How many ETFs can you name that yield over 5% that don’t involve covered call strategies? It is unlikely that the ETFs you have in mind will overlap with the Amplify Natural Resources Dividend Income ETF (NYSEARCA:NDIV), Alternative Access First Priority CLO Bond ETF (NYSEARCA:AAA), and Columbia Research Enhanced Real Estate ETF (NYSEARCA:CRED).
All of them come with a yield above 5% and they derive that income in niche ways that are worth looking into. These ETFs can complement your portfolio very well if you pair them up with popular lower-yield ETFs.
Higher yields will become more important in the coming months as the Federal Reserve has shown more willingness to cut. The current Fed Chair Jerome Powell’s term will end in May 2026. He’s expected to be replaced with a Trump appointee.
As such, the next Fed Chair is very likely to be even more dovish on interest rates. Low interest rates will then drag down Treasury yields and lead to far more interest in the following high-yield dividend ETFs.
Amplify Natural Resources Dividend Income ETF (NDIV)
The Amplify Natural Resources Dividend Income ETF tracks the performance of the EQM Natural Resources Dividend Income Index before fees. It holds 41 dividend stocks from companies involved with natural resources.
The companies it holds are cash cows, and the dividend yield should stay above 5%. Natural resources have historically served as an inflation hedge, so these hard assets are well-suited in the current environment.
The fund’s own managers say that there is a possible “commodity supercycle” due to “current world events (war, ongoing pandemic, supply chain issues, growing demand for green energy commodities, etc.)”
NDIV yields 5.72% and yields monthly. It comes with a 0.59% expense ratio, or $59 per $10,000.
Alternative Access First Priority CLO Bond ETF (AAA)
Not all bonds have to be from the government for you to invest in. If you want top-notch safety, Treasuries are what first springs to mind, but you can squeeze out more yield with AAA-rated bonds.
The Alternative Access First Priority CLO Bond ETF does exactly this. It invests in the senior-most debt tranches of collateralized loan obligations (CLOs). These bonds are “first priority,” meaning they are the first to receive interest and principal payments.
Any single security is limited to 5% of the portfolio, and any single CLO manager is limited to 10%. All securities are rated AAA, and if any fall below investment grade, the advisor can sell or adjust the position. It is very unlikely that these companies would ever miss interest payments, as AAA-rated bonds are the next safest asset.
AAA yields 5.19% and also pays monthly. The expense ratio is 0.25%, or $25 per $10,000.
Columbia Research Enhanced Real Estate ETF (CRED)
The Columbia Research Enhanced Real Estate ETF gives you exposure to U.S. real estate investment trusts (REITs) by combining traditional market-cap weighting with active research insights.
It uses a rules-based system to select and weight companies it believes have better growth and income potential through the Beta Advantage Lionstone Research Enhanced REIT Index. This index screens out underperforming stocks and buys those that it believes have quality, income, and value.
The real estate industry has been under a lot of scrutiny since 2008, and rightfully so. However, the industry has learned a lot from it, and the lessons drawn from the Great Recession allowed most REITs to breeze through the aggressive interest rate increases in the past few years.
Now that rates are going down, I expect CRED to do even better. REITs thrive in low-rate environments, and the extra cash will translate into higher dividends since these companies are legally required to pay 90% of taxable income as dividends.
CRED ETF comes with a 5.56% dividend yield and an expense ratio of 0.33%, or $33 per $10,000.
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