For income investors who are tired of “safe” 2% or 3% yields, the current market offers a variety of different ETFs that are paying well above 5%. The good news is that these are not obscure funds or risky bets, they are established products with clear strategies to generate elevated income. The tradeoff, as always, is that earning higher yields adds to your risk profile than a lower-yield offer.
What matters most as you evaluate the different ETFs on this list is understanding where the income comes from. Some are going to feature traditional dividend stocks from around the world, while others use option strategies to boost payouts. Understanding the different income mechanisms will help you, as an investor, set realistic expectations for both sustainability and growth.
JPMorgan Equity Premium Income ETF
The JPMorgan Equity Premium ETF (NYSE:JEPI) has become one of the most popular income ETFs in the market, and the 8.19% dividend yield explains why. The $4.72 dividend you can earn annually is nothing to ignore, thanks to this ETF combining large-cap US stocks with a covered call strategy that generates premium income on top of more traditional dividends.
The payout ratio of 205.55% is understandably notable as it reflects how much of this income comes from options premiums rather than underlying stock dividends. When you think through that this ETF also has a growth rate of 11.94%, you understand its popularity as it has been steadily increasing its distributions over time. This makes it a really sound choice for investors who want high monthly income but also understand the upside will be capped even during strong bull market runs.
Global X SuperDividend ETF
The Global X SuperDividend ETF (NYSE:SDIV) offers the highest yield on this list at 9.17%, with a $2.31 annual dividend payable monthly. This payout comes as a result of investing in the 100 highest-yielding stocks globally, giving it both broad international exposure and substantial monthly income.
This helps explain the payout ratio of 101.39%, which sits on the edge of sustainability, hinting at why a dividend growth rate of -1.33% has been slowly declining. Even so, this ETF works best for investors who are looking to prioritize maximum current income over dividend growth and understand that high-yield global stocks could be more volatile than domestic ones.
Amplify CWP Enhanced Dividend Income ETF
The Amplify CWP Enhanced Dividend Income ETF (NYSE:DIVO) boasts a 6.36% yield by blending a mix of quality dividend stocks with tactical covered call writing. The $2.87 annual dividend is paid out monthly, as this ETF takes a more selective approach to its holdings than a more traditional options-overlay fund.
The standout number here is the 50.74% dividend growth rate, suggesting that there have been some pretty significant increases as of late. The payout ratio of 154.13% is elevated tobe fair, but it’s also typical for fund options strategies. Investors looking for high income from quality holdings will find this a good match.
iShares Emerging Markets Dividend ETF
The iShares Emerging Markets Dividend ETF (NYSE:DVYE) is a great choice if you want exposure to dividend-paying companies in developing economies, all while earning a 5.62% yield. This results in a $1.83 annual dividend, paid quarterly, all while taking advantage of a geographically diverse ETF.
The payout ratio of 48.44% is the healthiest number on this list, indicating strong dividend coverage from underlying holdings. However, the growth rate of -39.94% signals that distributions have started to decline, a reminder that emerging market dividends can and are volatile. If you can tolerate a level of variable income, the Shares Emerging Markets Dividend ETF is a good portfolio addition.
First Trust Dow Jones Global Select Dividend Index Fund
The First Trust Dow Jones Global Select Dividend Index Fund (NYSE:FGD) rounds out this list with a 5.56% yield and a more balanced global approach. Trading with a $1.70 annual dividend that is paid out quarterly, this ETF screens for dividend sustainability and yield across developed international markets.
The payout ratio of 6.182% suggests reasonable dividend coverage, while the dividend growth rate of 30.42% indicates the fund has been meaningfully increasing its distributions. Investors who want international high-yield exposure with better dividend growth characteristics than pure emerging-market funds will find this to be a great addition to a 5% dividend yield portfolio.
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