3 Dividend ETFs to Buy and Hold for $10,000 in Monthly Income

Most investors are never going to get to $10,000 in monthly income, at least not when you adjust for inflation. If you followed everything by the book, you’re more likely to make $3-4k a month. A $10k monthly check would require $3 million with a 4% yield. The yield is readily available, but for the vast majority of people, the $3 million is not.

But it’s still possible, and you need $883,652 if you invest equal amounts in the three dividend ETFs I will be discussing. They have a blended yield of 13.58%.

Not everyone should take this deal. The strategy makes sense for a narrow slice of investors, chiefly people who want to shift from perpetual capital preservation to funding a richer decade or two before they pass. If you don’t fit in that slice and you still want more income, you could partially allocate a portfolio into these.

Here are the monthly dividend ETFs.

NEOS Nasdaq-100 High Income ETF (QQQI)

NEOS Nasdaq-100 High Income ETF gives you partial exposure to the Nasdaq-100 while generating income through covered calls. Rather than simply buying and holding Nasdaq-100 stocks, the ETF writes call options against its holdings while using call spreads to maintain greater participation in upside market movements compared to traditional covered call strategies. Here are its holdings.

This has led to significant income along with some upside. QQQI comes with a forward yield of 14.29%. This is an active ETF, so the fees are higher at 0.68%, or $68 per $10,000.

It is a newer fund, but the strategy can work in the long run due to how popular options are getting. Retail investors are pouring into the market, and this can lead to even higher premiums being collected by the fund.

NEOS Real Estate High Income ETF (IYRI)

NEOS Real Estate High Income ETF is another options ETF. It gives you exposure to ETFs and uses options to derive income. IYRI follows the Dow Jones U.S. Real Estate Capped Index. No single stock exceeds 10% of the index, and it has 72 holdings. 

It uses an options overlay strategy by writing call options on its underlying REIT allocations to forego some upside and get income. The yield here is much better than what you’d get if you invested in Realty Income (NYSE:O | O Price Prediction), for example. Obviously, the catch is that you don’t get nearly as much safety, and IYRI is very new. Still, given that REITs have remained resilient through the most aggressive rate hike cycle in decades, the future looks bright.

IYRI comes with a yield of 10.82% and an expense ratio of 0.68%.

PIMCO Dynamic Income Fund (PDI)

PIMCO Dynamic Income Fund (NYSE:PDI) is technically a closed-end fund (CEF) rather than an ETF, but it’s worth looking into if you want the yield. It invests in mortgage-backed securities, corporate bonds (both investment-grade and high-yield), sovereign debt, and emerging market bonds.

You might have noticed that PDI has seen quite a hideous decline since February 2020. It is down by over 41% at the moment, but I see gains in the future as interest rate cuts kick in. The fund has mostly underperformed due to the interest rate hikes by the Federal Reserve. Higher rates made safer bonds more attractive, so PDI’s higher-risk strategy didn’t jibe well with investors.

We are at an inflection point in the market, with the Fed expected to start cutting interest rates in September. President Donald Trump’s firing of Fed Governor Lisa Cook will only add more pressure on Fed Chair Jerome Powell to cut.

Once cuts happen, this will cause Treasury yields to start going down, and PDI can deliver significant upside alongside dividends. You currently get a dividend yield of 15.64%. The net expense ratio is 6.13% due to the interest expense, as the fund uses leverage. Rate cuts should help on this front, too. The management fee rate is 1.1%, or $110 per $10,000.

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