Which Monthly Dividend ETFs Really Deserve Your Portfolio? A Comparative Deep Dive Into the Best Options Today

The dividend investing landscape has transformed dramatically. Where investors once waited three months for dividend payments, monthly-paying funds now dominate the conversation. But with the proliferation of high-yield monthly dividend ETFs promising 10%+ yields, the critical question isn’t whether these funds exist—it’s which ones actually merit a place in your portfolio.

Understanding the Covered Call Trade-off: High Yield Comes With a Price

Before examining specific funds, it’s essential to understand the fundamental mechanism driving these generous yields. Most of the best monthly dividend ETFs employ covered call strategies, which generate income by selling call options on underlying holdings. This approach creates a tension that investors must consciously accept: higher monthly payouts in exchange for capped upside potential.

Consider the performance gap that illustrates this tradeoff perfectly. During a strong bull market year, funds employing this strategy may deliver 7% total returns while the broad market surges 20%+. This isn’t underperformance—it’s the intended structural limitation. Over three years, this gap narrows but remains visible. This is why concentrating your entire portfolio in these funds would be strategically unsound; they’re better viewed as income-focused satellite positions within a diversified framework.

The JPMorgan Domination: JEPI and JEPQ Lead the Monthly Dividend ETF Race

JPMorgan has established itself as the architectural innovator in this space, with two standout offerings that showcase different market exposures.

JEPI: The Blue-Chip Dividend Engine

With $29 billion in assets under management and a three-year track record, JEPI has become synonymous with the monthly dividend ETF category. Its 10%+ current yield, combined with its status as the largest actively-managed ETF despite launching only three years ago, signals strong investor demand.

The fund’s portfolio construction emphasizes broad diversification—118 holdings where the top 10 comprise just 17.5% of assets. This reduces single-stock concentration risk considerably. Yet JEPI’s three-year annualized return of 11.5% trails the comparable S&P 500 benchmark (13.7%), validating the covered call performance ceiling.

The 0.35% expense ratio represents genuine value among premium-income ETFs, though it’s positioned above ultra-low-cost broad market trackers.

JEPQ: Technology-Forward Yield Strategy

JEPQ amplifies the yield proposition with an 11.7% dividend payout by shifting the underlying exposure to the Nasdaq 100 rather than the S&P 500. This results in a portfolio skewed meaningfully toward large-cap technology leaders—a bet that paid off handsomely with 28.2% year-to-date returns (slightly trailing the Nasdaq’s 32% gain).

Launched in 2022, JEPQ lacks the extended track record of JEPI, introducing some uncertainty about long-term sustainability. However, for investors seeking technology-weighted exposure alongside double-digit monthly income, the offering is compelling. The identical 0.35% expense ratio to JEPI maintains cost efficiency.

The Contenders: SPYI, QYLD, and SDIV Present More Complex Trade-offs

SPYI: Higher Yields, But Watch the Fees

SPYI targets a similar S&P 500 approach as JEPI with a slightly higher 10.7% yield and a 505-stock portfolio that maximizes diversification. Interestingly, year-to-date performance of 17% actually outpaced JEPI’s 7.3%, suggesting the underlying options strategy executed with additional sophistication.

The critical drawback: a 0.68% expense ratio that’s nearly double JEPI and JEPQ. Over a decade, this fee difference compounds meaningfully—an extra $105 in cumulative costs on every $10,000 invested. For yield-focused investors, this structural cost disadvantage requires clear outperformance justification.

QYLD: The Established Player With Questionable Long-Term Results

QYLD’s 2013 launch predates all peers discussed here, offering nine consecutive years of monthly dividend payments and an 11.5% yield comparable to JEPQ. This longevity suggests operational reliability.

However, reliability hasn’t translated to compelling returns. The three-year annualized return of 6.5% and five-year annualized performance of 5.7% lag the Nasdaq considerably—the fund’s underlying index. Combined with a 0.60% expense ratio, QYLD appears less attractive than newer JPMorgan alternatives. The extended underperformance raises questions: are aging covered-call strategies simply less efficient, or has the fund manager underexecuted?

SDIV: Highest Yield Masks Deteriorating Capital

SDIV presents the most compelling yield figure—12.8%—via a fundamentally different approach. Rather than using covered calls on premium holdings, SDIV invests in the “100 highest-yielding equities globally.”

This sounds theoretically sound. In practice, it has destroyed value. Annualized total returns over the past one, three, five, and ten years are all negative. Despite paying out significant distributions, SDIV investors have lost capital across every measured timeframe. This reveals a crucial investment principle: high yields on deteriorating companies or cyclical downturns signal value traps rather than opportunities. Sometimes yield is high because it’s not sustainable.

SDIV’s 0.58% expense ratio compounds the problem, adding further drag to an already challenged return profile.

Constructing a Decision Framework: Best Monthly Dividend ETFs for Different Investor Goals

For Risk-Aware Income Seekers: JEPI and JEPQ emerge as the strongest choices. Their lower fees, transparent covered-call strategies, and nascent positive returns justify consideration. JEPI suits broad-market exposure; JEPQ attracts technology-focused allocations. Neither should dominate a portfolio, but each can effectively generate monthly distributions within a balanced framework.

For Performance-Conscious Dividend Hunters: SPYI’s recent outperformance and 505-holding diversification warrant monitoring, despite fee disadvantages. Revisit this fund after 3-5 more years of track record.

For Conservative Capital Preservation: Avoid QYLD and SDIV. The former’s mediocre returns and the latter’s actual capital destruction don’t justify their fee structures, regardless of monthly distribution frequency.

The Bottom Line: Monthly Dividend ETFs Have Evolved, But Selectivity Remains Critical

The proliferation of monthly-paying ETFs has genuinely expanded income-focused investment options. However, distinguishing between quality monthly dividend ETFs and yield-chasing traps requires understanding the covered-call performance ceiling, analyzing fee impact over multi-decade horizons, and frankly assessing historical returns.

JEPI and JEPQ represent the best current execution of this strategy, balancing yield, performance, and costs. SPYI merits attention as an emerging alternative. QYLD and SDIV illustrate how high headline yields can obscure mediocre or harmful fundamental performance—a cautionary reminder that income investors must remain vigilant about return sustainability, not just monthly distribution checks.