The Best Monthly Dividend ETFs 2024

Dividends are a popular source of passive income. They can either be cashed or reinvested to higher returns in the future. However, dividends are never confirmed. Therefore, relying on just a few stocks for a good payout is risky.

Monthly dividend ETFs are an important part of any portfolio. Especially those that aim to provide a decent yield to its owner. No matter what the motive is, either for passive income potential or simply as a way to supplement returns beyond simple share appreciation. In fact, the benefits of monthly dividend ETFs make these investment vehicles superior in many ways to individual stocks.

Let’s discuss the benefits and disadvantages of Dividend ETFs. It will further clarify why certain investors choose Dividend ETFs and others don’t.

Benefits of investing in Dividend ETFs:

• Diversification: Through Dividend ETFs, investors can buy a diversified basket of dividend stocks with just one investment. This investment may consist of dozens or hundreds of holdings.
• Convenience: Dividend ETFs are comparatively much easier investments to manage. Instead of researching and analyzing multiple stocks to hold in a portfolio, an investor can simply find the best dividend ETF to suit their needs.
• Income: Dividend ETFs can be a smart way for an investor seeking income to create a revenue stream.
• Relative stability: Many dividend ETFs tend to be less volatile than broader market indexes, especially growth-oriented stocks.

Disadvantages of investing in Dividend ETFs:

• Lack of control: As is the case with other fund types, investors have no control over security selection with dividend ETFs.
• Blended income: Dividend ETFs payout a dividend yield that is a blend of the underlying holdings. If some holdings in a dividend ETF reduce dividends, the overall average yield can decline.
• Price risk: Declines in price in some market environments may outweigh dividend yields and create a net negative return.

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Here is the list of Best Dividend ETFs for 2024:

JPMorgan Equity Premium Income ETF

JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) is an exchange-traded fund that invests in equity securities of large-cap companies from the Nasdaq-100 Index and sells call options to generate income. The fund aims to maintain prospects for capital appreciation while lowering the volatility of the portfolio. The fund is actively managed by experienced portfolio managers using ESG factors, proprietary data science, and risk-adjusted stock rankings. The fund distributes monthly income to investors

Its portfolio managers have over 60 years of combined experience investing in equities and equity derivatives. 

PORTFOLIO

• A defensive equity portfolio employs a time-tested, bottom-up fundamental research process with stock selection based on our proprietary risk-adjusted stock rankings.
• Disciplined options overlay implements written out-of-the-money S&P 500 Index call options that seek to generate distributable monthly income.

RESULTS

• Provided an attractive 12-month rolling dividend yield of 11.04 % and a 30-day SEC yield of 7.70 %.
• Top quintile yield in the Derivative Income category
• Competitively priced vs. peers at 0.35 %

This ETF was created in 2020. It has a total of 136 holdings.  This ETF offers a dividend yield of 10.1 %.

The below chart shows the total return on 31/07/23:

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SPDR Bloomberg 1-3 Month T-Bill ETF

The Bloomberg  1-3 Month U.S. Treasury Bill Index (the “Index”) is designed to measure the performance of public obligations of the U.S. Treasury that have a remaining maturity of greater than or equal to 1 month and less than 3 months. The Index includes all publicly issued U.S. Treasury Bills that have a remaining maturity of less than 3 months and at least 1 month, and are rated investment-grade. In addition, the securities must be denominated in U.S. dollars and must have a fixed rate. The Index is a market capitalization-weighted, with securities held in the Federal Reserve System Open Market Account deducted from the total amount outstanding.

The key features of this ETF are:

• The SPDR® Bloomberg  1-3 Month T-Bill ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Bloomberg  1-3 Month U.S. Treasury Bill Index (the “Index”)
• Seeks to provide exposure to publicly issued U.S. Treasury Bills that have a remaining maturity between 1 and 3 months
• Short-duration fixed income is less exposed to fluctuations in interest rates than longer-duration securities
• Rebalanced on the last business day of the month

This ETF was created in 2007. It has a total of 19 holdings and an expense ratio of 0.1354%. This ETF offers a dividend yield of 3.15 %.

iShares U.S. Treasury Bond ETF

The iShares U.S. Treasury Bond ETF seeks to track the investment results of an index composed of U.S. Treasury bonds.

Benefits of investing in GOVT:

• Exposure to U.S. Treasuries ranging from 1–30-year maturities
• Low-cost access to the broad U.S. Treasury market in a single fund
• Use at the core of your portfolio to seek stability and pursue income

This ETF was created in 2012. It has a total of 157 holdings and an expense ratio of 0.05%. This ETF offers a dividend yield of 2.44 %.

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iShares 1-5 Year Investment Grade Corporate Bond

The iShares 1-5 Year Investment Grade Corporate Bond ETF seeks to track the investment results of an index composed of U.S. dollar-denominated investment-grade corporate bonds with remaining maturities between one and five years.

Benefits of investing in this ETF:

• Exposure to short-term U.S. investment-grade corporate bonds
• Low cost, targeted access to bonds with 1-5 year maturities
• Use to customize a bond allocation and pursue income

This ETF was created in 2007. It has a total of 3,663 holdings and an expense ratio of 0.04 %. This ETF offers a dividend yield of 2.52 %.

JPMorgan Ultra-Short Income ETF

The JPMorgan Ultra-Short Income ETF (JPST) had one of the most successful fund launches in the industry and has been a big hit for JP Morgan’s asset management business. The actively-managed fund capitalizes on JPMorgan’s reputation for cash management and does it at a low cost. The fund invests in short-term investment-grade debt and may be suitable for investors looking for a relatively safe way to eke out a little more yield than they can get from brokerage sweep accounts, money market funds, or long-term Treasuries.

Portfolio

• Invests primarily in a diversified portfolio of short-term, investment grade fixed- and floating-rate corporate and structured debt while actively managing credit and duration exposure.
• Targets portfolio duration of less than one year.

Results

• Top quintile returns with top decile risk-adjusted returns since inception.1
• Attractive SEC Yield (5.24%).
• Competitively priced vs. peers at 0.18%

This ETF was created in 2017. It has a total of 632 holdings and an expense ratio of 0.18 %. This ETF offers a dividend yield of 3.74 %.

The below chart shows the total return on 31/07/23:

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WisdomTree Floating Rate Treasury Fund

WisdomTree Floating Rate Treasury Fund seeks to track the price and yield performance, before fees and expenses, of the Bloomberg U.S. Treasury Floating Rate Bond Index.

Benefits of investing in this ETF:

• Provides cost-effective access to newly issued US government floating rate notes
• Designed to fluctuate with short-term rates and are priced at a spread over 3-mo Treasury Bills
• Short-term government bond solution that fluctuates with most recent 3-mo Treasury Bills

This ETF was created in 2014. It has an expense ratio of 0.15 %. This ETF offers a dividend yield of 4.04 %.

Schwab Short-Term U.S. Treasury ETF

The fund’s goal is to track as closely as possible, before fees and expenses, the total return of an index that measures the performance of the short-term U.S. Treasury bond market.

Key Features:

• A straightforward, low-cost fund offering potential tax-efficiency
• The Fund can serve as part of the core of a diversified portfolio
• Simple access to U.S. Treasury securities having a remaining maturity of between 1 and 3 years
• Provides income from the short-end of the Treasury bond yield curve

This ETF was created in 2010. It has a total of 97 holdings and an expense ratio of 0.03 %. This ETF offers a dividend yield of 2.99 %.

The below table shows the cumulative return  of the ETF

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Schwab U.S. TIPS ETF

The investment seeks to track as closely as possible, before fees and expenses, the total return of the Bloomberg US Treasury Inflation-Linked Bond Index (Series-L)SM. The fund will invest at least 90% of its net assets in securities included in the index. The index includes all publicly-issued U.S. Treasury Inflation-Protected Securities (TIPS) that have at least one year remaining to maturity, are rated investment grade, and have $500 million or more of outstanding face value. The TIPS in the index must be denominated in U.S. dollars and must be fixed-rate and non-convertible.

Key Features:

• A straightforward, low-cost fund offering potential tax-efficiency
• The Fund can serve as part of the core of a diversified portfolio
• Simple access to the U.S. Treasury Inflation-Protected Securities (TIPS) market
• Invests in the overall maturity spectrum of the U.S. TIPS market

This ETF was created in 2010. It has a total of 49 holdings and an expense ratio of 0.04 %. This ETF offers a dividend yield of 5.92 %.

iShares Broad USD High Yield Corporate Bond ETF

The iShares Broad USD High Yield Corporate Bond ETF seeks to track the investment results of an index composed of U.S. dollar-denominated, high-yield corporate bonds.

Benefits of investing in this ETF:

• Offers high-yield bond market exposure that is broader than any other ETF1
• Low-cost high yield bond ETF
• Use to complement core fixed income holdings to enhance portfolio income and performance potential

This ETF was created in 2017. It has a total of 1,884 holdings and an expense ratio of 0.15 %. This ETF offers a dividend yield of 6.68 %.

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PIMCO Enhanced Short Maturity Active Exchange-Traded Fund

This fund aims to provide clients with capital preservation, liquidity, and stronger return potential to traditional cash investments in exchange for a modest increase in risk. The fund further provides diversification and downside risk mitigation in volatile markets with little exposure to interest rate risk. This fund also offers access to IMCO’s veteran liquidity management team as well as an extensive credit research process to source what are believed to be the most attractive securities.

This ETF was created in 2009. It has a total of 665 holdings and an expense ratio of 0.35 %. This ETF offers a dividend yield of 3.71 %.