2 Impressive Monthly Income ETFs to Buy in December

By Joey Frenette Published Dec 10, 7:45AM EST

Quick Read

JEPI offers an 8.2% yield with a 0.35% expense ratio using a covered call strategy.
SDIV delivers a 9.6% yield by investing in the 100 highest-yielding equities globally.
Both ETFs provide lower volatility and reduced tech exposure during market uncertainty.

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2 Impressive Monthly Income ETFs to Buy in December — © Sutthiphong Chandaeng / Shutterstock.com

It’s been quite a turbulent past couple of weeks for the broad markets, especially if you’re a tech investor. Either way, the monthly income ETFs out there can help investors smoothen those volatile potholes in the road a bit as we head into what might be a rough finish to the broad market on the year. As other retail investors get hyped about Santa Claus coming to town to lift the spirits of investors as well as share prices, it might be a good time to think about taking some risk off the table. And if you can do that while also getting a good dose of monthly income, all the better.

In any case, this piece will outline two interesting income ETFs that pay distributions monthly. It’s not just the handsome payouts that stand out, but the makeup and investment methodology of the ETFs. Also, they seem quite timely as the year comes to a close. So, if you’re ready to pull back from tech, growth, and risk, as you steer towards lower volatility, dividends, and relative value, the following pair might just be worth a closer look.

JPMorgan Equity Premium Income ETF

The JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) is one of the most popular ultra-high-yield monthly income ETFs out there. And while the longer-term share chart might not look pretty, it’s the dividend (and total returns) that make the ETF so intriguing, especially for those with high-income needs who’d also like to take some volatility (and tech-related risk) off the table.

As the broad stock market looks to get that much choppier (perhaps ultimately going nowhere when all is said and done, just like during the November dip), perhaps a premium income strategy is the way to go. In this climate, when there’s so much nervousness, but stubborn resilience and glimmers of brilliance, I think there’s going to be a ton of volatility in both directions, and no explosive sustained moves either way.

With an 8.2% yield and a very fair 0.35% net expense ratio, I view the monthly income ETF as worth checking out. More income and less chop seems like a deal that’s too good to pass up, especially if you’re defensively-minded regarding stocks this holiday season.

Global X SuperDividend ETF

Up next, we have the Global X SuperDividend ETF (NYSEARCA:SDIV), which, like the JPMorgan Equity Premium Income ETF, offers a supercharged distribution and less volatility. The 9.6%-yielding ETF invests in some of the highest-yielding companies out there, and while the total expense ratio might be higher (currently at 0.58%), I do think the price of admission is worth the while, especially if you’d rather be in the 100 highest-yielding equities to boost your monthly income, rather than going for more of a covered call kind of strategy, which might cause a portfolio to forego big gains in a bull market.

Given modest return expectations and the surge in volatility, though, I do think such specialty income ETFs might be the way to get more mileage. In any case, the ETF has a very broad mix of names, many of which investors may have never heard of before. With a unique mix of names, many of which are in the financial, energy, and real estate sectors, I consider the ETF to be a great pick, especially for a portfolio that’s a bit shy on yield. Additionally, you’re getting a slightly lower beta of 0.91, which could make for a less painful ride if the new year turns against tech in a more sustained and vicious manner.

About the Author Joey Frenette →

Joey is a 24/7 Wall St. contributor and seasoned investment writer whose work can also be found in publications such as The Motley Fool and TipRanks. Holding a B.A.Sc in Computer Engineering from the University of British Columbia (UBC), Joey has leveraged his technical background to provide insightful stock analyses to readers.

Joey's investment philosophy is heavily influenced by Warren Buffett's value investing principles. As a dedicated Buffett disciple, Joey is committed to unearthing value in the tech sector and beyond.