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Yahoo
16 hours ago
- Business
- Yahoo
3 ETFs with Dividend Yields of 12% or Higher for Your Income Portfolio
Exchange-traded fund (ETF) inflows hit a record $1.9 trillion in 2024, pushing total ETF assets to $14.7 trillion. However, with 10-year U.S. Treasury yields hovering near 4.4%, income-hungry investors face a situation in which traditional ETFs struggle to compete. This has prompted a shift toward innovative strategies aimed at securing higher yields. Warren Buffett Famously Warned to 'Make Money While You Sleep' or 'You Will Work Until You Die': 5 Stocks To Invest Like Buffett 3 ETFs with Dividend Yields of 12% or Higher for Your Income Portfolio Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! Three notable funds are reshaping the income investing landscape by offering yields that far exceed conventional alternatives. Each one uses advanced covered call strategies on major indexes, turning volatile markets into reliable monthly income streams. The Global X Nasdaq 100 Covered Call ETF (QYLD) tracks the CBOE NASDAQ-100 BuyWrite V2 Index. With assets under management reaching $8.38 billion, QYLD's annual distribution rate sits at 14.13%, paying out distributions monthly. The fund maintains positions in all stocks in the Nasdaq 100 Index ($IUXX) and simultaneously sells call options on the index, effectively covering 100% of its portfolio. This strategy is aimed at collecting option premiums, which are distributed monthly. While this delivers a robust income stream, the tradeoff comes in the form of capped upside during sharp rallies. The fund's expense ratio is 0.6%, which is competitive given the complexity of its options strategy and the steady cash flow it aims to provide. The ETF is down 8.7% in the year to date and is down 6.7% over the past year. The NEOS S&P 500 High Income ETF (SPYI) is a product of NEOS Funds and began trading on Aug. 31, 2022. The ETF also pays out monthly distributions and has a 12-month distribution rate of 12.65%. This ETF is built on the back of the S&P 500 Index ($SPX), but it's not just a passive tracker. It holds the stocks in the benchmark index, and then in addition to selling call options on the index, its managers buy put options on the same index. This creates a 'collar' effect, aiming to retain more of the upside potential of its holdings if the market breaks out to the upside. SPYI manages $3.9 billion in assets. The fund's expense ratio is 0.68%, which is in line with its active approach and complex strategy. SPYI is down 2.4% in the year to date and 1.9% over the past 52 weeks. The ProShares S&P 500 High Income ETF (ISPY) brings a new twist to the high-yield ETF space. Tracking the S&P 500 Daily Covered Call Index, ISPY is the first ETF to implement a daily covered call overlay on the S&P 500. This means that rather than the typical monthly or weekly cadence, ISPY writes fresh out-of-the-money call options every single trading day, using swap agreements to access the full S&P 500 portfolio and maximize option premium capture. This high-frequency approach is designed to exploit the rapid time decay of daily options, allowing the fund to reset its strike price each day and adjust to changing market conditions. The result is a steady stream of elevated income, with the added benefit of some downside protection if markets turn choppy. However, this daily reset also means that returns are more closely tethered to short-term market swings, and the fund may lag in strong, sustained bull runs since upside is capped. Its 12-month distribution rate is 12.82%, and like QYLD and SPYI, it pays out distributions monthly. ISPY's assets under management stand at $740.3 million, and the fund charges an expense ratio of 0.55%, which is competitive for an actively managed, options-driven ETF. ISPY is down 7.9% in the year to date and 6.3% over the past 52 weeks. High-yield covered call ETFs like QYLD, SPYI, and ISPY offer a compelling way to boost monthly income, though they do sacrifice some growth potential for those generous payouts. Considering the current volatile investing environment, it's reasonable to expect these ETFs to stay relevant for income seekers in 2025. On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Effettua l'accesso per consultare il tuo portafoglio
Yahoo
15-05-2025
- Business
- Yahoo
What's Behind the Surge in Options Income ETFs?
Income-hungry investors have been piling into ETFs that use options to deliver juicy dividends. We've seen a surge in launches of these products recently, as providers employ innovative strategies to package derivatives within the ETF structure to meet rising investor demand. In addition to offering high yields, these strategies generally help reduce portfolio volatility. However, investors should remember that there's no free lunch in investing. These products tend to perform best in sideways markets and often underperform during strong bull runs. That said, they can provide some downside protection when stocks fall. Roni Israelov, Senior Quantitative Researcher at Citadel, refers to these strategies as a 'Devil's Bargain.' His research shows that trading options to generate income can undermine long-term investment returns. Our own analysis of the most popular derivatives-backed ETFs also suggests that investors may be leaving significant returns on the table in their pursuit of high income. Nevertheless, these products have attracted substantial inflows this year, as market volatility has shaken investor confidence. The JPMorgan Equity Premium Income ETF JEPI uses proprietary research to select around 130 stocks and writes S&P 500 Index call options to generate income. Its top holdings include NVIDIA (NVDA), Microsoft MSFT, and Meta META. JEPI and its sister fund, the JPMorgan Nasdaq Equity Premium Income ETF JEPQ, are among the top asset gatherers this year. The Amplify CWP Enhanced Dividend Income ETF DIVO aims to deliver high income from both dividends and covered calls. Its managers focus on high-quality large-cap companies with a history of dividend growth and write covered calls on individual stocks. While DIVO has outperformed JEPI, both have significantly lagged the S&P 500 over the long term. JEPQ and the Global X Nasdaq 100 Covered Call ETF QYLD continue to underperform the Nasdaq 100 ETF QQQ. To learn more about these ETFs, please watch the short video above. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT) : Free Stock Analysis Report Invesco QQQ (QQQ): ETF Research Reports Global X Nasdaq 100 Covered Call ETF (QYLD): ETF Research Reports Amplify CWP Enhanced Dividend Income ETF (DIVO): ETF Research Reports JPMorgan Equity Premium Income ETF (JEPI): ETF Research Reports Meta Platforms, Inc. (META) : Free Stock Analysis Report JPMorgan Nasdaq Equity Premium Income ETF (JEPQ): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
