Top 5 Monthly Dividend ETFs | JEPI JEPQ QYLD Compared
Our top picks for monthly dividend ETFs that pay distributions every month. Compare yields, strategies, and key features of popular ETFs like JEPI, JEPQ, and QYLD.
Monthly dividend ETFs appeal to investors who want a steady, predictable cash flow from their portfolio. ETFs built around covered call strategies are especially popular because they can generate unusually high dividend yields. In this guide, we compare five of the most widely held monthly dividend ETFs, examining how each one works and what trade-offs investors should keep in mind.
Top 5 Monthly Dividend ETFs Rankings
Combines high-quality S&P 500 holdings with an equity-linked note (ELN) strategy to deliver reliable monthly income. The fund has demonstrated strong downside protection and is designed to generate attractive income relative to its volatility.
A monthly dividend ETF anchored in Nasdaq-100 technology stocks. It offers greater growth potential than JEPI and tends to generate higher total returns during tech-driven market rallies.
Sells call options on the Nasdaq-100 index every month and distributes the full premium to shareholders as dividends, resulting in one of the highest yields available. The trade-off is that price appreciation is significantly limited.
Pursues both income and capital appreciation by combining high-quality dividend stocks with a selective covered call overlay. Because the fund does not write calls on every position, it retains meaningful upside participation.
Invests in the 50 S&P 500 stocks that combine the highest dividend yields with the lowest price volatility. It delivers consistent monthly dividends without relying on any covered call strategy.
Table of Contents
1. How Monthly Dividend ETFs Work
Most monthly dividend ETFs rely on a covered call strategy. The fund holds a basket of stocks and simultaneously sells call options on those positions. The premiums collected from selling those options are distributed to shareholders as monthly dividends. This structure makes high yields possible, but it also caps how much investors participate in rising stock prices.
2. JEPI vs. JEPQ: Which Is Right for You?
JEPI tracks S&P 500 holdings, while JEPQ is built around Nasdaq-100 stocks. Because of its heavier weighting toward technology, JEPQ tends to offer higher yields and higher volatility. JEPI is comparatively more stable. Combining both funds lets investors balance exposure between growth-oriented technology stocks and more value-oriented large-cap equities.
3. Key Risks to Understand Before Investing
A high dividend yield alone is not a sufficient reason to buy a covered call ETF. In a strong bull market, these funds typically underperform plain index ETFs such as SPY or QQQ because the options cap upside gains. Tax treatment also matters: monthly dividends are generally taxed as ordinary income rather than qualified dividends. It is worth separating your income-oriented capital from growth-oriented capital and managing each with a distinct strategy.
Key Investment Tips
- 1.A 50/50 split between JEPI and JEPQ creates a balanced monthly income portfolio with both stability and growth exposure.
- 2.Monthly dividend ETFs are well suited for retirees or anyone who needs regular cash flow to cover living expenses.
- 3.If you plan to reinvest your dividends, growth-focused ETFs such as VOO or QQQ are usually more tax-efficient.
- 4.The dividend yield on covered call ETFs fluctuates with market volatility — expect it to vary from month to month.
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