Updated 21.6.2023 20:13
Our Research Team Has Compiled a List of Five Lesser-Known Dividend ETFs With Ultra-High Double-Digit Yields
When searching for the highest-paying dividend ETFs, there are a few key factors to consider. The five unique ETFs we reviewed are currently paying out annual yields between 11.1% and 32.35%.
In the world of high-yield ETFs, there are certain details that investors should always include in their research before making an investment. Before we get into our list of five ETFs, we’ll quickly review the four key points that should be factored into your due diligence to help make the best investment decision possible.
- Dividend Yield: This is the most straightforward factor. It’s the annual dividend payment divided by the stock’s current market price. A higher yield can mean a better return, but it’s also important to watch out for extraordinarily high yields, as they may not be sustainable.
- Dividend Growth: Companies that consistently increase their dividends over time can be a good choice. These companies typically have strong financial health and are confident in their future earnings growth.
- Payout Ratio: This is the proportion of earnings a company pays shareholders in dividends. A lower payout ratio could mean the company is retaining more payments for growth, but a higher payout ratio could indicate that the company is generously sharing its profits with shareholders.
- Sector and Sustainability: Specific sectors are known for higher dividends, such as utilities and real estate (REITs). These sectors often have stable, predictable cash flows and thus can afford to pay out substantial dividends. When it comes to sustainability, it’s crucial to look at whether a company’s profits are expected to continue at a level that will sustain its dividend payments. If earnings are volatile, the company may not always be able to pay its dividend.
5 Little-Known ETFs With Huge Yields
In the ever-evolving investment landscape, the search for high-yield returns often leads investors off the beaten path. Today, we spotlight five lesser-known ETFs that have been quietly delivering impressive yields, ranging from 11.1% to a staggering 32.35%. These ETFs offer a diverse range of exposures, from commodities to equity volatility, global equities, and advanced income strategies.
1. iShares U.S. Trust GSCI Commodity Dynamic Roll Strategy ETF (NASDAQ: COMT) | Yield: 32.35%
The iShares U.S. Trust GSCI Commodity Dynamic Roll Strategy ETF (NASDAQ: COMT) leads the pack with an incredible yield of 32.35%. COMT is an ETF designed to offer exposure to a broad range of commodities while mitigating the negative effects of contango, a market scenario where futures prices are higher than the spot price. Despite its less well-known status, COMT’s yield makes it an ETF worth considering for those willing to take on the inherent volatility of commodity markets.
Shares of COMT closed trading today at $25.91 per share, down –0.54% on the day. YTD, COMT ETF is down -5.68%.
2. iShares Currency Hedged MSCI EAFE ETF (NYSE Arca: HEFA) | Yield: 22.17%
The iShares Currency Hedged MSCI EAFE ETF (NYSE Arca: HEFA) provides a unique offering with a yield of 22.17%. This fund targets the performance of equity securities in developed international markets (Europe, Australasia, Far East) while mitigating exposure to fluctuations between the value of component currencies and the U.S. dollar. For investors looking to diversify internationally while managing currency risk, HEFA is a compelling choice.
Shares of HEFA closed trading today at $30.52 per share, up +0.16% on the day. YTD, HEFA ETF is up +11.1%.
3. Simplify Volatility Premium ETF (NYSE Arca: SVOL) | Yield: 17.23%
The Simplify Volatility Premium ETF (NYSE Arca: SVOL) offers an intriguing approach to volatility investing, with a yield of 17.23%. SVOL aims to provide investors with exposure to the equity volatility premium, the tendency of implied volatility (as priced by options markets) to exceed realized volatility. As such, it can serve as a valuable addition to a diversified portfolio, particularly for investors seeking to hedge against market turbulence.
Shares of SVOL closed trading today at $22.79 per share, up +0.31% on the day. YTD, SVOL ETF is up +4.16%.
4. Global X Russell 2000 Covered Call ETF (NYSE Arca: RYLD) | Yield: 12.65%
The Global X Russell 2000 Covered Call ETF (NYSE Arca: RYLD) focuses on a classic income-generating strategy, offering a yield of 12.65%. This ETF follows a “covered call” strategy, which involves holding a portfolio of stocks (in this case, replicating the Russell 2000 index) and selling call options on that portfolio. This strategy can generate income from option premiums, making RYLD a solid pick for those seeking consistent income.
Shares of RYLD closed trading today at $18.37 per share, even on the day. YTD, RYLD ETF is down -2.24%.
5. JPMorgan Equity Premium Income ETF (NYSE Arca: JEPI) | Yield: 11.10%
Rounding out our list is the JPMorgan Equity Premium Income ETF (NYSE Arca: JEPI), with a yield of 11.10%. JEPI uses a unique approach, applying an option overlay strategy to a portfolio of U.S. large-cap stocks to generate income while also offering the potential for capital appreciation. JEPI’s blend of income and growth potential could be a valuable component of a balanced portfolio.
Shares of JEPI closed trading today at 54.51 per share, up +0.18% on the day. YTD, JEPI ETF is up +0.07%.
It’s also important to remember that while dividends can provide a steady income stream, they are not guaranteed. The company’s board of directors can choose to decrease or eliminate the dividend at any time.
So what are your thoughts on these ETFs?
Disclaimer: Wealthy VC does not hold a long or short position in any of the stocks mentioned in this article.