2022 been a very challenging year for income-hungry investors who earlier relied on bonds. Some ETFs that use options to hedge against market losses and pay juicy dividends have been quite popular with investors.
The JPMorgan Equity Premium Income ETF JEPI aims to construct a diversified, low volatility portfolio of about 125 stocks. It generates additional income by writing out-of-the-money S&P 500 Index call options.
The actively managed ETF currently has an attractive 12-month rolling dividend yield of about 10%. Exxon Mobil XOM AbbVie ABBV are among its top holdings.
The Amplify CWP Enhanced Dividend Income ETF DIVO also aims to provide high income from both dividends and covered calls. Its managers pick about 25 high-quality large-cap companies with a history of dividend growth, and then write covered calls on individual stocks for extra income.
DIVO’s current distribution rate is close to 5%. UnitedHealth Group UNH and McDonald's MCD are its top holdings.
Both these products have significantly outperformed the broader market this year and taken in a lot of cash. To learn more about these ETFs, please watch the short video above.
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