The Best Dividend ETFs for Monthly Passive Income (Top Monthly-Paying Funds)

The Best Dividend $\text{ETFs}$ for Monthly Passive Income

For investors seeking reliable cash flow, **monthly dividend $\text{ETFs}$** are the bedrock of a passive income portfolio. Unlike traditional quarterly payouts, monthly dividends provide predictable income that closely mimics a regular paycheck, making budgeting and reinvesting simpler.

However, you can't just chase the highest yield. The best funds balance a high payout with **long-term stability, low fees, and potential dividend growth**. Here are the top $\text{4}$ monthly dividend $\text{ETFs}$ for $\text{2025}$, categorized by their primary investment goal.

The Three Pillars of Monthly Dividend Investing

When selecting a monthly dividend fund, consider these trade-offs:

**Yield:** The percentage payout (Income Focus). Higher yield often means lower growth potential.
**Dividend Growth:** The historical rate at which the payout increases (Growth Focus). Crucial for beating inflation.
**Expense Ratio:** The annual fee charged by the fund. Must be low to maximize net income.

Top 4 Monthly-Paying Dividend $\text{ETFs}$ for $\text{2025}$

1. Best for High Yield & Income: $\text{JEPQ}$ (JPMorgan Nasdaq Equity Premium Income $\text{ETF}$)

TICKER: $\text{JEPQ}$

This fund aims to provide high monthly income by holding stocks in the Nasdaq $\text{100}$ (growth-oriented companies) and simultaneously selling covered call options against them. This options strategy generates premium income, which is paid out monthly, resulting in a significantly higher yield than standard index funds.

**Primary Focus:** $\text{High}$ current income.
**Typical Yield:** $\mathbf{8\%} - \mathbf{12\%}$ (Varies monthly).
**The Tradeoff:** The covered call strategy caps the fund's upside during sharp market rallies, meaning total returns will lag in booming growth years.

2. Best for High-Quality & Lower Risk: $\text{SCHD}$ (Schwab US Dividend Equity $\text{ETF}$)

While $\text{SCHD}$ is famous for its **quarterly payout**, it remains the gold standard for dividend quality and growth, which you can easily convert into monthly income. If you combine $\text{SCHD}$ with other monthly payers, you can fill in the gaps for a full monthly cash flow.

TICKER: $\text{SCHD}$

This fund tracks high-quality $\text{US}$ companies with a long history of paying dividends and strong financial ratios. It is known for its exceptionally low expense ratio and reliable dividend growth, making it a foundation of any retirement income portfolio.

**Primary Focus:** Quality, growth, and low fees ($\mathbf{0.06\%}$).
**Typical Yield:** $\mathbf{3.5\%} - \mathbf{4.0\%}$.
**The Tradeoff:** Pays quarterly, not monthly, requiring combination with other funds for smooth cash flow.

3. Best for Bond/Equity Blend: $\text{SPYI}$ (NEOS S\&P $\text{500}$ High Income $\text{ETF}$)

TICKER: $\text{SPYI}$

This fund provides monthly income through a strategy similar to covered calls but with a focus on $\text{S\&P 500}$ holdings, combined with a buffer strategy using Treasury options to smooth out volatility. $\text{SPYI}$ is a newer fund that seeks to provide high monthly income with less dramatic drawdowns than pure options funds.

**Primary Focus:** $\text{High}$ Monthly Income with reduced volatility.
**Typical Yield:** $\mathbf{10\%} - \mathbf{14\%}$ (Variable).
**The Tradeoff:** Very new fund with a limited track record compared to older funds. Expense ratio is higher ($\mathbf{0.68\%}$).

4. Best for Real Estate Exposure: $\text{VNQ}$ (Vanguard Real Estate $\text{ETF}$)

Real Estate Investment Trusts ($\text{REITs}$) are legally required to distribute at least $\mathbf{90\%}$ of their taxable income to shareholders, often leading to higher yields. $\text{VNQ}$ provides broad, low-cost exposure to the U.S. $\text{REIT}$ market, paying dividends monthly.

TICKER: $\text{VNQ}$

This fund holds a diversified portfolio of publicly traded $\text{REITs}$, covering industrial, retail, residential, and office properties. It provides a unique income stream that diversifies away from corporate equities and offers an inflation hedge.

**Primary Focus:** $\text{Real}$ estate income and diversification.
**Typical Yield:** $\mathbf{3.0\%} - \mathbf{4.5\%}$.
**The Tradeoff:** Sensitive to interest rate changes (rising rates hurt $\text{REIT}$ valuations).

If you're interested in alternative investment strategies that generate cash flow, read our analysis on How Falling Commercial Real Estate Impacts Your Bank.

Building a Monthly Dividend Calendar

To ensure true monthly cash flow, you must combine funds with different payout schedules. Because funds like $\text{SCHD}$ pay quarterly (e.g., March, June, September, December), you must pair them with two other quarterly funds that pay in the intervening months (e.g., a fund paying in January/April/July/October and another in February/May/August/November).

However, the simplest approach is to use a basket of **$\mathbf{3}$ to $\mathbf{5}$ monthly-paying funds** like $\text{JEPQ}$ and $\text{SPYI}$ to smooth out income immediately.

Ready to build your passive income stream?

Download our free $\text{2025}$ Monthly Income Portfolio Starter Guide, which includes $\text{10}$ specific monthly-paying tickers to cover all $\text{12}$ months.

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The Best Dividend ETFs for Monthly Passive Income