Exchange-traded funds (ETFs) can be great for any investing style. Want growth? No problem. Are you a value investor? There are plenty of ETFs you'll probably like. Seeking income? You'll also have many ETFs from which to choose.
Even if you desire exceptionally high income with your investments, you won't have a hard time finding attractive alternatives. Here are three ETFs that pay ultra-high yields of over 6%.
1. JPMorgan Equity Premium Income ETF
JPMorgan Chase's JPMorgan Equity Premium Income ETF(NYSEMKT: JEPI) offers a juicy 30-day SEC yield of 6.88%. Income investors will especially like that the fund pays its distributions monthly.
How is this JPMorgan ETF able to pay such a hefty distribution? Mainly by selling out-of-the-money S&P 500 index call options.
The ETF owns 132 stocks. Some pay dividends, but others don't. And many with dividend programs don't have high yields. For example, the fund's top five holdings are Amazon, Meta Platforms, Microsoft, Trane Technologies, and Progressive. Amazon doesn't pay a dividend. Although the other four stocks do, no dividend yield in the group is higher than 1%.
If you want growth along with income, the JPMorgan Equity Premium Income ETF could be right up your alley. Since its inception in May 2020, the ETF has delivered an average annual return of 12.4%. Its fees are also manageable, with an annual expense ratio of 0.35%.
2. Vanguard Emerging Markets Government Bond Index ETF
The Vanguard Emerging Markets Government Bond Index ETF(NASDAQ: VWOB) isn't far behind with a 30-day SEC yield of 6.77%. As its name indicates the fund focuses on bonds issued by governments in emerging markets. Like the JPMorgan Equity Premium Income ETF, the Vanguard Emerging Markets Government Bond Index ETF pays its distributions monthly.
This ETF owns 715 bonds with an average effective maturity of 12 years. While most of these bonds were issued in emerging markets (97.5%), 1.9% were issued in Europe with the remaining bonds issued in the Middle East or elsewhere.
One downside to this Vanguard ETF is that bonds haven't performed well in recent years. Since its inception in May 2013, the fund has delivered an average annual return of roughly 2.6%.
However, you won't have to worry about fees eating into your income and profits. The Vanguard Emerging Markets Government Bond Index ETF has a low annual expense ratio of 0.2%, well below the average expense ratio of 0.98% for similar funds.
3. iShares Preferred and Income Securities ETF
Blackrock's iShares Preferred and Income Securities ETF(NASDAQ: PFF) pays a 30-day SEC yield of 6.33%. The fund focuses on preferred stocks that generate income comparable to what investors can obtain with high-yield bonds.
The iShares ETF owns 438 stocks. Its top holdings include Wells Fargo & Company Series L, Citigroup Capital XIII, Albemarle, Bank of America, and Apollo Global Management.
This fund tends to deliver modest growth in addition to generating income. Since its inception in March 2007, its average annual return is nearly 3.7%. However, the iShares ETF's performance over the last 12 months has been much better.
Probably the main knock against this fund compared to the other two on the list is its cost. The iShares Preferred and Income Securities ETF's annual expense ratio is 0.46%.
Should you invest $1,000 in JPMorgan Equity Premium Income ETF right now?
Before you buy stock in JPMorgan Equity Premium Income ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and JPMorgan Equity Premium Income ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $826,672!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of July 8, 2024
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights has positions in Amazon, Bank of America, JPMorgan Equity Premium Income ETF, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Amazon, Bank of America, JPMorgan Chase, Meta Platforms, and Microsoft. The Motley Fool recommends Progressive and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
