I’d Skip SCHD And Buy These Monthly Income ETFs Instead

One of the best ways to earn passive income is to build yourself an investment portfolio that does the heavy lifting for you. And to that end, it’s a good idea to invest in ETFs, or exchange-traded funds, that generate steady income.

One popular income ETF is the Schwab U.S. Dividend Equity ETF (SCHD). SCHD tracks the Dow Jones U.S. Dividend 100 Index, which consists of high-quality U.S. businesses with at least 10 years of consistent dividend payments. It also focuses on companies that are likely to continue paying and increasing their dividends.

Funds like SCHD commonly pay dividends on a quarterly basis. So if you’re looking for a way to generate steady portfolio income without taking on too much risk, SCHD could be a good bet.

However, if you have very aggressive portfolio income goals, you may want to instead focus on monthly income ETFs. Here are three options worth looking at in that regard.

1. The JPMorgan Equity Premium Income ETF (JEPI)

The JPMorgan Equity Premium Income ETF (JEPI) invests in large-cap S&P 500 companies. But that strategy alone isn’t necessarily conducive to generating income.

The reason JEPI is such a strong option for income-seeking investors is that it also sells call options against its holdings to generate regular income. And because the fund invests in a broad range of established companies, you’re not taking on the same risk you would by investing in sector-specific ETFs or funds that make their money on covered calls alone.

Another thing that makes JEPI a solid investment is that it pays monthly. And if you reinvest that money, you could grow your portfolio in a serious way.

2. The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)

The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) is a great option for people who like the idea of regular portfolio income but want to limit their risk. SPHD focuses on dividend-paying stocks within the S&P 500 index. It also, like JEPI, pays investors on a monthly basis, leading to more consistent income.

Now one thing worth noting about SPHD is that it generally has a lower yield than a number of income ETFs. However, it generates that yield by limiting itself to relatively stable, large-cap companies. So while you may be giving up some upside, you’re also limiting your risk to some degree.

3. The Global X SuperDividend ETF (SDIV)

The Global X SuperDividend ETF (SDIV) is a bit different from its counterparts above in that it doesn’t just invest in U.S. companies. Rather, a limited number of its holdings are U.S. companies, and the majority are international stocks with high yields.

That could be a good thing and a bad thing. On the positive side, SDIV gives you added diversification by branching outside of U.S. companies. It also offers a very impressive yield and monthly payments for investors.

But on the flipside, going international in your portfolio could mean exposing yourself to even more market volatility. And right now, with tariffs in the mix, investing in international companies may fall outside your comfort zone.

While SDIV may be a good investment for you, if you don’t like the idea of taking on too much risk, you may want to favor an option like SPHD. With SDIV, you’re taking on more than just economic risk — you’re taking on political and currency risk, too. You may want to couple SDIV with one or both of the funds above to create a portfolio that’s capable of generating steady income without introducing too much volatility.