QQQI, JEPQ, SPYI and MSTY: 4 ETFs That Act Like Passive Income Machines

The beauty of passive income grows with time, especially in the current economic climate. Investors have been facing a perfect storm of trade path changes, elevated interest rates, and persistent inflation, leaving many between a rock and a hard place in search of outperformance. Passive income, where you can earn money 24/7, is a sure-fire way to combat the economic uncertainty, but it can be hard to come by unless you know where to look.

Fortunately, the markets offer no shortage of ETFs to choose from, including those that are concentrated in generating income like it’s their job. We have identified four ETFs that act like passive income machines that could deserve a place in your portfolio allocation. These include the NEOS NASDAQ-100(R) High Income ETF (Nasdaq: QQQI), JPMorgan Nasdaq Equity Premium Income ETF (Nasdaq: JEPQ), Neos S&P 500(R) High Income ETF (SPYI) and Yieldmax MSTR Option Income Strategy ETF (MSTY). While each of these ETFs has its own risk/reward strategy, one common denominator among them is income. Even if you’ve heard of these income-generating ETF machines before, stick around because we are sure to uncover some fresh perspectives.

• QQQI targets high monthly income through Nasdaq-100 holdings and options overlay while delivering 20.8% annualized returns since inception.

• JEPQ returned 14.2% year-to-date by combining Nasdaq-100 exposure with covered call options that generate monthly distributions.

• SPYI delivers 11-12% trailing yield through S&P 500 holdings plus covered calls that qualify for favorable 60/40 tax treatment.

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The NEOS NASDAQ-100(R) High Income ETF (QQQI) will position an investor for what analysts expect will be a bullish 2026 market cycle for technology stocks. With members like Nvidia, Apple, Microsoft and Broadcom as top holdings, the QQQI ETF pays monthly income in a tax-efficient way, capturing the attention of investors at the start with a reasonable payout ratio of 0.68%.

While this ETF might appear to be more interested in growth than income, don’t let its tech exposure fool you. By harnessing a data-powered options strategy, QQQI aims to pay high monthly income through its investments in Nasdaq 100 index holdings. Run by NEOS, this ETF not only targets strong monthly income but also keeps investors in the game for possible upside from the Nasdaq-100.

At its core, the fund blends ongoing tax-loss harvesting with a more advanced options overlay using NDX index options, which typically qualify for a favorable 60/40 mix of long-term and short-term capital gains for tax purposes. The options sleeve is designed to generate extra income by selling and buying NDX index calls while still leaving room to participate when the Nasdaq 100 moves higher. The ride can be more exciting than a traditional income fund, but as a reward, QQQI has delivered about 20.8% annualized returns since inception, with an 18.5% increase YTD that’s only slightly behind the Nasdaq 100. For investors who can handle tech’s ups and downs in exchange for high monthly payouts, QQQI is built to turn Nasdaq 100 volatility into a potential passive income stream.

Next up is the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ). This ETF is a fan favorite for its monthly cash distributions and association with the Nasdaq 100 without all the volatility. With returns of 14.2% year-to-date, JEPQ hasn’t let investors down owing to a portfolio management team with a deep bench of experience in both stocks and equity derivatives. Dividends vary and currently hover at $0.55323 per share, up from $0.47553 in November. With an expense ratio of 0.35% and YTD returns of 14.20%, investors appear to be well positioned.

The fund strategy is two-pronged. The JPMorgan Nasdaq Equity Premium Income ETF is built to give investors exposure to the Nasdaq 100 while smoothing out the ride and pay a steady stream of monthly income. Fund managers use a data-driven, fundamentals-based approach to pick and weight stocks in the index.

On top of that, the fund adds an options overlay: it regularly sells out-of-the-money call options on the Nasdaq 100 Index. The option premiums collected are a main source of the fund’s distributable monthly income, while the equity sleeve is meant to keep investors with capital appreciation, but with less volatility than a straight Nasdaq 100 position. Among the 106 holdings include Big Tech stocks Nvidia, Apple, Microsoft, Alphabet and Broadcom, among others.

While the covered-call approach can limit some upside in big Nasdaq rallies, it also helps keep the ride smoother along the way. Payouts can move around with market conditions, but the goal is to keep a steady stream of monthly income on top of equity exposure. For investors who want Nasdaq-linked growth with more consistent cash flow, JEPQ aims to be more of a passive income machine than a pure high-octane growth bet.

The NEOS S&P 500 High Income ETF (SPYI) delivers the diversification of America’s biggest companies alongside a genuinely juicy monthly paycheck. The magic happens through a covered-call strategy on steroids. SPYI owns the underlying S&P 500 stocks, or close equivalents,  and strategically sells call options against the index. Those option premiums get paid out to shareholders every month. To keep a little more upside on the table than a traditional covered-call fund, NEOS will sometimes buy more options with a portion of the premiums, essentially giving the fund a bit of extra kick when the market is in bull rally mode.

At 0.68% expense ratio, it’s not the cheapest ETF on the block, but the trailing 12-month yield has consistently hovered close to 12%, which explains why money has poured in since its 2022 launch. One twist is that the options are written on the S&P 500 index, so they fall under Section 1256 tax treatment, which translates to lower 60% long-term and 40% short-term capital gains no matter how long you hold the ETF. On top of that, actively managed NEOS tax-loss harvests throughout the year, which can further offset the tax bite in taxable accounts.

In short, SPYI could deliver meaningful monthly income without abandoning large-cap U.S. stocks entirely. It’s not going to perfectly track the S&P 500 in a straight-up bull market, but for retirees, entrepreneurs or someone trying to turn their brokerage account into an income machine, it’s one of the more compelling funds available right now.

For investors comfortable with extra volatility in exchange for the chance at truly standout income, the YieldMax MSTR Option Income Strategy ETF (MSTY) is worth a close look. It takes the roller-coaster stock of MicroStrategy (Nasdaq: MSTR), the company famous for holding massive amounts of Bitcoin, and turns it into an ETF that pays out every single week. Since launching in early 2024, the fund size has ballooned to more than $1.8 billion in assets, which tells you plenty of income-focused investors are happy to ride the ups and downs.

Unlike a traditional stock ETF, MSTY doesn’t actually own shares of MicroStrategy. Instead, it creates synthetic exposure using options, while parking most of the portfolio in safe U.S. Treasury bills. On top of that position, the managers sell call options to collect premiums. Those premiums are the primary fuel for the weekly distributions, which can come from option income, capital gains, dividends or even return of capital, meaning the payout size fluctuates but can potentially be lucrative.

The expense ratio is 0.99%, noticeably higher than broad-market ETFs, yet that’s the price of admission for this risky play. You still participate in some of MSTR’s upside, but the sold calls will limit gains when the stock rockets higher, a trade-off for the extra income layer.

Keep in mind this ETF represents a single-stock strategy tied to a company whose fortunes are closely linked to Bitcoin. Volatility is high, downside risk is real and there’s nearly zero diversification to soften the blow if things go awry. Distributions that include return of capital can also reduce your cost basis over time, so most people prefer to hold MSTY in an IRA or other tax-advantaged account. In the world of passive income machines, MSTY sits at the risky end of the spectrum, big weekly paydays for those who can handle the bumps and keep a long-term perspective on MicroStrategy and crypto.

You may think retirement is about picking the best stocks or ETFs, but you’d be wrong. Even great investments can be a liability in retirement. It’s a simple difference between accumulating vs distributing, and it makes all the difference.

The good news? After answering three quick questions many Americans are reworking their portfolios and finding they can retire earlier than expected. If you’re thinking about retiring or know someone who is, take 5 minutes to learn more here.