4 High Dividend ETFs To Buy Now

Finding just the right balance between growth, value, and income is time-consuming. The process becomes even more complex when selecting assets that have a negative correlation to protect against market ups and downs. 

Of course, nothing replaces research, and strong portfolios typically include an assortment of shares from promising companies. However, many investors have elected to streamline the asset selection process by purchasing shares of Exchange-Traded Funds (ETFs) in lieu of individual company stocks. 

ETFs offer the advantage of more diversification for less money, and they tend to have lower fees than mutual funds. Depending on the specific ETF, investors may gain exposure to a variety of regions, sectors, and broader markets with the purchase of a single share. These are four high-dividend ETFs to buy now. 

JPMorgan Equity Premium Income ETF (JEPI)

Your investment portfolio can generate returns in two ways – an increase in the value of underlying assets or income from the payment of dividends. JPMorgan’s Equity Premium Income ETF (JEPI) offers both. 

The fund’s stated goal is to generate current income while leaving plenty of room for capital to appreciate. It strives to deliver most of the returns realized by the S&P 500 index without the same volatility. 

JEPI achieves its goal of generating income through investment in domestic large-cap stocks and selling options in the same.

Between dividends and premiums from selling options, the fund has realized total returns of 28.49 percent since it launched in May of 2020 (as of August 31, 2021). With expenses at just 0.35, that’s a win for any portfolio. 

Of course, past performance doesn’t guarantee future returns, and the market was recovering from the historic March 2020 crash when this ETF began selling shares. Growth has slowed slightly in 2021, with returns coming in at 16.58 percent year-to-date for the period ending August 31, 2021. 

Portfolio Managers Hamilton Reiner and Raffaele Zingone have 34 years and 30 years in the industry, respectively. They use JP Morgan’s proprietary research process to identify stocks that are either overvalued or undervalued and have desirable risk/return characteristics. At the time of research, the fund held $3.94 billion in assets. 

The current JEPI dividend yield for the trailing twelve months is 7.47%.

Nationwide Risk-Managed Income ETF (NUSI)

Economic ups and downs are simply a fact of life. However, when it comes to your investment portfolio, watching assets rise to dramatic heights and then fall precipitously can be unnerving – especially if you don’t have a lot of time to wait for them to recover. That’s why most portfolios include a mix of assets that work together to limit volatility – for example, a balance of stocks and bonds. 

As investors get closer to taking distributions, the proportion of lower-risk assets goes up, and high-risk/high-reward assets comprise a smaller portion of the portfolio. Nationwide’s Risk-Managed Income ETF (NUSI) seeks to replace lower-risk/low-reward options like bonds with a fund that limits downside risk while still generating income. 

NUSI launched in December of 2019, and it has since realized returns of 14.04 percent. Year-to-date, that figure comes to 5.51 percent (as of September 30, 2021). This was accomplished with a four-step strategy. 

First, the fund buys all of the underlying stocks in the Nasdaq-100 Index. Then, it uses a rules-based options collar strategy to limit downside potential. Monthly income from options premiums and dividends is distributed to shareholders, and finally, additional premiums may be reinvested in the underlying portfolio of stocks.

As of Q2, 2021, NUSI’s top ten holdings included the following companies: 

• Apple (11.09 percent)
• Microsoft (9.90 percent)
• Amazon (8.41 percent)
• Facebook – Class A (4.04 percent)
• Alphabet – Class C (3.93 percent)
• Tesla (3.93 percent)
• NVIDIA (3.68 percent)
• Alphabet – Class A (3.56 percent0
• PayPal (2.53 percent)
• Adobe (2.07 percent)

The fund’s expense ratio comes in at 0.68 percent, which is comparable to actively managed equity mutual funds. 

The current NUSI dividend yield for the trailing twelve months is 7.83%.

GraniteShares HIPS US High Income ETF (HIPS)

The GraniteShares HIPS US High Income ETF (HIPS) takes a less-common approach to achieve its income goals. Its objective is to track the performance of the TFMS HIPS Index, which is a collection of up to 60 securities listed on US exchanges. 

Each of the securities listed in the TFMS HIPS Index has a pass-through structure, which means nearly all of their earnings are distributed to shareholders. The acronym HIPS refers to the strategy known as “High Income Pass-Through.” 

This particular ETF pays shareholders a monthly distribution, which is helpful for those interested in a regular source of income. Since its July 2015 inception, the fund has maintained a monthly distribution per share of 10.75 cents. 

HIPS offers shareholders exposure to four income categories, as follows: 

• MLP – Master Limited Partnerships
• REIT – Real Estate Investment Trusts
• BDC – Business Development Companies
• CEF – Closed-End Funds

One of the most attractive features of the GraniteShares HIPS US High Income ETF is its tax efficiency. Historically, more than 50 percent of HIPS distributions are treated as a return of capital for tax purposes, and HIPS does not generate a K-1. 

Management fees come in at 0.70 percent for this fund. 

The current HIPS dividend yield for the trailing twelve months is 8.34%.

Strategy Shares Nasdaq 7HANDL Index ETF (HNDL)

Strategy Shares considers itself a “pioneer in non-traditional investment solutions” – a characteristic that is clearly on display with the Strategy Shares Nasdaq 7HANDL Index ETF (HNDL).

In a first-of-its-kind target distribution fund, HNDL seeks to deliver results that correlate to the Nasdaq 7HANDL Index. The HANDL Indexes, founded by David Cohen, are an acronym for High-Distribution and Liquid Solutions.

The 7HANDL index is evenly divided into two components. Half is allocated to fixed income and equity ETFs. This is referred to as the Core Portfolio. The other half is allocated to a mix called a Dorsey Wright Explore Portfolio.

It is made up of US alternative, US blend, US equity, and US fixed-income assets. It may also include other categories that have historically delivered high levels of income. 

HNDL pays monthly distributions at a target rate that, annualized, represents approximately seven percent of the fund’s per-share NAV (net asset value) as of the date of the distribution’s declaration. Some or all of the distribution may consist of a return of capital. That’s important because dividends are taxed much differently than a return of capital. 

HNDL’s top ten holdings as of the time of research, include the following: 

• Vanguard Total Bond (10.60 percent) 
• Schwab US Aggregate Bond (10.60 percent) 
• iShares Core US Aggregate Bond (10.60 percent) 
• Cash and Cash Equivalents (10.06 percent) 
• Global X MLP ETF (6.96 percent) 
• Vanguard Dividend Appreciation Index Fund (6.88 percent) 
• Invesco QQQ Trust Series (6.57 percent) 
• Schwab US REIT ETF (5.65 percent) 
• Wisdom Tree US Efficient Core Fund (5.12 percent) 
• Global X Nasdaq Covered Call ETF (4.60 percent) 
• Fidelity MSCI Utilities Index ETF (3.95 percent) 

This fund has been popular among retirees because it is an alternative method of drawing on assets accumulated through long-term investing. The expense gross expense ratio is 1.12 percent, and the net expense ratio is 0.97%

The current HNDL dividend yield for the trailing twelve months is 6.54%.

High Dividend ETFs to Buy Now: The Bottom Line 

Buying individual high-dividend stocks isn’t a poor investment strategy, but it does create risk. After all, an individual company, industry, or sector can experience unexpected downturns that reduce the value of your investment overnight. That’s problematic if you need to meet short-term financial goals. 

ETFs reduce risk by creating instant diversification in every share. That limits downside risk, though lower risk tends to come with lower upside potential. These four ETFs put a priority on income.

Using a variety of techniques, they have successfully delivered as promised. While that is no guarantee of future returns, these ETFs are a smart choice for investors in search of options for reliable income. 

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.