Want $5,000 a Year From $100K? This ETF Pays Nearly Double VYM’s Yield

For income-focused investors, the Vanguard High Dividend Yield ETF (NYSEARCA:VYM) is often the default pick. VYM tracks the FTSE High Dividend Yield Index, holds hundreds of large-cap dividend payers, and charges just 0.04%. That is about as cheap as broad dividend exposure gets, which is why VYM anchors so many income sleeves and retirement accounts.

The catch shows up on the income line. VYM’s distribution yield runs in the mid-2% range, so $100,000 throws off closer to $2,500 a year than $5,000. If you bought VYM to fund spending, the Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO) more than doubles that cash payout while staying in large-cap quality. It owns quality dividend payers and writes covered calls on part of the book, turning option premium into monthly income that runs near 5%.

What VYM Actually Delivers on Income

VYM pays quarterly. Over its last four payments it distributed $0.8617, $0.9474, $0.8417, and $0.8617 per share. At today’s $159.05 price, that is roughly 2.2%, or about $2,200 a year on $100,000. The capital side has carried the load: VYM has gained 24.36% over the past year and 71.73% over five years. Total-return holders won’t complain. But anyone replacing a paycheck gets a thinner stream than the “high dividend yield” label implies.

The Alternative: Dividends Plus a Covered-Call Overlay

DIVO chases the same goal by a different route. It holds a concentrated book of quality dividend payers, then writes tactical covered calls on part of the portfolio to harvest option premium. It layers those premiums on top of the underlying dividends and pays the total out monthly. The fund pairs current income with capital appreciation, benchmarked to the S&P 500 Total Return Index.

The income math is the headline. DIVO paid $2.2786 across 12 distributions in 2025, including a $0.9534 year-end payment on December 30, 2025. Against a $46.09 price, the distribution yield lands near 5%. On $100,000, that targets roughly $5,000 a year, paid monthly rather than in four lumps. The 2026 run rate backs that up, with monthly payments of $0.1826, $0.1863, $0.1787, $0.1812, and $0.1842. DIVO’s option income also rises with volatility, often just when stock dividends stall, smoothing the cash profile.

What the Higher Yield Costs

There are three real trade-offs. First, fees. DIVO charges 0.56% against VYM’s 0.04%. On $100,000, that runs roughly $520 a year. The extra income covers it, but it adds up over time.

Second, capital appreciation. Selling calls caps upside. VYM has returned 11.46% year to date and 24.23% over the past year; DIVO has returned 5.67% and 17.93%. Over five years the gap narrows, 71.73% for VYM against 66.62% for DIVO. In strong bull runs, VYM pulls ahead on price. In choppy markets, the option premium closes the gap.

Third, the nature of the payout. In some periods DIVO classifies part of its monthly distribution as return of capital rather than ordinary dividend income. That can help in a taxable account, since it defers tax and lowers your cost basis, but it also means the headline figure is not pure investment income. The distribution floats with market conditions and the premium collected. It is not a contractual yield. Check the latest 19a-1 notice before you lock in any income projection.

How a Swap Actually Looks

In a tax-advantaged account, the move is simple: sell VYM, buy DIVO, no tax bill. In a taxable account, VYM holders sitting on 70%-plus five-year gains would crystallize a sizable capital gain on a full swap. A partial rotation, or routing new contributions to DIVO while holding VYM, raises income and skips that bill.

DIVO carries $7.1 billion in net assets as of June 11, 2026, and dates to December 2016. That record spans the 2018 selloff, the 2020 crash, and the 2022 bear market. The covered-call sleeve has done what it advertised: more income, less capital upside, slightly shallower drawdowns.

Where This Lands

VYM stays a strong, cheap building block for total-return investors who want a dividend tilt. For someone whose real goal is current income, DIVO trades roughly half a percent in fees and some upside for more than double the cash yield, paid monthly. The math changes for anyone who bought VYM for income, not for a low-fee index. Weigh that income gap against the fee, the capped upside, and the tax friction of moving.