3 High-Yield ETFs You Could Retire With

By Maurie Backman Published Dec 10, 10:33AM EST

Quick Read

JEPI writes call options against its holdings to generate additional income.
SPYD concentrates on the highest-yielding S&P 500 stocks with heavy exposure to financials and utilities.
HDV invests in high-quality companies with consistent and sustainable dividends.

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3 High-Yield ETFs You Could Retire With — © Canva: Monkey Business Images and Ray Bilcliff from Pexels

Once you retire, you’ll probably have Social Security to help cover your bills. But those monthly benefits may not provide nearly enough income to pay for all of your retirement expenses.

The average retired worker on Social Security today collects about $2,000 a month. If you’re a higher earner, you may be in line for a larger monthly benefit. But even so, you’ll probably need outside income to live comfortably. And that’s where your portfolio comes in.

It’s a good idea to set yourself up with high-yield ETFs that can produce steady income for your senior years. Here are three options to look at.

1. The JPMorgan Equity Premium Income ETF (JEPI)

The JPMorgan Equity Premium Income ETF (JEPI) has an interesting strategy that differs from other ETFs. It invests in large-cap U.S. businesses within the S&P 500. But it also writes call options against its holdings to generate more income and offer investors more upside.

Funds that issue covered calls get to collect a premium for them, which generates ongoing revenue. That’s income that can be shared with investors. So with JEPI, you may find that your portfolio enjoys steady income that can supplement your Social Security checks nicely.

Now one thing you should know about JEPI is that it does have a higher expense ratio than many of the ETFs you’ll see. However, its expense ratio is relatively low given that it’s an actively managed ETF, not a passively managed one.

2. The SPDR Portfolio S&P 500 High Dividend ETF (SPYD)

Generally speaking, dividend ETFs can be a good choice for retirees because of the income they tend to generate. But the SPDR Portfolio S&P 500 High Dividend ETF (SPYD) employs a strategy that makes it a good pick.

SPYD focuses specifically on the top-yielding stocks within the S&P 500 index. The fund has a heavy concentration on financials, utilities, and real estate, which means it’s a bit less diverse than a broad income ETF. However, it also focuses on sectors that are known for their higher dividend yields.

Plus, SPYD has a low expense ratio. In fact, it’s one of the least expensive funds in the high-yield dividend ETF space.

3. The iShares Core High Dividend ETF (HDV)

The iShares Core High Dividend ETF (HDV) works by tracking the Morningstar Dividend Yield Focus Index, which focuses on high-quality U.S. stocks with strong dividends. What makes HDV a good pick is that its strategy emphasizes dividend consistently and sustainability.

In other words, HDV gives you access to companies whose dividend yields are not only strong, but sustainable in the long run. It also focuses on companies with generally strong financials — think low levels of debt and those with a clear competitive advantage.

HDV could be a good option if you’re looking for steady portfolio income to live on without taking on undue risk — something that’s very important at a time in your life when you’re no longer earning a paycheck. And for a dividend ETF, it has a fairly low expense ratio, helping you avoid losing too much money to investment fees.

About the Author Maurie Backman →

Maurie Backman has more than a decade of experience writing about financial topics, including retirement, investing, Social Security, and real estate. Her work has appeared on sites that include The Motley Fool, USA Today, U.S. News & World Report, and CNN Underscored.