Top 3 Dividend ETFs for Generating Passive Income

Passive income is often seen as a positive quality, especially in the world of investing. Unlike the negative connotations associated with passivity in individuals, passive income allows investors to sit back and let their money work for them. This type of income stream can provide a steady flow of money without requiring active involvement on a daily basis. One popular way to generate passive income is through exchange-traded funds (ETFs), which offer investors a diversified portfolio of assets that can generate regular income through dividends.

One high-yield dividend ETF that investors may want to consider is the Invesco S&P SmallCap High Dividend Low Volatility ETF (XSHD). This ETF focuses on small-cap stocks with high dividend yields and relatively low volatility. With a 30-day SEC yield of 7.72%, the Invesco ETF offers investors a potentially lucrative income stream. While the fund has not performed well historically, its monthly distributions and low expense ratio of 0.3% make it an attractive option for income investors.

Another option for passive income seekers is the JPMorgan Equity Premium Income ETF (JEPI). This fund uses a proprietary process to select stocks with less volatility and sells out-of-the-money S&P 500 index call options to generate income. With a 30-day SEC yield of 7.55% as of May 31, 2024, the JPMorgan ETF offers investors a competitive income stream. While the fund has a relatively short track record, its strong performance since inception in May 2020 may make it a compelling choice for investors seeking passive income.

For investors looking for exposure to high dividend-yielding stocks in the S&P 500 index, the SPDR Portfolio S&P 500 High Dividend ETF (SPYD) may be a good option. With a 30-day SEC yield of 4.68% and a low expense ratio of 0.07%, the SPDR ETF offers investors a cost-effective way to access high dividend-yielding stocks. While the fund pays distributions quarterly instead of monthly, its track record of positive returns since inception in October 2015 makes it a solid choice for investors seeking passive income.

In conclusion, passive income can be a valuable source of income for investors looking to generate regular cash flow without actively managing their investments. By investing in high-yield dividend ETFs like the Invesco S&P SmallCap High Dividend Low Volatility ETF, JPMorgan Equity Premium Income ETF, and SPDR Portfolio S&P 500 High Dividend ETF, investors can potentially earn attractive returns while enjoying the benefits of passive income. It’s important for investors to carefully consider their investment goals and risk tolerance before investing in any ETFs to ensure they align with their financial objectives.