I’m Retiring Today—These Are the 3 ETFs I’m Buying Right Now

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JPMorgan Nasdaq Equity Premium (JEPQ) 11.38% yield at $57.78; Amplify Enhanced Dividend (DIVO) 4.79% yield, 18.87% 1-year return at $46.66; Invesco High Dividend Low Volatility (SPHD) 4.83% yield at $52.
The three ETFs generate monthly income for retirees through covered call strategies or low-volatility dividend stocks, balancing high yields with capital preservation.
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By Vandita Jadeja Published Mar 5, 11:56AM EST

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I’m Retiring Today—These Are the 3 ETFs I’m Buying Right Now — © 24/7 Wall St.

It is essential to plan for retirement, whether you’re 2 days away from it or 20 years away from it. While there are multiple strategies for investing, there’s no one-size-fits-all approach that can guarantee a financially stable retirement. Some investors prefer to invest in individual stocks to build a diversified portfolio, while many others choose to invest in exchange-traded funds (ETFs).

If you prefer the second option, choosing from the hundreds of ETFs can feel overwhelming. But, if you pick the right funds and remain invested for a long period of time, you can stop worrying about retirement. Building an ETF portfolio is much easier than picking individual stocks. If I’m retiring today, here are the three ETFs I’d buy.

An infographic titled "JEPQ: Nasdaq Equity Premium Income ETF for Retirees." The top features a blue and brown circuit board pattern. Section 1, "How the ETF Works (Covered Call Strategy)," is a horizontal flow diagram. It starts with a green box "Portfolio: Nasdaq-100 Tech Leaders (NVDA, AAPL, MSFT)," arrow to a blue box "Strategy: Writes Covered Calls on Holdings," arrow to a blue box "Result: Generates Option Premium Income," arrow to a green box "Distribution: Monthly Payments to Investors." Section 2, "Most Suitable Use Case," shows an illustration of two retirees on a bench and text describing "Income-Focused Retirees Seeking Maximum Current Income & Cushion in Flat/Down Markets," "Willing to Sacrifice Upside Potential for Regular Payments," and "*Not for Full Growth Capture*." Section 3, "Pros & Cons," is divided into two columns. The green column, "PROS (Income & Stability)," lists: High Yield (10.39% Trailing / 11.52% Official), Monthly Payments (44 Consecutive Months), Low Expense Ratio (0.35%) & Large Scale ($31.9B Assets), and Strong Recent Total Return (~26% 1-Year). The red column, "CONS (Risks & Limitations)," lists: Variable Monthly Income (30-40% Fluctuation), Capped Upside (Underperforms in Bull Markets), High Tech Concentration (41.7% Sector Risk), and Tax Inefficient (Mostly Ordinary Income).

JPMorgan Nasdaq Equity Premium ETF

The JPMorgan Nasdaq Equity Premium Income ETF (NYSEARCA:JEPQ) is a top-quality ETF with an exceptional yield of 11.38%. It uses a covered call strategy to generate a premium and maintain the high yield. As the first step, it uses a fundamental data science approach to build a strong portfolio, and second, it implements out-of-the-money call options to generate monthly income. The fund has an expense ratio of 0.35%.

JEPQ pays monthly dividends and owns a portfolio of 108 stocks, which include the big tech companies, due to its focus on the Nasdaq. It allocates 41% of the portfolio to the technology sector, which is followed by 12.5% in communication services and 10.6% towards consumer discretionary.

It shouldn’t come as a surprise that the top 10 holdings include the Magnificent Seven and comprise 41% of the portfolio. The fund has the highest allocation to Nvidia at 7.40%.

JEPQ has generated a cumulative 1-year return of 15.76% and a 3-year return of 87.18%. The fund has only gained 5% in the past year and is exchanging hands for $57.78. However, it generates monthly passive income, which makes it stand out amongst the sea of ETFs. Reinvestment of the dividends can generate a higher total return. I’d buy JEPQ for the high yield and the reliability of a steady pay check.

Amplify CWP Enhanced Dividend ETF

Next up is Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO). It also uses a covered call strategy to enhance income and has a yield of 4.79%. It sells calls on an investment and generates a premium on the options. With ETFs that use a covered call strategy, there’s a risk that the stock sometimes rises so much that its strike price is hit and the stock gets called away. Hence, its upside becomes limited. But DIVO successfully manages to balance risk and return.

It restricts the holdings to 34 stocks and invests in large-cap companies that have a history of dividend and earnings growth. DIVO is well-balanced amongst the 10 traditional S&P sectors and maintains a yield over 4%. The fund also pays monthly dividends and has the highest allocation to financials at 26.98%, followed by information technology (16.46%) and consumer discretionary (14.12%).

Its top 10 holdings include RTX Corp., Apple, Microsoft, Home Depot, Visa, JPMorgan Chase, and American Express. It’s just 34 holdings and an expense ratio of 0.56%. On the average annualized return basis, it has generated a 1-year return of 18.87%, a 3-year return of 16.14%, and a 5-year return of 13.12%.

Besides the monthly income, DIVO also generates capital appreciation. It has gained 12.76% in the past year and is exchanging hands for $46.66.

Invesco S&P 500 High Dividend Low Volatility

I went with the Invesco S&P 500 High Dividend Low Volatility ETF (NYSEARCA:SPHD) since it pays a steady dividend while ensuring low volatility. This is exactly what retirees need. It tracks the S&P 500 Low Volatility High Dividend Index and invests in only 50 stocks to avoid value traps. SPHD has a yield of 4.83% and an expense ratio of 0.30%.

It focuses on value-focused sectors like energy, consumer staples, and utilities that continue to remain relevant even in market turmoil. SPHD has the highest allocation to the consumer staples segment at 20%, which is followed by real estate at 19% and financials at 14%. The fund sets itself apart by completely staying away from the technology sector.

This is the reason its top 10 holdings do not comprise the Magnificent Seven and instead include real estate investment trusts (REITs) such as Realty Income and Healthpeak Properties Inc. Besides that, it holds Verizon Communications, Conagra Brands Inc., Pfizer Inc., and Kraft Heinz Co.

It is another fund that pays monthly dividends, making it an ideal choice for the retirement period. The fund has generated a 1-year return of 8.17% and a 3-year return of 11.19%.

I like the ETF for the low volatility and steady passive income. The fact that it invests in only 50 stocks makes it a high-quality dividend ETF. It gained 4.44% in the past year and is exchanging hands for $52.