Top 4 ETFs for Monthly High Dividend Payments
Table of Contents
- Introduction
- Why Invest in ETFs?
- Advantages of Monthly Paying ETFs
- Wisdom Tree High Dividend ETF (DHS)
- Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
- JP Morgan Equity Premium Income ETF (JEPI)
- JP Morgan Nasdaq Equity Premium Income ETF (JEPQ)
- Conclusion
Introduction
In this article, we will explore the world of monthly paying dividend ETFs and discuss why dividend investors should not overlook them. We will begin by understanding the concept of investing in ETFs and the advantages they offer. Then, we will dive into four high dividend ETFs that pay monthly dividends and analyze their performance and potential returns. By the end of this article, You will have a better understanding of monthly paying ETFs and their importance in building a solid dividend portfolio.
Why Invest in ETFs?
Investing in Exchange Traded Funds (ETFs) offers several advantages for investors. Unlike investing in individual stocks, ETFs allow investors to invest in a basket of stocks, providing diversification and reducing the risk associated with owning a single stock. ETFs also offer ease of trading, as they can be bought and sold on stock exchanges just like stocks. Additionally, ETFs generally have lower expenses compared to mutual funds, making them a cost-effective investment option.
Advantages of Monthly Paying ETFs
Monthly paying ETFs have become increasingly popular among dividend investors. The main AdVantage of these ETFs is that they provide investors with a regular monthly income. This can be especially beneficial for investors who rely on dividend income for their financial goals. Monthly dividend payments can help cover living expenses, provide a steady source of income, or be reinvested to compound returns over time.
Wisdom Tree High Dividend ETF (DHS)
The Wisdom Tree High Dividend ETF (DHS) is an excellent choice for investors looking for a monthly paying dividend ETF. This ETF seeks to track the investment results of high dividend-yielding companies in the U.S. equity market. With over 1.19B in assets and 392 equities within the fund, DHS is considered a dividend powerhouse. Some of its top holdings include Exxon Mobil, AbbVie, Chevron, Phillip Morris, and Altria. Despite being down around 8% year-to-date, analysts forecast a potential upside of 20%. The fund's track Record shows an average annual return of 8.21% and an average dividend yield of 4.31%. With an expense ratio of only .38%, DHS offers a compelling investment opportunity for dividend investors.
Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) is another monthly paying dividend ETF worth considering. This ETF is Based on the S&P 500 low volatility, high dividend index and consists of 51 securities traded on the S&P. It aims to provide investors with high dividend yields and minimal volatility. Top holdings of SPHD include Altria, Verizon, AT&T, Kinder Morgan, and Dow. With over 3.29B in assets, SPHD offers a 4.27% dividend yield. Over the past 10 years, investing $10,000 in SPHD would have resulted in a return of $22,890 with an 8.22% annualized return. The ETF has a low expense ratio of .30%, making it an attractive option for investors seeking monthly dividend payments.
JP Morgan Equity Premium Income ETF (JEPI)
The JP Morgan Equity Premium Income ETF (JEPI) is a large fund that aims to invest defensively through a bottom-up fundamental research process. It selects stocks based on risk-adjusted stock rankings and call options. With $21B in assets under management, JEPI has gained popularity quickly since its inception in 2020. The ETF is diversified, with 117 total holdings. Top holdings include U.S. Cash, Microsoft, the Hershey company, Mastercard, and Amazon. JEPI offers a solid offense in growth investments along with defensive strategies. The expense ratio for JEPI is .35%, meaning investors would pay approximately $35 per $10,000 invested. Although JEPI's performance cannot be evaluated over a 10-year period, it has shown significant growth since its inception, with a share price increase of approximately 44%.
JP Morgan Nasdaq Equity Premium Income ETF (JEPQ)
The JP Morgan Nasdaq Equity Premium Income ETF (JEPQ) focuses on generating income through a combination of selling options and strategically investing in large-cap U.S. based growth stocks. JEPQ aims to minimize volatility by selectively choosing stocks from the Nasdaq 100 index. With over $2.88 billion in assets under management, the ETF's top holdings include Microsoft, Apple, Google, Amazon, and Nvidia. While JEPQ has experienced some market fluctuations, it has shown substantial overall growth, up by 19.75% year-to-date. A $10,000 investment in JEPQ in 2020 would have yielded a profit of nearly $2,000, with a dividend yield of 12.11%. JEPQ has an expense ratio of .35%, making it an intriguing option for investors looking for monthly dividend payments.
Conclusion
Monthly paying dividend ETFs provide investors with a steady stream of income and the opportunity to grow their investments over time. The Wisdom Tree High Dividend ETF (DHS), Invesco S&P 500 High Dividend Low Volatility ETF (SPHD), JP Morgan Equity Premium Income ETF (JEPI), and JP Morgan Nasdaq Equity Premium Income ETF (JEPQ) are four excellent options to consider. Each ETF offers unique features, including diversified holdings, solid performance, and attractive dividend yields. As always, investors should conduct their due diligence and consider their investment goals and risk tolerance before investing in any ETF.
Highlights:
- Monthly paying dividend ETFs offer investors a steady stream of income.
- ETFs provide diversification and ease of trading compared to individual stocks.
- Wisdom Tree High Dividend ETF (DHS) is a dividend powerhouse with a potential upside of 20%.
- Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) offers high dividend yields with minimal volatility.
- JP Morgan Equity Premium Income ETF (JEPI) focuses on defensive strategies and growth investments.
- JP Morgan Nasdaq Equity Premium Income ETF (JEPQ) combines large-cap growth stocks and selling options for income generation.
FAQ
Q: Why should I invest in monthly paying dividend ETFs?
A: Monthly paying dividend ETFs provide investors with a regular income stream that can help cover expenses or be reinvested for future growth. By investing in ETFs, investors also benefit from diversification and ease of trading.
Q: Are monthly paying dividend ETFs better than quarterly paying dividend ETFs?
A: The choice between monthly and quarterly paying dividend ETFs depends on individual preferences and investment goals. Monthly paying ETFs provide more frequent income, which can be advantageous for investors who rely on a regular cash flow. However, quarterly paying ETFs may offer higher dividend yields in some cases.
Q: What are the advantages of investing in ETFs?
A: Investing in ETFs offers several advantages, including diversification, ease of trading, and lower expenses compared to mutual funds. ETFs allow investors to invest in a basket of stocks, reducing the risk associated with owning individual stocks.
Q: How can I choose the right monthly paying dividend ETF for my portfolio?
A: When choosing a monthly paying dividend ETF, consider factors such as the ETF's track record, dividend yield, expense ratio, and holdings. It is also essential to align the ETF's investment strategy with your investment goals and risk tolerance. Conduct thorough research and consult with a financial advisor if needed.