The 3 Monthly Income ETFs I Would Buy Today for Retirement Cash Flow

I’m a total return guy. All I really care about is after-tax performance with distributions reinvested. I couldn’t care less about how much yield an ETF throws off.

Even in retirement, I’d be perfectly fine just selling shares as needed to fund withdrawals. From a portfolio standpoint, that’s no different than receiving income. But while I believe that’s the correct way to think about it, I know it’s a minority view.

There’s a sizable group of retirees who are strongly against selling shares. To them, it feels like drawing down principal. Dividends, and especially monthly distributions, feel like income or even “free money,” even though the economic reality is the same.

I’m not going to argue with that perspective today. If that’s how you prefer to structure your retirement income, there are still some basic principles you can follow to choose better funds. The key is to understand that higher yield often comes with more complexity, more trade-offs, and sometimes lower total return.

With that in mind, here are three monthly income ETFs that work along a spectrum, starting simple and moving toward higher yield and more complex strategies.

Plain-Vanilla High Dividend Stocks

If I wanted to keep things simple and avoid derivatives entirely, I’d start with the WisdomTree U.S. High Dividend Fund (NYSEARCA: DHS).

DHS pulls its holdings from the broader WisdomTree U.S. Dividend Index but applies a high-yield screen. The key detail is how it weights stocks. Instead of weighting by dividend yield, it weights by the total cash dividends a company pays.

That means larger, more established companies that generate more total dividend dollars get a higher weight, rather than simply chasing the highest yielders, which can sometimes be riskier. That helps reduce exposure to potential yield traps.

On top of that, DHS applies a composite risk score based on value, quality, and momentum factors. This can adjust individual weights up or down depending on fundamentals. The end result is a portfolio that not only boosts yield but also improves valuation. DHS currently trades at about 15.81 times earnings, which is well below the broader market.

Sector exposure also looks different. Instead of being tech-heavy, the largest weights are in financials, consumer staples, and healthcare, the last two of which are regarded as defensive and non-cyclical, which is good for retirees.

After a 0.38% expense ratio, DHS currently offers about a 4.25% distribution yield. That’s calculated by taking the most recent monthly payout, annualizing it, and dividing it by the ETF’s current net asset value (NAV).

Active Stock Selection and Options

If I wanted a bit more yield, I’d step up to the Amplify CWP Enhanced Dividend Income ETF (NYSEARCA: DIVO). Unlike DHS, this ETF is actively managed.

Portfolio manager Kevin Simpson selects a concentrated portfolio of around 20 to 25 large-cap stocks based on dividend growth, earnings growth, free cash flow, return on equity, and management quality. Sector weights are adjusted based on his macro outlook.

There’s also an options overlay, but it’s not rigid. Simpson writes covered calls on individual stocks, adjusting strike prices, expiration dates, and coverage levels based on factors like implied volatility, market conditions, and company-specific outlook.

The focus here is not purely maximizing yield. It’s about balancing income with total return, and DIVO has delivered on that.

Over the past three years, it has returned about 15.15% annualized. After a 0.56% expense ratio, DIVO offers about a 4.79% distribution yield based on recent payouts.

High Yield Through Equity-Linked Notes

If I wanted to push yield higher, I’d look at the JPMorgan Equity Premium Income ETF (NYSEARCA: JEPI). This is one of the largest active ETFs in the U.S., with about $43.89 billion in assets.

The strategy has two parts. First, portfolio manager Hamilton Reiner builds a defensive portfolio of U.S. equities, broadly aligned with the S&P 500 but tilted toward lower-volatility names.

Second, up to 15% of the portfolio is allocated to equity-linked notes. These are structured products that replicate the payoff of selling out-of-the-money monthly covered calls on the S&P 500 index.

The result is a portfolio that combines equity exposure with an income-generating options overlay, at the cost of capping some upside. JEPI is more focused on generating current income than DIVO.

That shows up in the numbers. It currently offers about a 7.5% distribution yield, but its three-year annualized return of around 12.24% trails DIVO. On the plus side, it’s also the cheapest of the three, with a 0.35% expense ratio.