategy within its portfolio, balancing equity potential with income stability.

• A recent study highlighted a single habit that doubled Americans’ retirement savings, making retirement more feasible for many. Click here for details.

Whether you’re just starting out or are already retired, passive income might be your investment priority. No matter your stage, having a regular income stream can really help in wealth-building. This is why many gravitate toward dividend stocks. While they usually pay out quarterly, there’s no firm guarantee that these payments will keep coming. If you’re looking to minimize risk while establishing a passive income, exchange-traded funds (ETFs) could be worth considering.

ETFs are managed funds that typically invest in a large number of high-dividend stocks. A lot of top ETFs tend to offer monthly dividends, providing consistent passive income. They target stocks known for stable dividends and strong financials. In fact, some investors add to their income by selling call options. Here’s a look at three well-diversified ETFs that yield up to 8% and provide monthly dividends seamlessly.

The JPMorgan Nasdaq Stock Premium Income ETF (NYSEARCA:JEPQ) is particularly attractive, boasting an 11.42% yield. It’s a favorite among dividend investors, thanks to its strategy of investing in blue-chip stocks and utilizing options to generate income. This approach not only produces a premium for the ETF but also helps keep yields elevated.

Focusing on the Nasdaq 100 index, JEPQ selects low-volatility companies to safeguard investors from downturns. The fund manages $32 billion in assets and has recorded a three-year return of 89.11%.

With an expense ratio of 0.35%, JEPQ pays dividends monthly, having raised its payment for three consecutive years, now at $0.465 per share. While the yield might fluctuate monthly, it’s generally higher than many other dividend ETFs.

The fund’s investment includes 108 stocks, primarily in technology (41%), followed by communications (12%) and consumer services (10.4%). The top holdings include major players like Nvidia, Meta Platforms, Amazon, and more.

On to the Global X Super Dividend ETF (NYSEARCA:SDIV), it provides international exposure by investing in the 100 highest dividend-paying stocks globally. SDIV currently offers a yield of 8.88% and pays monthly dividends, having maintained this for 14 years. Recently, it announced a $0.19 dividend.

With a 0.58% expense ratio, the fund allocates its investments across sectors—31% in financials, 17% in energy, and roughly 15% in materials and real estate. By geography, it focuses significantly on the U.S., Brazil, and the U.K.

Although SDIV holds only 106 stocks, it ensures none exceeds 2% of its portfolio. It emphasizes high-yield stocks, often overlooking dividend history. Over one year, it posted an average annualized return of 28.27%, making it an ideal choice for investors seeking global diversification away from tech.

A $100,000 investment in SDIV could yield about $8,800 annually in dividends, with a current trading price around $25.

Turning to the Amplify CWP Increased Dividend Income ETF (NYSEARCA:DIVO), this actively managed fund emphasizes high dividend stocks while employing a covered call strategy to maintain low volatility. DIVO provides a yield of 4.81%, appealing to conservative investors, and has seen impressive returns of 15.30% over the past year and 14.11% over three years.

With an expense ratio of 0.56%, DIVO invests in just 40 stocks, primarily focusing on large, blue-chip companies known for solid dividend performance. Notably, its top holdings feature firms like RTX Corp, Caterpillar Inc., and others that seem to be thriving amidst market instability.

This ETF allows fund managers to utilize covered calls selectively, keeping a portion of their holdings free from that strategy. This way, they can capture upside potential while ensuring safety for investors, stabilizing income and reducing volatility. DIVO is currently priced at $46.59, having appreciated by about 9.78% in the last year.

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