Like the Nasdaq-100 But Hate the Lack of Income? These Monthly-Paying Nasdaq ETFs Have Yields of ~12%

The NASDAQ-100 has delivered strong capital appreciation, with QQQM returning 15.39% annualized over five years, supported by the “Magnificent Seven” and a heavy large-cap growth tilt. Income-focused investors often avoid plain NASDAQ exposure because the yield is low; QQQM pays a 0.44% 30-day SEC yield and is therefore not designed for monthly cash flow. Higher-income NASDAQ-100-linked ETFs now exist using derivatives or structured products, but they are not dividend strategies. Many generate payouts by selling future upside and/or volatility, and investors must consider taxes, so higher income comes with trade-offs. Three alternatives are highlighted: JEPQ, a NEOS offering, and a Calamos offering.

"Still though, income-focused investors have historically shied away from plain-vanilla NASDAQ exposure because the yield simply is not going to turn heads. QQQM currently pays a 0.44% 30-day SEC yield. Personally, I like that because it is relatively tax efficient in a brokerage account. But again, if your goal is distributions and monthly cash flow, QQQM is probably not going to cut it."

"Fortunately, there are now a variety of alternative ETFs that use derivatives or structured products to deliver NASDAQ-100-based exposure with much higher income. Importantly though, these are not dividend-focused strategies. Most of them are effectively selling future upside and/or volatility in exchange for higher current payouts. You also need to contend with taxes, so there is no free lunch here either."

"The JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) has become extremely popular with more than $38 billion in assets under management. JEPQ charges a fairly reasonable 0.35% expense ratio given that investors are effectively getting both active stock selection and a derivatives overlay. The strategy works in two parts."

"At its core, JEPQ holds an actively managed portfolio of stocks selected primarily from the NASDAQ-100, although the managers do have discretion to venture outside the benchmark. The goal is to deliver performance broadly similar to the NASDAQ-100, but with a somewhat smoother ride and lower overall volatility."

Read at 24/7 Wall St.