5 Best Dividend ETF Investments for Passive Income: JEPI, JEPQ, SCHD, VYM, and SPHD

Bittime - Imagine a notification of money landing in your account at the start of each month without overtime or starting a new business. That’s the power of dividend ETF investing.

Dividend Exchange Traded Funds (ETFs) allow investors to receive routine passive income from dividend distributions while still having potential for capital gains.

This article explains what an ETF is, how it works, and presents five top dividend ETFs: JEPI, JEPQ, SCHD, VYM, and SPHD.

What Is an ETF and Why It Matters?

An ETF, or Exchange Traded Fund, is an investment instrument that bundles stocks, bonds, or other assets into a single tradable product that can be bought and sold on an exchange like a regular stock.

By purchasing one unit of an ETF, an investor immediately gains diversified exposure to hundreds of major companies worldwide.

Unlike single stocks, which carry higher idiosyncratic risk, ETFs are generally more stable because they spread risk. Another advantage is lower management costs (expense ratios) compared to traditional mutual funds.

Some ETFs even pay monthly or quarterly dividends, making them well suited for investors seeking cash flow.

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Why Dividend ETFs Are Popular

Dividend ETFs offer a combination of stable dividend yields and the potential for price appreciation (capital gain).

For investors looking to build supplemental income, dividend ETFs can be a long-term retirement strategy. Reinvesting dividends also benefits from compound growth, helping a portfolio grow faster over time.

5 Best Dividend ETFs for Passive Income

1. JP Morgan Equity Premium Income ETF (JEPI)

• Dividend Yield: approx. 8.4% per year
• Payments: Monthly, around the 5th
• Focus: Top 500 U.S. stocks such as Nike, Walmart, and Visa

JEPI is popular because it can provide stable cash flow using a covered-call options strategy to boost dividends.

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2. JP Morgan Nasdaq Equity Premium Income ETF (JEPQ)

• Dividend Yield: approx. 11% per year
• Payments: Monthly, around the 8th
• Focus: NASDAQ-100 technology stocks like Nvidia, Facebook, and Netflix

JEPQ is suitable for those targeting high yield from the technology sector, though it comes with higher volatility risk.

3. Schwab U.S. Dividend Equity ETF (SCHD)

• Dividend Yield: approx. 4% per year
• Capital Gain: approx. 7.8%
• Payments: Quarterly

SCHD is known as a global investor favorite because it contains stable companies like Apple, Microsoft, and Pfizer. The combination of dividends plus price growth makes it ideal for the long term.

4. Vanguard High Dividend Yield ETF (VYM)

• Dividend Yield: approx. 2.6%
• Capital Gain: approx. 11%
• Payments: Quarterly

VYM has a solid total return of about 13% per year. It contains established companies such as Johnson & Johnson, Procter & Gamble, and ExxonMobil. Suitable as a portfolio cornerstone.

5. Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)

• Dividend Yield: approx. 3.5%
• Capital Gain: approx. 8%
• Payments: Monthly, around the 25th

SPHD focuses on defensive stocks that are resilient when markets are turbulent. It includes companies such as AT&T, Verizon, and Walgreens.

Dividend ETF Investment Strategies

Allocating capital proportionally can maximize returns. With an average yield of about 8.4% per year, this strategy can provide stable passive income.

If dividends are reinvested, the portfolio can grow significantly over the long term.

Strategy should not only chase the highest yield but also consider the balance between risk and capital growth potential.

For example, investors can mix ETFs with different characteristics.

ETF such as JEPQ offers high dividend yield through exposure to tech stocks, while JEPI provides steady cash flow with relatively controlled risk via a covered-call strategy.

To keep a portfolio healthy long term, defensive ETFs like SCHD, VYM, or SPHD can complement these positions. SCHD is known for companies with strong fundamentals, while VYM focuses on companies with consistently high dividends.

SPHD, on the other hand, offers protection during volatile markets because it contains low-volatility stocks.

By combining several of these ETFs proportionally, an investor can create a stable dividend stream while building capital gains, without sacrificing portfolio safety.

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Conclusion

Dividend ETFs are a smart instrument to build long-term passive income.

Among the five top choices (JEPI, JEPQ, SCHD, VYM, SPHD), each has strengths: some focus on high yield while others are more stable for the long term.

With the right portfolio strategy, investors can receive monthly dividend streams while also building healthy capital growth.

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FAQ

What is a dividend ETF?

A dividend ETF is an ETF that distributes routine dividends to unit holders, typically monthly or quarterly.

Which dividend ETF is best for beginners?

SCHD and VYM are suitable for beginners because they are stable and have low costs.

Are dividend ETFs safe?

They are safer than single stocks because they are diversified, but they still carry market risk.

What is the average yield of dividend ETFs?

It varies, generally between 2.5% and 11% per year depending on the ETF.

How can I buy dividend ETFs from Indonesia?

Global ETFs can be purchased through international brokers or brokerage apps that provide access to U.S. markets.