Pulling $40,000 a year from $500,000 requires a blended yield of roughly 8%, well above what the 4.7% 10-year Treasury delivers today. Three exchange-traded funds sit near the center of that math: the NEOS S&P 500 High Income ETF (CBOE:SPYI), the Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO), and the Virtus InfraCap U.S. Preferred Stock ETF (NYSEARCA:PFFA).
Each fund attacks the income problem from a different angle. SPYI wraps an options overlay around the S&P 500. DIVO layers tactical call writing on a concentrated book of blue-chip dividend payers. PFFA reaches into leveraged preferred securities. Blended in roughly equal weights, the three produce distributions in the high single digits on a portfolio basis, enough to fund the target without selling shares.
Why the Blend Matters Now
The S&P 500 has returned 8% year to date and 16% over the past year through July 27. The 10-year Treasury sits in the 99th percentile of its trailing 12-month range, which means investors are being paid to hold duration but not enough to hit the $40,000 target on Treasuries alone. The three funds stack option premium, dividend yield, and preferred stock coupons on top of that baseline, taking specific risks in exchange for the extra spread.
SPYI: S&P 500 Exposure With a Monthly Paycheck
Holding the S&P 500 and selling index call options against it is what SPYI does, converting equity upside into monthly distributions. Section 1256 tax treatment on those index options separates SPYI from older covered call products: gains are split 60% long term and 40% short term regardless of holding period, and a portion of distributions are typically classified as return of capital, which defers the tax bill.
Every month since inception, SPYI has paid out, with 2026 payments running from $0.5104 to $0.5353 per share. The trailing 12-month total is $6.31, and the forward annualized rate is $6.36. At a share price of $52, that puts the running yield in the low double digits.
The fund carries net assets of $6.9 billion and an expense ratio of 0.68%. SPYI is up 7% year to date and 16% over the past year on a price basis, versus 8% and 16% for SPY. The gap reflects the cost of the option overlay. In a runaway bull market, SPYI will lag, and in a sharp drawdown, the premium collected only cushions so much.
DIVO: Dividend Growth With Tactical Call Writing
The growth-oriented leg of the blend is DIVO. Capital Wealth Planning runs a concentrated portfolio of large-cap dividend payers, then writes covered calls on individual names selectively rather than blanketing the whole book. According to the Amplify DIVO prospectus, top holdings include Caterpillar at 5.76%, Apple at 5.68%, JPMorgan Chase at 5.02%, and Microsoft at 4.96%. The active call writing adds income only when volatility or valuation supports it, preserving more upside than a systematic overlay.
Regular monthly payments in 2026 have ranged from $0.17872 to $0.18632 per share, and DIVO paid a large year-end special of $0.9534 in December 2025. That special carries the trailing 12-month total to $2.97 per share on a current price of $47, a running yield in the mid single digits.
With net assets of $5.2 billion and an expense ratio of 0.56%, DIVO has total return sitting at 8% year to date and 16% over one year. DIVO offers more capital appreciation potential and a smaller headline yield than SPYI, so investors leaning on it for cash flow accept a lower monthly base rate in exchange for larger year-end specials and portfolio growth.
PFFA: The Contrarian Preferred Stock Play
The pick most income screens miss is PFFA, and Virtus InfraCap runs an actively managed book of U.S. preferred securities, using leverage in the 20% to 30% range to lift the coupon. The fund concentrates in preferred shares of banks, mortgage REITs, and midstream energy issuers. NPORT filings show top exposures in Flagstar Bank at 2.47%, First Citizens Bancshares at 2.37%, Energy Transfer at 2.44%, and KKR at 2.25%, spread across more than 195 holdings.
Every month in 2026, PFFA has paid $0.1725 per share, up from $0.17 in 2025 and $0.1675 in 2024. The forward annualized rate of $2.07 against a share price of $21 works out to a yield near 10%. Net assets sit at $2.35 billion, with the higher expense ratio of 2.11% reflecting both the active management and the cost of borrowed capital that supports the leverage.
Leverage cuts both ways, and preferred prices are sensitive to changes in long rates. With the 10-year Treasury at its 12-month high, any further move higher pressures NAV. PFFA is concentrated in financial and real estate sponsors, so credit spreads in those sectors matter more than for a plain vanilla preferred index. Total return over the past year of 6% plus the coupon has cleared that bar so far.
Matching the Fund to the Investor
An equal-weight split of the three across a $500,000 account produces roughly $40,000 in annual distributions based on current forward rates, with the exact figure depending on where DIVO’s year-end special lands.
For the investor who wants the highest current cash flow and is comfortable capping upside on the S&P 500 in exchange for tax-advantaged monthly income, SPYI fits the bill. For the investor who wants meaningful dividend income but is not willing to give up long-term appreciation, and who can accept a lumpier distribution schedule with year-end specials, DIVO is the better match. For the investor who understands preferred securities, tolerates rate sensitivity, and wants a high, steady coupon that behaves differently from equity income, PFFA works well. The blend is a way to get all three without picking a winner.
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