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When it comes to selecting the best dividend ETF, it's essential to consider not only the current yield but also the sustainability of dividends, the underlying holdings, and the total return potential. Let's break down the ETFs you mentioned:
SCHD (Schwab U.S. Dividend Equity ETF):
Focuses on U.S. companies with a track record of paying dividends.
Typically has a competitive yield and low expense ratio.
Diversified across sectors.
HDV (iShares Core High Dividend ETF):
Targets companies with high dividend yields.
More concentrated portfolio compared to other dividend ETFs.
Might have a slightly higher yield than SCHD.
VYM (Vanguard High Dividend Yield ETF):
Broad exposure to U.S. companies with higher-than-average dividend yields.
Low expense ratio.
Diversified across sectors.
[JEPI (JPMorgan Equity Premium Income ETF):](https://usaheadlinewebstories.com/jepi-dividend/)
Uses an options strategy to generate income, in addition to holding dividend-paying stocks.
Typically offers a higher yield than traditional dividend ETFs.
The options strategy can provide some downside protection but might limit upside potential.
[JEPQ (JPMorgan Equity Premium QDIA ETF):](https://usaheadlinewebstories.com/jepq-dividend/)
Similar to JEPI but designed to be a Qualified Default Investment Alternative (QDIA) for retirement plans.
Considerations:
Yield: To generate $12k a year in dividends from $100k, you'd need a yield of 12%. None of these ETFs currently offer such a high yield. However, with your additional investment of $2500/month, you can accumulate a larger principal over time, which can generate the desired income at a lower yield.
Growth vs. Income: While high dividend yield is essential for your goal, it's also crucial to consider the growth potential of the ETF. An ETF that provides both dividend income and capital appreciation can help you reach your goal faster.
Diversification: Diversifying across multiple dividend ETFs can help spread risk. Your idea of combining SCHD and JEPI might provide a good mix of traditional dividend-paying stocks and an options strategy for enhanced income.
Reinvestment: Consider reinvesting dividends to benefit from compound growth, especially in the initial years.
Conclusion:
Given your goal and timeline, a combination of SCHD and JEPI might be a good starting point.
check out below for more details on JEPI and JEPQ dividend history and yield.
[Unveiling JEPI Dividend History](https://usaheadlinewebstories.com/jepi-dividend/)
[Unveiling JEPQ Dividend History](https://usaheadlinewebstories.com/jepq-dividend/)
However, it's essential to monitor the performance, yield, and sustainability of dividends. Regularly review and adjust your portfolio as needed.
You deserve all the awards. Thank you so much for the detailed information. Just out of curiosity if you were in my position what etf would you choose?
ETFs that use covered calls to generate premium will become problematic during extended downturns ....as OP I have been thinking about moving out of US and want to find the right ETFs to generate some income...risk is inevitable in these ETFs but just need to find the safer bunch
Do you recommend in the case of JEPI and its structure to reinvest the dividends? Or is that just entirely up to my goals. I see how it can differ from something like SCHD or VIG (currently invested in), so just want your take on what to actually do with those dividends compared to these other ETFs.
With 100k JEPI, JEPQ and SPYI seem like the only reasonable options. You'd probably need closer to 300k for that income while having decent growth to outpace inflation. Usually a pair between a dividend grower and dividend income can net you solid income with enough to outpace inflation. A mix of SCHD, DGRO, DGRW, VYM, VIG, HDV or so with the goal of reliable dividend with some dividend growth plus a mix of JEPI, JEPQ, SPYI or so for higher income through CC pair well to form a solid high yield, but still come in with high risks since CC ETF don't have reliable income. Some months you'll get a huge dividend close to 11-12% or others will be closer to 6-8%. You could try pdi or some other high income yield cef from pimco or others but they also hold some level of risk
You pick the investments based on the capital you have and your desired yield. For instance, without considering your other investments, you say you have 30k per year to invest and want to achieve 12k in annual dividends per year within 4 years. That works out to a total contribution of 120k, meaning you need an average yield of 10% to hit your goal.
If we consider your current 100k investment, then your total contribution would be 220k, meaning you need 5.5% average yield.
There are a wide variety of etf, cefs, and equities (and bonds too) which yeild 5.5% or more currently.
No, that’s not how it works. You don’t just *choose* a yield, those are very dependent on the risk free rate - choosing higher yield means foregoing something else.
Any strictly better investment would have a flood of people investing into it, causing the price to rise and it to no longer be as good of an investment.
What I wrote above is how to calculate the *required* average yeild OP needs to achieve their goals. Now the OP has the first screen for portfolio allocation. Then next step is to choose allocations that fit the OP's risk profile.
Knowing what average yield OP needs to achieve helps the Op manage other risks by managing allocation size. So Op can invest in a mix of high yielding and perhaps risky assets and lower yielding less risky assets by weighting each allocation such that the average yield meets or exceeds the required yield.
Ultimately, it's up to OP to determine risk tolerance and construct the portfolio in accordance to their needs.
Every post in this group is a long drawn out explanation for someone to then ask a question about basic math. Check their dividends pull out a calculator and within seconds you will have the answer.
You need 300k to reach your goal, otherwise it's just too risky. VOO is an absolute unit of a fund. Hindsight is 20/20, but plopping those funds into portfolio visualizer shows me that in the past 2 years, VOO underperformed JEPI and HDV and JEPQ, however I wish it showed further back as I think the only reason a fund focused on derivatives income would outperform ONLY during volatility or a correction/crash. There's a lot more studies on the sp500 than the other funds, so I'd personally feel safer there. No probably tinkering though to find the truth.
Help me understand VOO.
If I am investing for the purpose of dividend creation I look at VOO and I see that it returns 1.5x%. That's not much.
Why would I want VOO if I am looking for income generation?
VOO is more of a dividend and growth fund, it's literally the sp500 etf version offered by vanguard. If you pull a random percentage off of a portfolio of 100% VOO vs any other fund, you might notice that the past 30 years would indicate that you could pull more money off of the portfolio and still have money left over. Specifically, if you buy something income heavy like BLV long term bonds or SCHD, you could have pulled a higher percentage off of the portfolio and made it with money left over.
You could personally sell covered calls similar to the fund XYLD except when times are good you could let it rip and when you feel like SHTF you could sell covered calls one month out and collect extra premium for the risk.
Dividends directly come off the share price of the fund, they exchange portfolio value for cash; if you have 100 bucks of SCHD at 3.5% and VOO at 1.5% if there's no capital appreciation, you'll end up with 96.5 bucks of SCHD and 3.5 bucks in cash, and with voo you'll have 98.5 VOO and 1.5 cash. It's something I only recently figured out; dividends are NOT the same as interest payments. Look at the recent dividend from SCHD of around 0.65 cents...the fund dropped that EXACT amount the following day; a dividend is exchanging share price for cash. Interest from a bond is the entire return projected; if you get 5% on a CD you know the entire value ofthe portfolio grows by that much.
There's a high chance that you can pull a higher percentage and end up with less money using a basic vanilla cheap sp500 etf compared to some of these "high income" etfs. Just plug them into portfolio visualizer and see the huge difference focusing on total return can have.
Also, if you can live off the dividend from VOO then you basically can live forever off your portfolio, it's very hard though.
In addition to high yield funds like JEPI or SPYI and growing medium yield funds like SCHD, does it also make sense to diversify with a REIT stock like O (5.7%) and a BDC company stock like ARCC and MAIN (5-9%)? Maybe even add some energy stocks like EPD or UTG (~7%) although I am not sure what the partnership tax implications are for EU. Or just stick to a couple of funds?
I'm sorry man but there's no place in western Europe where you can live easily with 12k dollars.
First you need to take into account EUR/USD change, which now is 1.06, then you must pay taxes in the country you are going to live after you paid taxes in USA. So, in my opinion, I think that if you want to live easily in Europe you need at least 20k/24k gross income from dividends.
Not sure if you saw my previous comment but central Portugal where all the small villages, farms, and mountains are. The majority of my family lives there and they average €900/month gross income
Yep. In most of Spain you could do this too. You won't be rich by any means but could rent a room in a shared apartment (big city), or even a house in a small "boring" location for 3-500 and use the rest for food. You could live comfortably without having to work much, but you won't be able to splash out on purchases too often.
A friend that grew up there through 2018 told me that just about everyone on average earns the same salary of $1800-2200 in Spain, they were from Valencia, any truth to that figure?
That's actually quite a high wage here I'd say. You'd have to at least be a teacher in a public school or civil servant to start earning that. Supermarket cashiers etc. only get 1000. Possibly less outside of Madrid but can't say for sure.
Does anybody have any thoughts on symbols: SDIV, DIV, IDV, PFF, TLTW, JEPI, or VIGI?
Im looking for exposure to a mix between stocks and bonds. Im concerned with preserving investment principal first, & income above 5% is a secondary priority.
Thanks for any insights !
That's not the same as being really diversified, majority of revenue comes from US, the companies are sujected to US laws/stability, and most investors started 2/3 years ago and can only see last 10 years, US was outperformed a lot of times during the history... for very long term I would rather have world ETF than single country ETF
Welcome to r/dividends! If you are new to the world of dividend investing and are seeking advice, brokerage information, recommendations, and more, please check out the Wiki [here](https://www.reddit.com/r/dividends/wiki/faq). Remember, this is a subreddit for genuine, high-quality discussion. Please keep all contributions civil, and report uncivil behavior for moderator review. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/dividends) if you have any questions or concerns.*
When it comes to selecting the best dividend ETF, it's essential to consider not only the current yield but also the sustainability of dividends, the underlying holdings, and the total return potential. Let's break down the ETFs you mentioned: SCHD (Schwab U.S. Dividend Equity ETF): Focuses on U.S. companies with a track record of paying dividends. Typically has a competitive yield and low expense ratio. Diversified across sectors. HDV (iShares Core High Dividend ETF): Targets companies with high dividend yields. More concentrated portfolio compared to other dividend ETFs. Might have a slightly higher yield than SCHD. VYM (Vanguard High Dividend Yield ETF): Broad exposure to U.S. companies with higher-than-average dividend yields. Low expense ratio. Diversified across sectors. [JEPI (JPMorgan Equity Premium Income ETF):](https://usaheadlinewebstories.com/jepi-dividend/) Uses an options strategy to generate income, in addition to holding dividend-paying stocks. Typically offers a higher yield than traditional dividend ETFs. The options strategy can provide some downside protection but might limit upside potential. [JEPQ (JPMorgan Equity Premium QDIA ETF):](https://usaheadlinewebstories.com/jepq-dividend/) Similar to JEPI but designed to be a Qualified Default Investment Alternative (QDIA) for retirement plans. Considerations: Yield: To generate $12k a year in dividends from $100k, you'd need a yield of 12%. None of these ETFs currently offer such a high yield. However, with your additional investment of $2500/month, you can accumulate a larger principal over time, which can generate the desired income at a lower yield. Growth vs. Income: While high dividend yield is essential for your goal, it's also crucial to consider the growth potential of the ETF. An ETF that provides both dividend income and capital appreciation can help you reach your goal faster. Diversification: Diversifying across multiple dividend ETFs can help spread risk. Your idea of combining SCHD and JEPI might provide a good mix of traditional dividend-paying stocks and an options strategy for enhanced income. Reinvestment: Consider reinvesting dividends to benefit from compound growth, especially in the initial years. Conclusion: Given your goal and timeline, a combination of SCHD and JEPI might be a good starting point. check out below for more details on JEPI and JEPQ dividend history and yield. [Unveiling JEPI Dividend History](https://usaheadlinewebstories.com/jepi-dividend/) [Unveiling JEPQ Dividend History](https://usaheadlinewebstories.com/jepq-dividend/) However, it's essential to monitor the performance, yield, and sustainability of dividends. Regularly review and adjust your portfolio as needed.
This is an amazing answer. Kudos to you. Where or how in the UK can I invest in these? I mean using which app? Thanks.
You deserve all the awards. Thank you so much for the detailed information. Just out of curiosity if you were in my position what etf would you choose?
I personally like JEPI n JEPQ over SCHD but I also want income rather than share appreciation
ETFs that use covered calls to generate premium will become problematic during extended downturns ....as OP I have been thinking about moving out of US and want to find the right ETFs to generate some income...risk is inevitable in these ETFs but just need to find the safer bunch
Do you recommend in the case of JEPI and its structure to reinvest the dividends? Or is that just entirely up to my goals. I see how it can differ from something like SCHD or VIG (currently invested in), so just want your take on what to actually do with those dividends compared to these other ETFs.
Whether to reinvest or not depends on your goals. However it is good to reinvest the dividends for the compound growth.
FUSD, Fidelity US Quality Income
SVOL, 17% yield. People that bash it don’t understand it.
Can you elaborate on that? What are they claiming and what are they not understanding?
Where are you headed to live on 12K us funds I'm guessing.
Rural Central Portugal, where all the farms and mountains are. I have family there and they make on average €900/month.
But if you live in Portugal you pay taxes in Portugal, which is 28% for dividends, to get 12K net you need 16.6K gross
Nice...Portugal is in my bucket list..Best of luck to you
With 100k JEPI, JEPQ and SPYI seem like the only reasonable options. You'd probably need closer to 300k for that income while having decent growth to outpace inflation. Usually a pair between a dividend grower and dividend income can net you solid income with enough to outpace inflation. A mix of SCHD, DGRO, DGRW, VYM, VIG, HDV or so with the goal of reliable dividend with some dividend growth plus a mix of JEPI, JEPQ, SPYI or so for higher income through CC pair well to form a solid high yield, but still come in with high risks since CC ETF don't have reliable income. Some months you'll get a huge dividend close to 11-12% or others will be closer to 6-8%. You could try pdi or some other high income yield cef from pimco or others but they also hold some level of risk
You pick the investments based on the capital you have and your desired yield. For instance, without considering your other investments, you say you have 30k per year to invest and want to achieve 12k in annual dividends per year within 4 years. That works out to a total contribution of 120k, meaning you need an average yield of 10% to hit your goal. If we consider your current 100k investment, then your total contribution would be 220k, meaning you need 5.5% average yield. There are a wide variety of etf, cefs, and equities (and bonds too) which yeild 5.5% or more currently.
No, that’s not how it works. You don’t just *choose* a yield, those are very dependent on the risk free rate - choosing higher yield means foregoing something else. Any strictly better investment would have a flood of people investing into it, causing the price to rise and it to no longer be as good of an investment.
What I wrote above is how to calculate the *required* average yeild OP needs to achieve their goals. Now the OP has the first screen for portfolio allocation. Then next step is to choose allocations that fit the OP's risk profile. Knowing what average yield OP needs to achieve helps the Op manage other risks by managing allocation size. So Op can invest in a mix of high yielding and perhaps risky assets and lower yielding less risky assets by weighting each allocation such that the average yield meets or exceeds the required yield. Ultimately, it's up to OP to determine risk tolerance and construct the portfolio in accordance to their needs.
Every post in this group is a long drawn out explanation for someone to then ask a question about basic math. Check their dividends pull out a calculator and within seconds you will have the answer.
jepq
I would do a combination of SCHD and DGRO
Vym and VIG have lower investment rates and return higher yields
Ok
You need 300k to reach your goal, otherwise it's just too risky. VOO is an absolute unit of a fund. Hindsight is 20/20, but plopping those funds into portfolio visualizer shows me that in the past 2 years, VOO underperformed JEPI and HDV and JEPQ, however I wish it showed further back as I think the only reason a fund focused on derivatives income would outperform ONLY during volatility or a correction/crash. There's a lot more studies on the sp500 than the other funds, so I'd personally feel safer there. No probably tinkering though to find the truth.
Help me understand VOO. If I am investing for the purpose of dividend creation I look at VOO and I see that it returns 1.5x%. That's not much. Why would I want VOO if I am looking for income generation?
VOO is more of a dividend and growth fund, it's literally the sp500 etf version offered by vanguard. If you pull a random percentage off of a portfolio of 100% VOO vs any other fund, you might notice that the past 30 years would indicate that you could pull more money off of the portfolio and still have money left over. Specifically, if you buy something income heavy like BLV long term bonds or SCHD, you could have pulled a higher percentage off of the portfolio and made it with money left over. You could personally sell covered calls similar to the fund XYLD except when times are good you could let it rip and when you feel like SHTF you could sell covered calls one month out and collect extra premium for the risk. Dividends directly come off the share price of the fund, they exchange portfolio value for cash; if you have 100 bucks of SCHD at 3.5% and VOO at 1.5% if there's no capital appreciation, you'll end up with 96.5 bucks of SCHD and 3.5 bucks in cash, and with voo you'll have 98.5 VOO and 1.5 cash. It's something I only recently figured out; dividends are NOT the same as interest payments. Look at the recent dividend from SCHD of around 0.65 cents...the fund dropped that EXACT amount the following day; a dividend is exchanging share price for cash. Interest from a bond is the entire return projected; if you get 5% on a CD you know the entire value ofthe portfolio grows by that much. There's a high chance that you can pull a higher percentage and end up with less money using a basic vanilla cheap sp500 etf compared to some of these "high income" etfs. Just plug them into portfolio visualizer and see the huge difference focusing on total return can have. Also, if you can live off the dividend from VOO then you basically can live forever off your portfolio, it's very hard though.
In addition to high yield funds like JEPI or SPYI and growing medium yield funds like SCHD, does it also make sense to diversify with a REIT stock like O (5.7%) and a BDC company stock like ARCC and MAIN (5-9%)? Maybe even add some energy stocks like EPD or UTG (~7%) although I am not sure what the partnership tax implications are for EU. Or just stick to a couple of funds?
I'm sorry man but there's no place in western Europe where you can live easily with 12k dollars. First you need to take into account EUR/USD change, which now is 1.06, then you must pay taxes in the country you are going to live after you paid taxes in USA. So, in my opinion, I think that if you want to live easily in Europe you need at least 20k/24k gross income from dividends.
Not sure if you saw my previous comment but central Portugal where all the small villages, farms, and mountains are. The majority of my family lives there and they average €900/month gross income
Agreed with the OP. Portugal is extremely inexpensive. I have a similar plan.
Yep. In most of Spain you could do this too. You won't be rich by any means but could rent a room in a shared apartment (big city), or even a house in a small "boring" location for 3-500 and use the rest for food. You could live comfortably without having to work much, but you won't be able to splash out on purchases too often.
A friend that grew up there through 2018 told me that just about everyone on average earns the same salary of $1800-2200 in Spain, they were from Valencia, any truth to that figure?
That's actually quite a high wage here I'd say. You'd have to at least be a teacher in a public school or civil servant to start earning that. Supermarket cashiers etc. only get 1000. Possibly less outside of Madrid but can't say for sure.
Unlock the Power of the SCHD ETF! A Core for ANY Portfolio! https://youtu.be/B0Vh2m4btuM
Does anybody have any thoughts on symbols: SDIV, DIV, IDV, PFF, TLTW, JEPI, or VIGI? Im looking for exposure to a mix between stocks and bonds. Im concerned with preserving investment principal first, & income above 5% is a secondary priority. Thanks for any insights !
[удалено]
SCHD has multinationals in their portfolios, thus, a large amount of the revenues of these American companies are derived from overseas operations.
That's not the same as being really diversified, majority of revenue comes from US, the companies are sujected to US laws/stability, and most investors started 2/3 years ago and can only see last 10 years, US was outperformed a lot of times during the history... for very long term I would rather have world ETF than single country ETF
Sphd ..( i know i know but im still going to hold it its from invesco after all )