High Yield and Low Stress: 2 Dividend ETFs That | Global Market News
Key Points
The JPMorgan Equity Premium Income ETF (NYSEMKT: JEPI) and JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ) have garnered vital investor consideration, partially resulting from their trailing-12-month dividend yields of 8.2% and 11.2%, respectively. Moreover, they offer month-to-month income, making them a favourite amongst passive income buyers.As such, it might be fascinating to share some modeling of their efficiency to see in the event that they do offer buyers a solution to a comparatively low-volatility strategy that virtually ensures a month-to-month income. (Keep in thoughts dividends can at all times be cut.)Where to invest $1,000 proper now? Our analyst group simply revealed what they consider are the ten best stocks to buy proper now. Learn More »Introducing two JPMorgan ETFsThe very first thing to grasp about these two exchange-traded funds is that they don’t seem to be tailor-made to invest in dividend stocks.
Instead, they each observe the identical strategy of investing up to 80% of web property in equities (stocks), with the one distinction being that the Equity Premium ETF focuses on S&P 500 stocks whereas the Nasdaq Equity Premium ETF focuses on stocks within the Nasdaq-100.As famous above, the stocks usually are not explicitly chosen for his or her dividend yield, an important level as a result of high-yield equity-focused ETFs typically contain concentrating holdings in sectors with high yields.The remaining web property, up to twenty%, are invested in equity-linked notes (ELNs) that observe a strategy of promoting call choices on the indexes that the 2 ETFs benchmark — S&P 500 and Nasdaq-100, respectively.A call option is the appropriate to buy shares of the index at a specified price (the strike price) and is purchased by bullish buyers. The vendor of the call choices (on this case the ETF) receives a premium from the client.However, if the index will increase considerably, the option is exercised, and the ELN usually incurs a loss. Conversely, when the index experiences a small gain, stays flat, or loses worth, the option is not exercised.
The thought is that an anticipated web revenue in premiums collected from the ELNs, mixed with some dividend income from stock holdings, will generate adequate income for distributions to be paid to shareholders below any situation, significantly within the occasion of a substantial increase within the index.And observe that the upside is restricted (positive aspects much less than the market), however the draw back can also be restricted.This desk lays out how the parts of the ETFs will carry out primarily based on how the underlying index performs in a month.
Monthly Index Performance
Strong Gain
Moderate Gain
Moderate Loss
Strong Loss
Equities (At least 80% of the ETF property)
Strong Gain
Gain
Loss
Strong Loss
ELNs (Up to twenty% of the ETF’s property)
Loss
Profit
Profit
Profit
Overall
Gain, however much less than the market
Gain, however much less than the market
Slight revenue/slight loss
Loss, however much less than the market
Author’s evaluation.What the ETFs need to do to exhibit they workBefore I throw charts at you, it is value noting that the proof of the strategy working consists of:
That mentioned, listed below are the charts evaluating the month-to-month index efficiency to the ETF’s efficiency. Both units of information embody reinvestment of dividends.First, this is the JPMorgan Equity Premium Income ETF.
Data source: JPMorgan. Chart by writer.
And now the JPMorgan Nasdaq Equity Premium Income ETF.
Data source: JPMorgan. Chart by writer.
A couple of conclusions might be drawn from the information, together with some further calculations.
In basic, the strategy is efficient, producing a assortment of optimistic returns when the indices report reasonable positive aspects and losses. The draw back is restricted in comparison with the index when the market declines considerably, and the upside is restricted when the indexes carry out nicely.
Image source: Getty Images.
What it means to passive buyersBoth indices have carried out very nicely over the durations, with an average month-to-month gain of 1.5% on the S&P 500 and 1.8% on the Nasdaq; due to this fact, the ETFs have understandably underperformed.However, there’s no guarantee that these circumstances will proceed, and these ETFs have demonstrated decrease volatility returns whereas sustaining substantial dividends for these looking for month-to-month income. As such, they’re glorious choices for these looking for to generate passive income throughout a vary of market circumstances.Should you invest $1,000 in JPMorgan Equity Premium Income ETF proper now?Before you buy stock in JPMorgan Equity Premium Income ETF, contemplate this:
The Motley Fool Stock Advisor analyst group simply recognized what they consider are the ten best stocks for buyers to buy now… and JPMorgan Equity Premium Income ETF wasn’t one of them. The 10 stocks that made the cut might produce monster returns within the coming years.Consider when Netflix made this listing on December 17, 2004… in the event you invested $1,000 on the time of our advice, you’d have $663,630!* Or when Nvidia made this listing on April 15, 2005… in the event you invested $1,000 on the time of our advice, you’d have $1,115,695!*Now, it’s value noting Stock Advisor’s whole average return is 1,071% — a market-crushing outperformance in comparison with 185% for the S&P 500. Don’t miss out on the latest high 10 listing, out there while you be part of Stock Advisor.See the ten stocks »*Stock Advisor returns as of August 13, 2025JPMorgan Chase is an promoting accomplice of Motley Fool Money. Lee Samaha has no place in any of the stocks talked about. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure coverage.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
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