The purpose of income investing isn’t just to pile up returns; frequently, investors are looking to withdraw money on a regular basis as a form of paycheck.
That’s fueling the popularity of monthly dividend-paying exchange-traded funds. You’ll find these ETFs in a variety of flavors, including preferred shares, covered calls and large-cap common stocks.
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The lure of a monthly payout may be strong, but investors should be aware that these strategies, like any involving stocks or derivatives, are more risky than bonds, which offer a guaranteed interest payout.
For investors willing to accept that risk, and for whom steady monthly cash flow from equities sounds appealing, here are seven ETFs that may be worth a closer look:
— iShares Preferred & Income Securities ETF (ticker: PFF)
— JPMorgan Equity Premium Income ETF (JEPI)
— JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
— Amplify CWP Enhanced Dividend Income ETF (DIVO)
— Global X SuperDividend ETF (SDIV)
— Global X SuperDividend U.S. ETF (DIV)
— WisdomTree U.S. LargeCap Dividend ETF (DLN)
iShares Preferred & Income Securities ETF (PFF)
This ETF, which offers a yield of 6.2%, uses securities that combine features of stocks and bonds. The idea is to offer both income and upside potential. These investments, dubbed hybrids, include preferred shares and subordinated bank debt. They pay regular income like bonds but trade on exchanges like stocks.
PFF has $14 billion in assets under management and has been around since 2007, making it one of the most well-established preferred stock ETFs on the market. Its expense ratio is 0.45%.
According to iShares, “Preferred securities have offered low correlations to traditional core bonds and may provide attractive diversification benefits within a broad portfolio.”
JPMorgan Equity Premium Income ETF (JEPI)
This actively managed ETF is designed to generate income through a strategy of selling options and investing directly in large-cap U.S. stocks. The monthly shareholder payout is derived from options premiums and stock dividends.
Top holdings are Johnson & Johnson (JNJ), Alphabet Inc. (GOOGL) and Analog Devices Inc. (ADI). The ETF yields 7%, and it’s one of the most widely held income funds.
Jonathan Ford Jr., president of JFJ Advisor Services in Morrow, Ohio, uses JEPI in client retirement portfolios. “It can offer stock-like performance with a little bit of protection in the form of option income,” he says.
“Because it uses out-of-the-money covered-call writing, you can participate in some of the upside. If stocks go down, you still keep the income generated by selling the option,” Ford adds.
This ETF pays non-qualified dividends, Ford notes. “So holding it in a tax-deferred account can be exceptionally beneficial,” he says.
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
This ETF uses the same covered call strategy as JEPI, with its higher yield of 9.9% due to more tech-sector concentration that increases volatility. In turn, that affects option premiums and payouts.
According to JPMorgan, the fund’s approach is to “deliver a significant portion of the returns associated with the Nasdaq-100 Index with less volatility.” Options premiums mitigate some of the index’s inherent volatility.
“Dividends from JEPQ are generally taxable when held in a brokerage account, which can make tax-advantaged accounts, such as a Roth IRA, a more appealing account to hold this ETF,” says Shai Gothreau, financial planner and founder of Infinity Financial Services in Dallas.
However, she adds, some of her clients have either retired early or are working toward that goal. They intentionally hold JEPQ in a taxable account, using the monthly income stream to help cover fixed expenses.
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Amplify CWP Enhanced Dividend Income ETF (DIVO)
Actively managed ETFs are generally costlier than index-based funds, and DIVO is no exception.
Its expense ratio is 0.56%, significantly higher than a basic ETF tracking the S&P 500. Concentrated with just 24 holdings, the fund combines managed stocks from the S&P 500 with a tactical covered-call writing strategy.
Its yield of 4.8% is lower than some rival products, but it’s shown solid price growth in recent months.
This fund doesn’t always overweight the most familiar S&P 500 names. The largest holding is RTX Corp. (RTX), which is the 37th most heavily weighted stock in the index.
As with other ETFs using covered-call strategies to smooth returns, DIVO’s beta is low. In this case, it’s 0.7, meaning it fluctuates only about 70% as much as the broader market, rising more slowly in rallies but faring better during sell-offs.
Global X SuperDividend ETF (SDIV)
For investors seeking regular dividends with a dollop of non-U.S. exposure, this ETF tracks an equal-weighted index of high-yielding international stocks.
Despite tracking an index, the expense ratio is still substantial, at 0.58%. International index ETFs cost more to run. Holding stocks from throughout the world comes with complexity a domestic fund doesn’t face; those include foreign custody fees, currency exchange rates, varying tax treaties and trading across multiple time zones.
This ETF’s global exposure also means it’s riskier than a domestic index counterpart. Another element that adds risk is the tilt toward smaller stocks. But SDIV yields 7.7% and has paid monthly distributions for 12 consecutive years.
Global X SuperDividend U.S. ETF (DIV)
From the same fund family as SDV, this ETF tracks 50 of the highest-yielding U.S. stocks. It follows an index whose methodology screens for stocks with low betas relative to the S&P 500. The idea is to generate low-volatility returns.
The expense ratio of 0.45% is on the higher side for an index fund.
There are a few reasons for that. It tracks a relatively small, custom, niche index, which can raise costs over a more widely used benchmark. Also, it includes master limited partnerships and real estate investment trusts, asset classes that require more complex administration and frequent rebalancing.
DIV also has a 12-year uninterrupted streak of monthly dividend payouts.
Like other dividend ETFs, its high monthly income means it’s inefficient for taxable accounts.
WisdomTree U.S. LargeCap Dividend ETF (DLN)
This 309-stock ETF measures the price and yield performance of its namesake index. With a plain-vanilla focus on large domestic stocks, DLN has a fairly low expense ratio, at least relative to its category, of 0.28%.
This fund avoids companies with weak profitability and falling stock prices, steering only toward healthy, better-performing names. It avoids chasing high yield.
Financials, information technology and health care are the top sectors.
“But its dividend yield, at less than 2%, hardly makes it attractive for income hunters,” says Joe Schneider, an investment advisor representative at Core Planning in Las Vegas.
“Still, it prioritizes holding high-quality businesses that are likely to thrive for the long term rather than holding lower-quality businesses with an emphasis on current high income; to me this is a prudent approach,” he adds.
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Update 02/27/26: This story was published at an earlier date and has been updated with new information.