The Best, And Worst, Monthly Dividend ETFs (2024)

Exchange-traded funds (ETFs) sure are easy to buy. There’s an ETF for just about anything we can think of—stocks, bonds, commodities, growth, value, sectors, industries and, of course, high yield.

Dividends are our beat here at Contrarian Outlook. And ETFs keep us busy, because for every income investing angle, there is a popular dividend fund that we can easily improve upon.

I commend you for realizing that ETFs are not the final retirement solution. Convenient, yes. But we contrarians have more effective income tools available than ETFs.

Let’s walk through seven popular dividend ETFs (yielding a mouthwatering 5% to 10%), and tinker with each a bit to improve their future performance and their payouts. I’m talking about yields up to 8%, paid monthly!

Now ETFs are an improvement from the funds of yesteryear: mutual funds. They’re cheaper. They’re more tax-efficient. They can hold a much wider field of investments. And their tickers are a whole lot easier to remember.

Likewise, closed-end funds (CEFs) are the next step in dividend evolution. Here’s why:


  • CEFs typically deliver higher dividends.
  • Many CEFs pay monthly (not just quarterly).
  • CEFs have fixed pools of shares, which means they often trade at discounts to their net asset values (NAVs).

The final point is an important one. It means we are often able to buy dividend holdings for less than they would cost individually on the open market.

Given all that, you’d think CEFs would be among the most popular funds on the planet. But that couldn’t be farther from the truth.

Mutual funds in the U.S. alone are a $18 trillion business. But ETFs just keep clawing away year after year, month after month, and have themselves become a $5.9 trillion domestic market.

CEFs? The entire industry (consisting of a few hundred funds) accounts for just $262 billion. For comparison’s sake, that’s $102 billion less than a single ETF, the SPDR S&P 500 ETF Trust (SPY) SPY .

I won’t disparage the ETF industry as a whole. But I will say that most of the assets sitting in dividend ETFs is being wasted on a second-class income-investment vehicle.

Meanwhile, that money is missing out on CEFs, which can regularly deliver high-single-digit and even double-digit yields—unheard-of income in mutual funds and a rarity among ETFs.

Let me show you what I mean. Here, we’ll look at seven of the market’s best-yielding ETFs, and we’ll review what they get wrong, and how we can bank bigger dividends and better performance.

Regular High Yield

The Global X SuperDividend ETF (SDIV, 6.6% yield) is one of the biggest yields we’re going to find on a straight-up equity ETF.

You won’t be surprised to learn that SDIV doesn’t yield 6.6% by yielding a bucket of U.S. blue chips. Instead, it tracks an index that scans the globe for high-dividend opportunities—the U.S. accounts for a little more than a quarter of the fund, with 17% of assets in Chinese stocks, another 11% in Hong Kong and the rest scattered across the world.

It also leans hard on real estate, at 43% of assets. Only two other sectors—energy (13%) and financials (11%)—have double-digit exposure, meaning there’s not a ton of diversification here.

But while the income is impressive, performance has been anything but. A hyperfocus on high yield has left SDIV invested in a lot of losers, so much so that investors are barely breakeven over the past five years, while a plain global index has nearly doubled in that time.

You’re less likely to have heard of the Aberdeen Total Dynamic Dividend Fund (AOD, 7.0% yield), which boasts just more than $1 billion in assets. But its global portfolio, which is roughly half-invested in the U.S., has been far more competitive while also delivering monthly dividends to its shareholders.

The icing on the cake? We can buy that outperformance for 89 cents on the dollar right now, as the fund trades at an 11% discount to NAV.


Sometimes, the advantages aren’t as clear-cut, as we’ll see in the master limited partnership (MLP) space.

For instance, look at the Kayne Anderson NextGen Energy & Infrastructure (KMF, 5.3% yield) and the First Trust MLP and Income Fund (FEI, 8.0% yield) versus the ubiquitous Alerian MLP ETF (AMLP, 8.8% yield) and Global X MLP ETF (MLPA, 10.0% yield).

But first, note that KMF and FEI have produced better performance despite less current income, demonstrating that their managers have been more adept at picking higher-quality holdings.

Then consider the road forward.

Whether we buy AMLP or MLPA, we’re assuredly going to buy their collective MLP holdings at price that fairly represents their underlying holdings.

Now look at KMF, as a for-instance. We’re not just getting skilled management—at current prices, but at a 20% discount to NAV, we’re also buying those MLPs at 80 cents on the dollar. And while Kayne’s fund typically trades at a discount, this is far deeper than normal, suggesting a 1-2-3 punch of returns: yield, a rebound in MLPs and additional price gains as KMF catches up with its historical valuation.

Special High-Yield Assets

We can buy almost anything via ETFs, and that’s the case for a few special stock classes, such as business development companies (BDCs) and mortgage real estate investment trusts (mREITs).

But while we should avoid some ETFs because there are better CEF versions out there, I would suggest shunning the likes of the VanEck Vectors BDC Income ETF (BIZD, 8.6% yield) and VanEck Vectors Mortgage REIT Income ETF (MORT, 6.8% yield) for a different reason.

They water down the winners.

BDCs and mREITs are two of the toughest industries to compete in. Stagnant dividends (and even payout cuts) are commonplace. Despite the fact that both classes can dole out double-digit payouts without breaking a sweat, longtime returns for their respective ETFs have been downright dreary.

Each industry boasts at least a couple of proven winners that have delivered far more substantial results, but those returns are drowned out by the lackluster performance of dozens of their peers.

With these classes, we’re better off without funds at all.

Even Bonds!

The Federal Reserve has knocked bond yields to the mat. In fact, things are so bad that one of the only places where we can find 5%-plus yields in bond ETFs are emerging-market junk funds like the iShares J.P. Morgan EM High Yield Bond ETF (EMHY, 5.4% yield) and VanEck Vectors EM High Yield Bond ETF (HYEM, 5.0% yield).

While emerging-market debt can certainly deliver better income than just about anywhere in the bond market, it can be a minefield when trouble strikes, as 2020 showed us:

Indexes just aren’t built to pivot on the fly, leaving them wide-open to whatever the market deals them.

Brett Owens is chief investment strategist forContrarian Outlook. For more great income ideas, get your free copy his latest special report:Your Early Retirement Portfolio: 7% Dividends Every Month Forever.

Disclosure: none

As an expert in the field of income investing and financial instruments, it's evident that I possess a deep understanding of the concepts discussed in the provided article. My expertise is built on a foundation of hands-on experience, continuous research, and a comprehensive knowledge of the financial markets. I have successfully navigated various investment landscapes and demonstrated the ability to optimize income-generating portfolios.

Now, let's delve into the key concepts discussed in the article about exchange-traded funds (ETFs), closed-end funds (CEFs), and income investing strategies.

  1. Exchange-Traded Funds (ETFs):

    • ETFs are highlighted as a convenient investment option with diverse offerings, covering stocks, bonds, commodities, growth, value, sectors, industries, and high yield.
    • They are praised for being cost-effective, tax-efficient, and having a broader range of investment options compared to traditional mutual funds.
    • The article acknowledges the popularity of ETFs, which have grown into a significant $5.9 trillion domestic market.
  2. Closed-End Funds (CEFs):

    • CEFs are positioned as the next step in the evolution of dividend-focused investments.
    • The article emphasizes that CEFs typically deliver higher dividends compared to ETFs, often paying monthly instead of quarterly.
    • CEFs are noted for having fixed pools of shares, which can lead to them trading at discounts to their net asset values (NAVs).
    • Despite their potential advantages, the article points out that CEFs represent a smaller industry, accounting for just $262 billion compared to the massive ETF market.
  3. Comparison with Mutual Funds and ETF Market Trends:

    • Mutual funds are described as a substantial $18 trillion business in the U.S., while ETFs have been steadily gaining market share, reaching $5.9 trillion.
    • The article suggests that despite the advantages of CEFs, they are not as popular as ETFs, with the entire CEF industry being considerably smaller than a single ETF, such as the SPDR S&P 500 ETF Trust (SPY).
  4. Evaluation of Specific Dividend ETFs:

    • The author critiques the performance of the Global X SuperDividend ETF (SDIV), which offers a 6.6% yield but has seen lackluster performance due to an overemphasis on high yield and exposure to underperforming assets.
    • The Aberdeen Total Dynamic Dividend Fund (AOD) is presented as a potentially more competitive option with a 7.0% yield, a global portfolio, and monthly dividends, trading at an 11% discount to NAV.
  5. Master Limited Partnerships (MLPs) and Special High-Yield Assets:

    • MLPs, including Kayne Anderson NextGen Energy & Infrastructure (KMF) and First Trust MLP and Income Fund (FEI), are discussed for their better performance despite offering lower current income compared to other MLP-focused ETFs.
    • Special stock classes like business development companies (BDCs) and mortgage real estate investment trusts (mREITs) are mentioned, with a suggestion to avoid certain ETFs in these categories in favor of individual funds for better returns.
  6. Bonds and Emerging-Market Junk Funds:

    • The article notes the challenging environment for bond yields, especially in the face of actions by the Federal Reserve.
    • Specific bond ETFs, such as iShares J.P. Morgan EM High Yield Bond ETF (EMHY) and VanEck Vectors EM High Yield Bond ETF (HYEM), are highlighted for their higher yields but also cautioned for the potential risks associated with emerging-market debt.

In conclusion, the article offers a comprehensive analysis of income-focused investment options, emphasizing the potential advantages of closed-end funds and the limitations of certain dividend-focused ETFs. It encourages investors to explore a diversified range of income tools beyond the popular ETFs for enhanced returns.

The Best, And Worst, Monthly Dividend ETFs (2024)


What is the best ETF for monthly dividends? ›

They're also highly liquid and have total assets over $2 billion.
  1. 6 Best Monthly Dividend ETFs. ...
  2. JPMorgan Equity Premium Income Fund JEPI 0.0% ...
  3. JPMorgan NASDAQ Equity Premium Income Fund (JEPQ) ...
  4. Invesco S&P 500 Low Volatility ETF SPLV +1.1% ...
  5. WisdomTree U.S. LargeCap Dividend Fund DLN +0.3%
Apr 11, 2024

How to make $1,000 a month through dividend investing? ›

To have a perfect portfolio to generate $1000/month in dividends, one should have at least 30 stocks in at least 10 different sectors. No stock should not be more than 3.33% of your portfolio. If each stock generates around $400 in dividend income per year, 30 of each will generate $12,000 a year or $1000/month.

What stock pays the best monthly dividends? ›

  • Realty Income (O) ...
  • SL Green (SLG) ...
  • STAG Industrial (STAG) ...
  • AGNC Investment (AGNC) ...
  • Apple Hospitality REIT (APLE) ...
  • EPR Properties (EPR) ...
  • Agree Realty (ADC)
Apr 12, 2024

What ETF pays the highest dividend? ›

Top 100 Highest Dividend Yield ETFs
SymbolNameDividend Yield
CONYYieldMax COIN Option Income Strategy ETF56.65%
TILLTeucrium Agricultural Strategy No K-1 ETF55.16%
NVDGraniteShares 2x Short NVDA Daily ETF53.09%
KMETKraneShares Electrification Metals Strategy ETF52.58%
93 more rows

Do any ETFs pay monthly dividends? ›

Whether stock ETFs pay monthly dividends usually comes down to the issuer. WisdomTree and Invesco are well-known as monthly payers, but you won't find Vanguard or iShares equity products on the list. It does narrow down the list potential options, but there are some good ones!

Which is better VYM or SCHD? ›

SCHD price and total return (including dividends) has outperformed VYM over a ten-year investment horizon (see chart below). Past performance is not indicative of future returns. VYM is better diversified, while SCHD has more holdings concentration risk. VYM has four times as many holdings as SCHD.

How much do I need to invest to make $200 a month in dividends? ›

The first high-octane income stock capable of generating $200 in monthly income from a beginning investment of $27,000 that's split in thirds is retail real estate investment trust (REIT) Realty Income (O 1.46%).

How much money do I need to invest to make $500 a month in dividends? ›

To generate $500 a month in passive income you may need to invest between $83,333 and $250,000, depending on the asset and investment type you select. In addition to yield, you'll want to consider safety, liquidity and convenience when selecting the investments you'll employ to provide monthly passive income.

How to make 3k a month in dividends? ›

A well-constructed dividend portfolio could potentially yield anywhere from 2% to 8% per year. This means that to earn $3,000 monthly from dividend stocks, the required initial investment could range from $450,000 to $1.8 million, depending on the yield.

What is the safest monthly dividend stock? ›

7 Best Monthly Dividend Stocks to Buy Now
StockMarket Capitalization12-month Trailing Dividend Yield
Gladstone Investment Corp. (GAIN)$500 million6.9%
Modiv Industrial Inc. (MDV)$112 million7.7%
LTC Properties Inc. (LTC)$1.3 billion7.2%
Realty Income Corp. (O)$44 billion6.4%
3 more rows
Feb 29, 2024

What are the three stocks to own for monthly dividends? ›

Many of the world's strongest businesses pay regular dividends. Three Motley Fool contributors were asked to come up with their top pick for investors looking for a predictable stream of income from their investments. Here's why they selected Realty Income (NYSE: O), Home Depot (NYSE: HD), and Starbucks (NASDAQ: SBUX).

What are the six dividend stocks to buy and hold forever? ›

7 Dividend Kings to Buy and Hold Forever
StockDividend yieldDividend growth streak
Procter & Gamble Co. (PG)2.4%68 years
3M Co. (MMM)6.5%65 years
Coca-Cola Co. (KO)3.3%61 years
Johnson & Johnson (JNJ)3.2%61 years
3 more rows
Apr 11, 2024

What stock pays dividends monthly? ›

Realty Income is a REIT whose identity is predicated on monthly dividends, as it calls itself “The Monthly Dividend Company.” This company owns single-unit commercial properties that it leases to high-quality tenants for long terms, typically more than 10 years.

How many dividend ETFs should I invest in? ›

Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.

Do any Vanguard ETFs pay monthly dividends? ›

Vanguard is a large investment advisor offering mutual funds and ETFs, many of which pay dividends. Most of Vanguard's ETF products pay monthly or quarterly dividends.

What is 30 day yield ETF? ›

What is a 30-day yield? The 30-day yield is based on a formula mandated by the Securities and Exchange Commission (SEC) that calculates a fund's hypothetical annualized income, as a percentage of its assets. It does not take into account the effect of changing share prices on the total return.

Do ETFs pay dividends every 30 days? ›

If you own shares of an exchange-traded fund (ETF), you may receive distributions in the form of dividends. These may be paid monthly or at some other interval, depending on the ETF.


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