Here Are 5 ETFs Retirees Use to Collect Monthly Income Without Covered Calls
Covered calls pay the bills, but they also cap your gains when stocks rally. Five monthly payers draw income from dividends, preferreds, and bonds instead, and each one carries a risk worth knowing before you buy.
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Many popular monthly-income ETFs pay part of their distributions by selling call options on the stocks they hold. This strategy is called covered calls. It brings in option premium now, and in return the fund gives up some of the gain if those stocks rally. Plenty of investors are fine with that exchange. Some retirees would rather keep the full upside and take their income from dividends and interest alone.
For investors who relate, five funds are worth exploring: Invesco S&P 500 High Dividend Low Volatility ETF (NYSEARCA:SPHD), Global X SuperDividend U.S. ETF (NYSEARCA:DIV), Invesco Preferred ETF (NYSEARCA:PGX), iShares 5-10 Year Investment Grade Corporate Bond ETF (NASDAQ:IGIB) and iShares Treasury Floating Rate Bond ETF (NYSEARCA:TFLO). Their payment histories show that all five have paid on a monthly schedule, and each one gets its income from a different source.
SPHD: Dividend Stocks Screened for Smaller Price Swings
SPHD tracks an index of 50 securities from the S&P 500 that have historically paid higher dividends with lower volatility. Its holdings filing dated August 31, 2026 lists telecom, consumer staples, utilities, REITs, energy, and financials. No single position was larger than 3.41% of net assets. Holdings totaled about $3.41 billion.
The latest monthly distribution was $0.2014 per share, and payouts over the trailing 12 months came to about $2.49. Shares trade near $52.77, up 18.08% over the past year on an adjusted basis. This is still a stock fund. Its price falls in sell-offs, and the companies it owns can cut their dividends.
DIV: Bigger Dividend Payers, Bigger Risks
DIV’s index holds 50 equally weighted common stocks, including master limited partnerships and REITs, selected from among the biggest U.S. dividend payers. Its July 31, 2026 filing shows pipeline partnerships, shipping companies, healthcare REITs, utilities, and tobacco. Net assets were about $783.8 million.
DIV has paid $0.106 a month since May 2026, plus an extra $0.016973 in June. The adjusted price is up 19.11% over the past year. DIV’s monthly payout was $0.1565 in 2019 and dropped in the years after.
PGX: Preferred Stock That Gets Paid Before Common Shareholders
Preferred stock is a hybrid security. It usually pays a set dividend, and preferred holders get paid before common shareholders but after bondholders. PGX seeks to invest at least 80% of its assets in fixed-rate, dollar-denominated preferreds. The most recent distribution came in at $0.06052, up from $0.0573 the month before.
PGX has three risks you should know about. Preferreds respond strongly to interest rates, and the shares are down 7.35% over the past year at about $9.93. The fund leans heavily toward financials such as banks and insurance companies. And issuers can redeem preferreds early, usually when rates fall, which leaves the fund reinvesting at lower yields.
IGIB: Investment-Grade Corporate Bonds With Five-to-10-Year Maturities
IGIB holds investment-grade corporate bonds that mature in five to 10 years. It manages about $18.72 billion, spread across tech, health care, utility, and bank issuers. Its largest visible position was just 0.22% of net assets. Shareholders received $0.220684 per share on November 5, 2026, and distributions over the trailing 12 months totaled about $2.60.
You take on corporate credit risk and interest-rate risk. The 10-year Treasury yield is at 4.90%, and IGIB’s adjusted price gained only 0.19% over the past year. It also runs indefinitely. It keeps replacing bonds as they age, so there is no date when your principal comes back in full, and its price can fall.
TFLO: Treasury Income That Resets With Short-Term Rates
TFLO tracks an index of U.S. Treasury floating rate bonds and has a current portfolio of approximately $7 billion. Because the interest on these bonds resets with short-term rates, the price tends to stay steady. It is up 0.36% over the past month and 4.01% over the past year on an adjusted basis, though it can still lose value. The latest distribution rose to $0.171627, with the fed funds upper bound at 4.00%.
Why Mixing Income Sources Spreads Your Risk
Each of these funds depends on something different. Dividends from SPHD and DIV rely on corporate profits. PGX and IGIB move with interest rates and credit conditions. TFLO’s income follows short-term rates. These pressures rarely hit all at once, so mixing income sources spreads the risks across them. For retirees who want monthly income without covered calls, these five funds give you five different sources to draw from (we rounded up seven more monthly payers worth researching in a free report here).
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Ryne Mauck is an investment writer covering exchange-traded funds, retirement planning, and portfolio strategy. Through his work at 24/7 Wall St. and other investment platforms, including Seeking Alpha, he aims to provide clear, research-driven insights that help investors make more informed decisions while maintaining a long-term approach to investing.
Ryne holds a B.Sc. in Finance and an M.A. in Political Science. He is a formerly registered Municipal Advisor Representative and has passed the Series 50, Series 63, and Series 65 exams. His articles are not intended to be, nor should they be interpreted as, financial advice.
