24/7 Wall St. Insights

• Exchange-traded funds have numerous advantages over open-end mutual funds.
• Many top ETFs pay monthly dividends, a plus for passive income investors.
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Many investors need dependable passive income, and one outstanding way to get reliable regular dividends is to invest in exchange-traded funds, or ETFs.

Unlike open-end mutual funds, ETFs trade on major exchanges like stocks. They own financial assets such as stocks, bonds, currencies, debts, futures contracts, and commodities such as gold bars.

One massive advantage to them is that they can be sold anytime when the markets are trading. We screened our 24/7 Wall St. ETF research database and found six top funds that have these qualities:

• High dividend payout
• Trades at or at a discount to net asset value
• Are managed by major Wall Street firms
• Reasonable expense ratio

Six top funds hit our screens and make sense for investors looking for dependable, often monthly instead of quarterly distributions.

JPMorgan Equity Premium Income

This gigantic fund has taken in billions since its inception in 2020 and is run by top portfolio managers at JPMorgan. JPMorgan Equity Premium Income (NYSEArca: JEPI) seeks to achieve its investment objective by:

• Creating an actively managed portfolio of equity securities comprised significantly of those included in the fund’s primary benchmark, the Standard & Poor’s 500 Total Return Index (S&P 500 Index)
• Using equity-linked notes (ELNs), selling call options with exposure to the S&P 500 Index

Dividend yield = 7.19% paid monthly
NAV = $58.27
Expense ratio = 0.35%

Alerian Master Limited Partnership

This is an excellent way for investors to have energy exposure, as Alerian Master Limited Partnership (NYSEArca: AMLP) will typically invest at least 90% of its total assets in securities that comprise the underlying index. The underlying index includes energy infrastructure MLPs that earn most of their cash flow from transporting, storing, and processing energy commodities.

Another plus is unlike individual MLP stocks, which send a K-1 for tax purposes and can be a hassle, this fund sends investors a 1099.

Dividend yield = 7.34% paid quarterly
NAV = $47.06
Expense ratio = 0.85%

Global X U.S. Preferred ETF

This fund focuses on preferred stocks of top U.S. companies. Global X U.S. Preferred ETF (NYSEArca: PFFD) invests at least 80% of its assets in the securities of its underlying index and supports at least 80% of its assets in preferred domestic securities, principally traded in or whose revenues are primarily from the U.S. The underlying index tracks the broad-based performance of the U.S. chosen securities market.

Dividend yield = 6.41% paid monthly
NAV = $20.24
Expense ratio = 0.23%

Global X SuperDividend REIT ETF

Like the MLP fund with energy, Global X SuperDividend REIT ETF (NASDAQ: SRET) gives investors exposure to real estate. At least 80% of its total assets are in the securities of the underlying index, and American Depositary Receipts and Global Depositary Receipts are based on the securities in the underlying index. The underlying index tracks the performance of REITs that rank among the highest-yielding REITs globally.

Dividend Yield = 6.94% paid monthly
NAV = $22.04
Expense ratio = 0.59%

iShares National Muni Bond ETF

While much lower in yield, iShares National Muni Bond ETF (NYSEArca: MUB) is a perfect fund for investors seeking tax-free income. The underlying index includes municipal bonds, the interest of which is exempt from federal income taxes and not subject to the alternative minimum tax.

Dividend Yield = 2.85% paid monthly.
NAV = $107.86
Expense ratio = 0.05%

Vanguard High Dividend Yield Index Fund

This is a perfect income ETF for more conservative investors. The manager employs an indexing investment approach designed to track the index’s performance, consisting of common stocks of companies that generally pay higher than average dividends. The adviser attempts to replicate the target index by investing all, or substantially all, Vanguard High Dividend Yield Index Fund (NYSEArca: VYM) assets in the stocks that make up the index.

Dividend Yield = 2.87% paid quarterly
NAV = $121.53
Expense ratio = 0.08%

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