These Dividend ETFs Still Yield Over 7% Without Using Options

Covered-call funds draw income investors with big checks, but they sell options against their holdings and give up upside in the process. The original roundup of dividend ETFs that yield over 7% without using options took a simpler path: own high-payout assets directly and pass along what they distribute. This update keeps that approach. It swaps out one fund that slipped below the bar and adds a lending category that the first list missed. The top yielder on the updated roster pays a trailing 12.6%, and every fund here clears 7% on trailing distributions at current prices.

Alerian MLP ETF Keeps Raising Its Quarterly Payout

Alerian MLP ETF (NYSEARCA:AMLP) holds energy infrastructure master limited partnerships (MLPs). Most of them are fee-based midstream operators that move and store oil, natural gas, and refined products. At a recent price near $54, trailing 12-month distributions of $4.07 work out to an ultra-high yield of 7.5%. The annualized forward rate of $4.12 means 7.6%.

No fund on this list has a stronger payout trend. A year ago, the quarterly distribution was $0.98. Since then it has gone to $1, then $1.01, and it has paid $1.03 in each of the last two quarters. Go back further and it was $0.88 in early 2024. The record also shows what a real cut looks like: in 2020 the payout dropped to a pre-reverse-split $0.15 before recovering. For an income investor, the dollar checks have grown steadily since that adjustment.

So why is the yield only a little above 7%? Price. The fund has gained 16.0% over the past year and 14.0% year to date. When the price rises faster than the payout, the yield shrinks even as each check gets bigger. With $13.0 billion in net assets, it is the largest fund in this group. Investors also get a single Form 1099 instead of the K-1s that come with owning MLPs directly.

Risk: concentration. The five largest positions (Sunoco at 14.2%, Energy Transfer at 13.9%, Plains All American at 13.8%, Western Midstream at 13.3%, and MPLX at 12.7%) add up to 67.8% of net assets. A distribution cut at any one of them would show up in your income.

Invesco KBW Premium Yield Equity REIT ETF Pays Monthly, but the Check Is Shrinking

Invesco KBW Premium Yield Equity REIT ETF (NASDAQ:KBWY) holds small and midsize equity REITs picked for high yields, and it pays every month. Start with safety: the payout has been trimmed. A year and a half ago, the monthly distribution was $0.12623. The latest is $0.11980. The decline came as a string of small reductions, with the biggest steps over three straight months: $0.12502, then $0.12252, then $0.12001.

The yield still counts. With shares at $16.38, trailing distributions of $1.4734 produce a trailing yield of 9.0%. Because recent checks are smaller, the annualized forward rate of $1.4376 means a lower 8.8%, which is the better number for planning. Over its longer history, the payout has moved around a lot, from $0.10254 in late 2021 to $0.1402 in mid-2023.

The bull case comes from price. Shares have gained 8.9% over the past year and 5.2% year to date, and the fund still yields close to 9% after that run. Monthly deposits also make it easy to line up income with bills.

Risk: years of high payouts have not built much capital. The price is in the red over five years and ten years, so nearly all the return here comes from the distributions.

Global X SuperDividend ETF Takes Over From an Emerging Markets Fund That Fell Short

iShares Emerging Markets Dividend ETF (NYSEARCA:DVYE) made the original list but no longer meets the bar. Trailing distributions of $1.741619 against a $33.36 price give it a yield of 5.2%. Its quarterly checks are also uneven, ranging from $0.103895 to $0.645875 over the past year.

Global X SuperDividend ETF (NYSEARCA:SDIV) keeps the global angle and pays monthly. It has paid $0.18 in each of the last six months. At $22.74, trailing distributions of $2.227 make for an ultra-high yield of 9.8%, and the forward rate means 9.5%.

The fund tracks an index of the 100 highest-yielding stocks worldwide. Most positions are close to 1% of assets, and the largest, Thaifoods, is just 1.8%. Holdings include Norwegian oil producers such as Var Energi and Aker BP, shipping companies such as Hoegh Autoliners and Nordic American Tankers, banks in Brazil, Indonesia, and Kazakhstan, and a large group of U.S. mortgage REITs, including AGNC Investment, Annaly Capital Management, and Two Harbors Investment. Because no single holding is large, one company’s cut barely moves your check.

The track record is weaker. Monthly payouts were $0.255 in early 2023 and have stepped down to $0.21, $0.20, $0.19, and now $0.18. In late 2022, they fell as low as $0.085 due to a reverse stock split.

Risk: long-term price erosion. The price is down 4.7% over ten years and 0.4% over five, and it fell 6.2% in the past week alone. The fund functions primarily as a source of cash flow.

VanEck BDC Income ETF Brings Private Credit Income to the Roster

VanEck BDC Income ETF (NYSEARCA:BIZD) holds business development companies, or BDCs. These publicly traded companies lend money to midsize private businesses and must pass most of their taxable income to shareholders. The fund is the highest yielder here. At $12.39 per share, trailing distributions of $1.5595 equal an ultra-high yield of 12.6%.

Ares Capital is the largest holding at 14.3% of net assets, followed by Blue Owl Capital at 5.9%, Blackstone Secured Lending at 5.4%, and Main Street Capital at 5.3%. Net assets total $1.6 billion. One quirk to know about: BIZD’s reported expense ratio includes the management fees of the BDCs it holds (called acquired fund fees), so it looks much higher than a typical index ETF’s. Those fees are already taken out before the BDCs pay their dividends.

Quarterly payouts are lumpy. The latest was $0.4371, up from $0.2391 the quarter before but below the $0.4818 paid before that. The longer view is better: the price is up 104.81% over ten years and 22.37% over five, so BDC income has come with real capital gains over time.

Risk: credit. If borrowers start missing payments, BDC income shrinks and dividends follow. The market appears to have already priced in some of that worry: shares are down 12.8% over the past year and 12.6% year to date.

Four Income Streams Built for Retirement Cash Flow

Pipelines, small-cap REITs, private-credit lenders, and global high yielders each pay over 7% without selling options, and each pays for different reasons. Alerian MLP ETF has the best record of payout growth, and BIZD has the highest yield. KBWY and SDIV deliver monthly checks, but their payouts have been going lower (the kind of slow-fade pattern we cataloged in a free guide to the seven warning signs a big yield is about to be cut). These are higher-risk parts of the market, so income investors near retirement may want to research how each one fits within a diversified income portfolio.

Contact [email protected] for any questions or corrections.