If you’re someone in retirement living off of your portfolio or just an income seeker in general, you know how advantageous it can be to capture your dividends monthly. Virtually every bill you need to pay comes on a monthly basis, so it makes sense to line up your income with your outflows. But even if you’re just reinvesting your dividends, getting them every month gives you greater flexibility in deploying your capital.
With fixed income ETFs, that’s not an issue because most of them make their distributions monthly, but what if your portfolio is mostly equities? Stock ETFs usually only pay out their dividends quarterly. Sure, you can sell some of your shares every month to create a pseudo-income stream, but that can start to get messy, especially from a tax planning standpoint.
What are investors to do in that situation? Thankfully, there are some stock ETFs that do pay dividends on a monthly basis. They’re definitely in the minority, but there are enough where you can actually build a pretty diversified portfolio using just monthly pay stock ETFs.
Whether stock ETFs pay monthly dividends usually comes down to the issuer. WisdomTree and Invesco are well-known as monthly payers, but you won’t find Vanguard or iShares equity products on the list. It does narrow down the list potential options, but there are some good ones!
Here are 10 stock ETFs that pay dividends on a monthly basis.
SPDR Dow Jones Industrial Average ETF (DIA)
It’s not the S&P 500, but this might be as close as you can get to a “broad” market index fund. The Dow might seem like a bit of a dinosaur when compared to the other major indices, but it still works as an investment. Despite this, it does have more than $33 billion in assets, which makes it more than liquid enough to trade, and its 0.16% expense ratio is the cheapest among the monthly pay equity ETFs.
JPMorgan Equity Premium Income ETF (JEPI)
Here’s an old favorite! As a heavily income-focused strategy, it makes sense that this fund pays its dividends monthly, which is another advantage for high income seekers. While interest in this ETF has waned somewhat (it’s taken in about $1.4 billion in net new assets this year compared to $13 billion in both 2022 and 2023) and its yield is way down from its peak of around 13%, but it’s still proven to be quite popular and durable.
The JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) is another option for tech investors.
WisdomTree U.S. Quality Dividend Growth ETF (DGRW)
One of the best run dividend ETFs in the world has the added advantage of paying monthly dividends. DGRW’s focus on both quality and growth characteristics makes it ideally suited for most portfolios even though the dividend yield is on the lower end. The expense ratio is a little on the higher end, but this is a great all around fund.
Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
This has actually been one of my favorite dividend ETFs, but you need to be careful with what you’re getting yourself into. Historically, this fund has been a feast or famine proposition with the returns during any given calendar year often at the top or bottom of its peer group. That makes it an ideal candidate for pairing with another fund on this list.
Global X Nasdaq 100 Covered Call ETF (QYLD)
All of the Global X covered call ETFs pay dividends monthly. Since it uses a 100% option overlay strategy, QYLD maximizes yield, but offers very little share price upside potential. QYLD and its sister ETFs, based on the S&P 500 and Russell 2000, have consistently offered double digit yields.
WisdomTree U.S. Total Dividend ETF (DTD)
DTD is the ETF I use as my dividend universe benchmark because it simply invests in all dividend-paying stocks and weights them according to their aggregate cash dividends paid (i.e. more dividends paid = bigger weighting). If you don’t want to mess around with dividend growth vs. high yield or other strategy issues, DTD is a straightforward way to just cover the entire space.
Invesco High Yield Equity Dividend Achievers ETF (PEY)
Long-term dividend growers tend not to offer big yields, but that doesn’t have to be the case. PEY’s strategy is simple – select the 50 stocks with the highest dividend yield that have increased their dividend for at least the past 10 years and weight the resulting portfolio by yield. What you get is a basket of long-term dividend growth stocks with more than double the yield of the broader dividend stock universe.
Amplify CWP Enhanced Dividend Income ETF (DIVO)
DIVO is probably less familiar to investors, but its 5-star Morningstar rating suggests it shouldn’t. That rating is all the more important because DIVO is actively-managed. That means the fund’s managers are really doing a good job picking winners. DIVO has shades of JEPI in that it can tactically implement a covered call strategy in order to increase yield.
VictoryShares U.S. Equity Income Enhanced Volatility Weighted ETF (CDC)
CDC is less about the portfolio, which is large-cap dividend growth stocks, and more about the rotation strategy. CDC reduces its overall equity exposure as stock prices initially start declining, but then begins slowing adding back exposure as stock prices fall further. Think of it as a built-in “buy the dip” strategy.
Global X SuperDividend ETF (SDIV)
This ETF is not for the faint of heart! Its strategy sounds simple – invest in 100 of the highest-yielding stocks in the world – but it produces a volatile and concentrated portfolio. That’s because it’s heavily overweight in REITs, financial services and other cyclical stocks. You can see in the chart above that those reaching for this yield have seen their account value drop in half over the past three years.
