$10K a Month From Dividends? These 3 Funds Make It Possible

Generating $10,000 monthly is a major milestone, and this means you’re making double the median annual salary in the U.S. If you want to get this through dividends, it can be quite difficult to do so. An annual $120k income solely from dividends almost always means you need to be a multi-millionaire.

The current risk-free yield is ~4%. You need $3 million for $120k per year, or $10k per month. Only 0.8% of households have that.

Does that mean $10k is completely out of reach? Not at all. If you’re unwilling to downgrade your lifestyle when retired and you are comfortable taking on a bit more risk, you can look for higher yields.

The following three ETFs come with a blended dividend yield of 11.12%. Considering that you invest equal amounts into all three, this would require $1.08 million or less if you invest more in the higher-yielding stocks.

Goldman Sachs Nasdaq-100 Premium Income ETF (GPIQ)

Goldman Sachs Nasdaq-100 Premium Income ETF gives you exposure to the Nasdaq-100 Index and uses options to generate income. It invests at least 80% of its assets in stocks that are in the Nasdaq-100 and then uses a covered call strategy from which it derives premium income.

Increasing amounts of retail investors are entering the stock market every day, and many of them are regularly buying and selling options. This has led to options premiums becoming a reliable source of income.

The caveat is that if options premiums unexpectedly go down, so will the income. Plus, the options strategy caps most of the upside, but in a bullish market, you will still have exposure to it.

GPIQ pays monthly. Its 10.16% dividend yield and a 0.29% (or $29 per $10,000) expense ratio make the deal worth taking if you’re short on monthly income.

AGNC Investment Corp (AGNC)

AGNC Investment Corp (NASDAQ:AGNC) is not explicitly a fund, since it’s structured as a real estate investment trust (REIT) for tax purposes. This means AGNC must meet specific regulatory requirements to maintain its tax-advantaged status.

The company must distribute at least 90% of its taxable income to stockholders and is exempt from federal corporate income taxes when it meets these distribution requirements. This structure allows AGNC to pass through income to shareholders while avoiding double taxation at the corporate level

Anyhow, it’s very similar to a fund and comes with a stellar dividend yield of 14.66%. There are no fees.

AGNC stock has declined significantly over the past few years due to interest rate hikes, but as the pendulum has turned the other way, more Fed rate cuts will lead to a reversal. Locking in the yield now can get you both upside and the dividends if you think rate cuts will continue.

InfraCap MLP ETF (AMZA)

InfraCap MLP ETF (NYSEARCA:AMZA) invests in master limited partnerships (MLPs) and limited liability companies taxed as partnerships. It specifically targets midstream energy infrastructure MLPs and uses some leverage to boost returns.

Before you run away after learning that this ETF invests in oil and gas-related companies, it’s important to remember that the companies it invests in don’t have much exposure to oil and gas prices. Midstream companies are among the best places to park your money, since they simply deal with the distribution and transportation of energy. Their earnings are fee-based.

And if that’s not enough, they’re also outside the purview of most tariffs, because these businesses are almost entirely domestic.

The recent boom in exports to Europe has caused these MLP stocks to deliver stellar returns. They often pay very high yields.

AMZA gets you exposure to dozens of these MLPs under one roof. It pays monthly and has an 8.54% dividend yield. The beta rounds to 1.

The caveat is the 2.75% expense ratio, or $275 per $10,000. This is due to the ETF using leverage, which in turn incurs interest expenses.