Exchange-traded funds (ETFs) have emerged as a popular investment option for portfolio diversification. While stocks may not interest every investor, ETFs make owning stocks easier and low-risk. With an ETF, you own a bunch of stocks at low cost and enjoy steady portfolio growth. There are hundreds of dividend ETFs to choose from, but there’s one that stands out in the industry.
While the Vanguard High Dividend Yield Index Fund ETF (NYSEARCA:VYM | VYM Price Prediction) is a worthwhile investment, some ETFs offer a higher return and monthly payments. If you are an income-focused investor seeking regular cash flow, you might want to consider J.P. Morgan Equity Premium Income ETF (NYSEARCA:JEPI). It is a highly reliable ETF during market uncertainty, has a higher yield and you enjoy monthly income. Here are some reasons why JEPI is a compelling dividend ETF.
Strong yield
Income investors begin their research by comparing the yields. VYM has a yield of 2.57% and an expense ratio of 0.06%, while JEPI has a yield of 7.92% and an expense ratio of 0.35%. Additionally, JEPI pays monthly dividends.
Launched in 2020, the fund has quickly become of the most popular ETFs in the market. JEPI has generated a cumulative return of 63.84% since inception. This means you not only enjoy steady, passive income but also see strong portfolio growth.
The right mix
VYM holds 580 stocks which reduces the concentration on each stock and its highest allocation lies in the financial sector. Its top 10 holdings include dividend paying companies and excludes the Magnificent Seven. On the other hand, JEPI holds 125 stocks and the portfolio has some of the top large-cap companies. They have the potential to generate steady returns and ensure consistent dividend payments. The stocks are less volatile than the rest of the market.
JEPI offers a perfect mix of growth and value stocks that can generate steady returns and high yields. Its largest holding lies in Nvidia, which has a low yield but tremendous returns. The stock is up 31% year-to-date. JEPI’s top 10 holdings include the Magnificent Seven which have generated impressive returns in the past three years.
Besides the big tech giants, it also holds a bunch of financial stocks such as Mastercard, and Visa. The fund has the highest allocation to the technology sector (15.2%), followed by financials (13.9%), and industrials (12.1%).
An investment of $10,000 in JEPI in 2020 would be worth $17,600 at the end of July 2025.
Performance and growth
JEPI sells call options via equity-linked notes and generates income from options premiums and dividends. It sells call options with exposure to the S&P 500 index and earns a premium on it. This ensures a consistent income stream without an exorbitant downside risk, offering a balanced approach of capital preservation and passive income.
Its dividend is significantly higher than the average yield for the S&P 500 (1.4%). JEPI has generated a return of 28.10% in three years and 63.84% in five years. JEPI is like a gift that will keep giving. It has an impressive yield and pays a monthly dividend, setting you up for a stream of passive income. JEPI’s most recent dividend was $0.357.
While the dividend amount can vary over time, the payments have an average yield of 7.92% right now. Hence, if you invest $10,000 in the fund, you’ll receive $792 in dividend payments over the year.
Exchanging hands for $57.13, JEPI has lost 0.63% value so far in 2025 and 2% in the past 12 months.
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