Exchange-traded funds (ETFs) have become increasingly popular among investors looking to generate passive income. These funds offer a convenient way to invest in a diversified portfolio of income-generating assets without the need for active management. By simply holding these ETFs in your brokerage account, you can sit back and watch as the income flows in.
Three ETFs that stand out for their ability to generate passive income are the Schwab U.S. Dividend Equity ETF (SCHD), JPMorgan Equity Premium Income ETF (JEPI), and Vanguard Real Estate ETF (VNQ). These funds are known for their higher-yielding dividends that have a track record of growth over the years.
The Schwab U.S. Dividend Equity ETF tracks the Dow Jones U.S. Dividend 100 Index, which consists of the top 100 high-yielding stocks with strong financial metrics. Companies like Pfizer, the fund’s top holding, have a history of consistently paying dividends and increasing them year after year. With a distribution yield of 3.6%, the fund offers a steady income stream that is significantly higher than the S&P 500.
On the other hand, the JPMorgan Equity Premium Income ETF takes a unique approach to generating income by combining a defensive equity portfolio with a disciplined options overlay strategy. By writing out-of-the-money call options on the S&P 500 index, the fund is able to generate monthly income for investors. With an income yield of 8%, the fund provides a lucrative income stream that outperforms other asset classes.
For investors looking to gain exposure to the real estate sector and generate passive income, the Vanguard Real Estate ETF is an excellent option. This ETF focuses on holding real estate investment trusts (REITs) that own income-generating properties such as office buildings and apartment complexes. With a diversified portfolio of over 150 REITs, the fund offers broad exposure to the commercial real estate sector and a current income yield of 3.5%.
Overall, ETFs are a great way to start generating passive income as they offer a hassle-free way to invest in income-generating assets. The Schwab U.S. Dividend Equity ETF, JPMorgan Equity Premium Income ETF, and Vanguard Real Estate ETF are top choices for investors looking to build a passive income stream that can grow over time. Consider adding these ETFs to your portfolio if you’re looking to start making more income without the need for active management.
