Monthly Dividend ETF Recommendations

Monthly dividend ETFs are exchange-traded funds that pay dividends every month. Unlike typical ETFs that distribute dividends quarterly, monthly dividend ETFs provide monthly cash flow, making them ideal for investors who need regular income to supplement living expenses. Popular examples include JEPI, JEPQ, and QYLD.

Most monthly dividend ETFs employ a covered call strategy. They sell call options on their holdings and use the option premiums as a source of dividend payments. While this strategy provides stable cash flow, it limits participation in significant upside of the underlying assets. As a result, returns may underperform S&P 500 index ETFs during bull markets.

When investing in monthly dividend ETFs, consider not only dividend yield but also total return (price change + dividends), expense ratio, fund size, and strategy sustainability. Don't be swayed by high yields alone -- avoid ETFs whose principal is continuously declining. It is recommended to use monthly dividend ETFs as part of a diversified portfolio.