Passive income is a dream for many investors, and one of the easiest ways to achieve this is through exchange-traded funds (ETFs). These investment vehicles allow individuals to passively collect income without the need for active management. Three ETFs in particular stand out for their ability to generate passive income: SPDR Portfolio S&P 500 High Dividend ETF (SPYD), JPMorgan Equity Premium Income ETF (JEPI), and SPDR Portfolio High Yield Bond ETF (SPHY).
The SPDR Portfolio S&P 500 High Dividend ETF is a great option for investors seeking high-yield dividend stocks. This ETF holds 80 of the top high-yielding dividend stocks in the S&P 500 index, providing instant diversification for income-seeking investors. With a sector allocation that includes real estate, utilities, financials, and more, this ETF offers a balanced portfolio of income stocks. Currently boasting a dividend yield of around 4.3%, much higher than the S&P 500, this ETF is ideal for those looking to generate passive income from dividend payments.
On the other hand, the JPMorgan Equity Premium Income ETF takes a different approach to passive income generation. This ETF aims to deliver monthly distributable income and equity market exposure with less volatility. By holding a defensive equity portfolio and implementing a disciplined options overlay strategy, this ETF provides investors with a unique opportunity to earn income from options premiums. With a rolling dividend yield of 7.6% over the past 12 months, this ETF offers a lucrative monthly income stream with additional upside potential from its equity portfolio.
For investors comfortable with higher risk, the SPDR Portfolio High Yield Bond ETF focuses on junk bonds with sub-investment-grade credit ratings. While these bonds carry a higher risk of default, they also offer a higher income yield. With over 1,900 bonds in its portfolio, this ETF helps mitigate default risk and provides additional diversification across sectors and issuers. Offering a 7.7% yield based on its payments over the past 30 days, this ETF is best suited for investors seeking a fixed income stream and are willing to take on the risks associated with junk bonds.
In conclusion, the SPDR Portfolio S&P 500 High Dividend ETF, JPMorgan Equity Premium Income ETF, and SPDR Portfolio High Yield Bond ETF are excellent options for investors looking to generate passive income. With high dividend yields, diversification benefits, and unique income-generating strategies, these ETFs make it easy for individuals to start collecting passive income without the need for active management. Whether you prefer high-yield dividend stocks, options premiums, or junk bonds, these ETFs offer a variety of ways to earn passive income and grow your investment portfolio.
