Monthly dividend exchange-traded funds (ETFs) offer a passive income opportunity that allows investors to earn regular payouts without actively managing their investments. These funds provide investors with a steady stream of income that can be used to cover living expenses or reinvested for long-term growth. Monthly dividends also allow for better budgeting as investors only have to plan for income on a 30-day basis.
Investing in monthly dividend ETFs also offers the benefit of dollar-cost averaging (DCA), which helps manage investment risk by investing on a scheduled cadence. By automatically reinvesting monthly dividends, investors can take advantage of market fluctuations and potentially lower their overall cost basis. Additionally, monthly dividends are more convenient for reinvesting compared to quarterly dividends.
Forbes has identified six monthly dividend ETFs that are potential candidates for investors seeking to build a passive income portfolio. These funds have dividend yields of 2% or more, expense ratios below 0.4%, and total assets over $2 billion. By choosing ETFs with these criteria, investors can access a diversified portfolio of high-quality dividend stocks while generating steady income.
The top six monthly dividend ETF picks include funds such as JPMorgan Equity Premium Income Fund (JEPI), JPMorgan NASDAQ Equity Premium Income Fund (JEPQ), Invesco S&P 500 Low Volatility ETF (SPLV), WisdomTree U.S. LargeCap Dividend Fund (DLN), WisdomTree U.S. MidCap Dividend Fund (DON), and Invesco S&P 500 High Dividend Low Volatility ETF (SPHD). These funds offer a combination of income generation and potential capital appreciation through dividend-paying stocks.
Investors interested in high-yield ETFs may consider the JPMorgan funds, JEPI and JEPQ, which employ covered call options to enhance dividend yields. For investors looking for less volatility, funds like SPLV and SPHD may be more suitable, as they focus on low volatility stocks within the S&P 500. The WisdomTree ETFs, DLN and DON, offer diversified exposure to large-cap and mid-cap dividend-paying stocks.
Overall, monthly dividend ETFs provide investors with a predictable income stream that can be used for various financial goals. Whether investors are looking to supplement their income or reinvest for long-term growth, monthly dividend ETFs offer a hassle-free way to earn passive income. By carefully selecting ETFs based on their objectives and risk tolerance, investors can tailor their portfolios to meet their financial needs.
