Buy 3 High-Yield Dividend ETFs to Generate Passive Income
Buy 3 High-Yield Dividend ETFs to Generate Passive Income
Exchange-traded funds (ETFs) are a great option for those looking to generate passive income. Many of these funds hold a portfolio of income-generating investments. Because of this, you don't Actively manage your investment portfolio. you can only Sit back and watch the income flow into your brokerage account.
this Schwab U.S. Dividend Stocks ETF(NYSE: SCHD), JPMorgan Equity Premium Income ETF(NYSE:GIVERS)and Vanguard Real Estate ETF(NYSE: VNQ) Are Three Great ETFs to Generate passive income. They pay higher-yielding dividends that have grown over the years.
this Schwab U.S. Dividend Stocks ETF track Dow Jones U.S. Dividend 100 Index. The index is designed to track the performance of 100 top high-yield stocks that consistently pay dividends and have financial metrics that outperform their peers.
The fund holds shares in companies with excellent dividend-paying records. For example, PfizerThe fund's largest holding recently announced its 345th consecutive quarterly dividend. The pharmaceutical giant has raised its dividend for the 16th consecutive year, with a dividend yield as high as 6.5% continuous. Most of the fund's other top holdings also offer higher-yielding dividends they raise every year Ten years or more.
The fund currently has a distribution yield of 3.6%, based on dividend payments received over the past 12 months. That's about three times the dividend yield S&P 500 Index (1.2%). Given that the fund's holdings have a history of increasing payments, this income stream should continue to grow steadily.
SCHD dividend data provided by YCharts.
this JPMorgan Equity Premium Income ETF Has a dual mission. The fund aims to distribute income to investors every month while providing lower volatility equity market exposure.
It does this through a two-pronged investment strategy:
defensive stock portfolio: Fund managers hold a portfolio of stocks selected based on fundamental research and proprietary risk-adjusted rankings.
Discipline Options Overlay Strategy:The ETF is out-of-the-money call options Generated on the S&P 500 Index monthly distributable income. These options are all above the index's current levels. It is caused by writing (short) option.
Selling options can be a very profitable income-generating strategy.
Image source: J.P. Morgan Asset Management.
As you can see in the chart above, based on recent payments, the fund has a yield of 8% (versus 7.5% over the past 12 months). This is much higher than other asset classes. The fund's monthly distributions vary based on the option fee income it generates, which tends to be higher during periods of market volatility.
In addition to its income stream, the fund also provides stock market exposure. Therefore, it can generate higher total returns than fixed-income investments such as bonds.
invest in Real estate is one of many ways to generate passive income. However, some real estate investment strategies require more active management (such as owning rental properties). On top of that, the upfront investment can be very high.
this Vanguard Real Estate ETF is one of the easiest and most passive ways to generate income from real estate. The fund focuses on holding real estate investment trusts (REIT) owns income-producing real estate such as office buildings, apartment complexes, and warehouses. the fund hold More than 150 REITs provide investors with a wide range of investment opportunities The entire commercial real estate sector.
Its largest REIT is a leading industrial REIT prelude. The global warehouse owner currently has a dividend yield of 3.5%. Meanwhile, GLP has grown at a compound annual rate of 13% over the past five years, well above the S&P 500's 5% growth.
The ETF currently offers a 3.5% yield. Revenue streams should increase future As REITs like GLP continue to increase their dividend payments.
ETFs are a great way to generate passive income because many of these funds hold a portfolio of income-generating investments. The Schwab US Dividend Equity ETF, JPMorgan Equity Premium Income ETF, and Vanguard Real Estate ETF are the best choices because they pay higher-yielding income streams that should grow in the future. This makes them a great ETF to buy right now if you want to start generating passive income.
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Matt DiLallo holds positions in the JPMorgan Equity Premium Income ETF and Prologis. The Motley Fool owns and recommends Pfizer, Prologis and the Vanguard Real Estate ETF. The Motley Fool recommends the following options: Long January 2026 $90 calls on Prologis. The Motley Fool has a disclosure policy.
3 High-Yield Dividend ETFs to Buy to Generate Passive Income Originally posted by The Motley Fool
