Three ETFs with dividend yields of 12% or more in revenue portfolio

The influx of Exchange-Traded Funds (ETFs) reached a record $1.9 trillion in 2024, pushing the ETF’s total assets to $14.7 trillion.

However, with the US Treasury harvesting nearly 4.4% hovering in 2010, revenue-hungry investors are facing a situation where traditional ETFs struggle to compete. This has prompted a move towards an innovative strategy aimed at ensuring higher yields.

Three notable funds are restructuring the income investment climate by providing yields far beyond traditional alternatives. Each uses advanced cover call strategies at key indexes, turning unstable markets into reliable monthly income streams.

Global X Nasdaq 100 Cover Call ETF (QYLD) tracks the CBOE NASDAQ-100 BUYWRITE V2 index. With managed assets reaching $8.38 billion, QYLD’s annual distribution rate is at 14.13%, with monthly distributions paid.

The fund maintains all stock positions in the NASDAQ 100 Index ($IUXX), and sells call options at the index at the same time, effectively covering 100% of its portfolio. This strategy aims to collect optional premiums distributed monthly. This results in a robust revenue stream, but the trade-offs take place in the form of rising capped during sharp gatherings.

The fund’s expense ratio is 0.6%. This is competitive given the complexity of options strategies and the stable cash flow intended to deliver. ETFs have declined 8.7% per year to date and 6.7% over the past year.

NEOS S&P 500 High Income ETF (SPYI) is a product of the NEOS Fund and began trading on August 31, 2022. ETFs also pay monthly distributions, with a 12-month distribution rate of 12.65%.

This ETF is built on the back of the S&P 500 index ($SPX), but it’s not just a passive tracker. In addition to keeping stock in the benchmark index and selling call options at the index, managers buy put options at the same index. This creates a “collar” effect, aiming to retain more chances of a rise in holdings if the market is turned upside down.

Spyi manages $3.9 billion in assets. The fund’s expense ratio is 0.68%, in line with its aggressive approach and complex strategies. SPYI has declined by 2.4% per year to date and 1.9% over the past 52 weeks.