<div id="readability-page-1"><p>High-yield funds can be risky. In a perfect world, every ultra-generous dividend yield would be a direct result of strong businesses generating lots of excess cash profits. In the real world, they're more often related to low stock prices and businesses in deep financial trouble. As a result, high yields tend to be paired with disappointing price charts and modest total returns, at best.</p> <p>What if I told you that one of the largest income-focused exchange-traded funds (ETFs) on the market today combines rich yields with impressive fund-price gains? The <strong>JPMorgan Nasdaq Equity Premium Income ETF</strong> <span>(JEPQ<span> 0.83%</span>)</span> checks both of those shareholder-friendly boxes -- and many more.</p> <h2>Why this young income-oriented ETF is turning heads</h2> <p>The Premium Income ETF is a very young fund, launched in May 2022. You may also have skipped it in the massive sea of income-generating ETFs because it's an actively managed fund. Passive index funds tend to come with lower annual fees, so it makes sense to start your fund-screening process with that criterion.</p> <p>But this <strong>JPMorgan</strong> instrument may be well worth its 0.35% management fee. Here's a quick rundown of the fund's unique qualities:</p> <h3>The good:</h3> <ul> <li>The Premium Income ETF's experienced management team relies on data science to select high-income stocks from the growth-oriented <strong>Nasdaq 100</strong> market index.</li> <li>54% of the portfolio is currently invested in information technology and communication services -- two market sectors closely related to the ongoing artificial intelligence (AI) boom.</li> <li>The top 10 holdings include the entire list of &#34;Magnificent 7&#34; stocks -- proven winners with very large market caps.</li> <li>Some of those tech giants don't pay dividends, but the fund managers generate monthly income from them in other ways.</li> <li>Annual dividend yields currently stand at 9.3% after rising above 12% over the summer.</li> <li>It has a massive $20.7 billion of assets under management, despite its short market history. Investors were quick to embrace this promising new fund:</li> </ul> <p><img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/574d9936c72ba0d760c2ef0879b5cd33.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="380" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/574d9936c72ba0d760c2ef0879b5cd33.png"/></p> <p>JEPQ Total Assets Under Management data by YCharts.</p> <h3>The bad:</h3> <ul> <li>The dividend-boosting methods include some risky tricks, such as selling short-term call options to generate payments out of volatile stocks. That's great when it works, but could also result in weak fund performance <em>and</em> lower yields in a persistent market downturn.</li> <li>The fund was launched a couple of months before this bull market started. It has not yet been tested in a weak economy, which could unleash the downsides of option-based investing tactics.</li> <li>The 0.35% management fee may not look like much, but it's far above the 0.06% average of the 10 largest ETFs today and even further ahead of low-cost funds such as the <strong>Vanguard S&amp;P 500 ETF</strong> <span>(VOO<span> 1.03%</span>)</span>. The fee could actually make a big difference in the long run. The Vanguard fund's 0.03% annual fee adds up to 0.3% in a decade, while the Premium Income ETF's fees would total 3.6% over the same period.</li> </ul> <p>The options-based income generation results in a monthly dividend payout instead of the usual quarterly checks. You can call that an upside or a downside, depending on which payout cadence you prefer.</p> <h2>How the ETF stacks up against the S&amp;P 500</h2> <p>The Premium Income ETF's total returns have matched broad market trackers like the Vanguard S&amp;P 500 ETF since its 2022 inception. At the same time, the fund price has only increased 28%, while the market tracker rose by 46%. In other words, the fund remains reasonably priced, even in a rare market surge, and you're still locking in some incredible dividend payouts for the long run.</p> <p><img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/0e6f9525f7f1a153bafdd90b7280ebcc.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="380" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/0e6f9525f7f1a153bafdd90b7280ebcc.png"/></p> <p>JEPQ data by YCharts.</p> <h2>Long-term dividend yields</h2> <p>The monthly payouts added up to $5.38 per share over the last year, or a 10.7% yield against the current share price of approximately $58. I can't promise that the fund will boost its payouts forever, given its reliance on unconventional options-based techniques, but it could be useful to consider how a modest payout increase could play out over time.</p> <p>Let's imagine that the fund's annual total returns hover around the 10% mark over the next decade -- a fairly reasonable assumption for a fund that tends to match the <strong>S&amp;P 500</strong>. I would assume that the dividend payouts increase at a similar rate, which results in a 159% increase over the next decade.</p> <p>You would still have a current yield of 9.3% at that point, but the same payout represents a 24% yield against the original purchase price. If you're looking for strong dividend payouts 20 years down the road, this fund could give you an effective yield of 62% on an investment made in 2024.</p> <p>This thought experiment relies on many assumptions, but you get the idea. Even if the JPMorgan Nasdaq Equity Premium Income ETF might underperform the S&amp;P 500, it could grow into a hyper-effective source of cash payouts in the long term. If you have $2,000 available to start a position today, this fund could pay out dividends approaching $1,317 in 2044. That's an effective yield of 66%, though it could be higher or lower depending on how accurate my assumptions are.</p> <p>At that point, the price per share won't really matter anymore. You'd never sell any part of that high-powered cash machine unless you absolutely had to.</p>                                                                                             </div>

<p>The JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) is highlighted as a promising investment option for those seeking high-yield dividends. Launched in May 2022, it combines a 9.3% annual yield with a 28% fund price increase. The fund focuses on high-income stocks from the Nasdaq 100, with significant investments in tech sectors. However, it employs risky strategies like selling short-term call options, which could affect performance in downturns. Despite a higher management fee of 0.35%, it offers monthly payouts and has matched the S&P 500's total returns since inception.</p>

The Best High-Yield Dividend ETF to Invest $2,000 in Right Now