Boost Your Passive Income with These Top Dividend ETFs

Investing in exchange-traded funds (ETFs) offers a simple path to earning passive income. Instead of actively managing a stock portfolio, you can invest in a few diversified funds and watch the income flow in.

There are many dividend ETFs available. Below are two funds that may enhance your passive income significantly.

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Ultra-High Yield Opportunity

The Global X SuperDividend ETF (NYSEMKT: SDIV) has a straightforward approach: it invests in 100 of the world’s highest-yielding dividend stocks. While high-yield stocks come with higher risks, this fund’s international focus mitigates risks associated with market fluctuations.

This fund has paid dividends monthly for 13 years, although the amounts can vary significantly over time.

SDIV Dividend data by YCharts

If you are looking for a substantial income stream, this fund is attractive. Over the past year, its dividend yield stands at 10.8%. In contrast, the S&P 500 is currently yielding only 1.2%. Thus, a $1,000 investment in this ETF could yield over $100 annually, compared to just over $10 from an S&P 500 index fund.

Enhanced Income Strategy

The Fidelity Yield Enhanced Equity ETF (NYSEMKT: FYEE) aims to generate current income while positioning for capital growth. About 80% of its assets are invested in large companies included in major indices like the S&P 500 or Russell 1000.

Using advanced quantitative analysis, the ETF selects a diverse portfolio of companies expected to yield higher returns than the S&P 500. This includes factors like previous valuations and growth potential.

Currently, the fund holds 161 stocks, with significant shares from high-profile companies like Apple, Nvidia, and Microsoft, making up 7.5%, 6.2%, and 5.7% of its assets, respectively.

To provide current income, the ETF uses two strategies. It writes call options on major indices for upfront premiums and can keep the entire premium if the options expire worthless. Additionally, it lends securities to short-sellers for extra income.

Since its launch, the fund has paid quarterly dividends of $0.45, $0.50, and $0.51 per share. Projecting this rate gives an annualized yield of about 7%, which translates to $70 in passive income from a $1,000 investment.

Considering the Risks

The Global X SuperDividend ETF and Fidelity Yield Enhanced Equity ETF can offer robust passive income streams. However, they come with higher risk profiles due to their investment strategies. They can still fit into a diversified approach to boost passive income.

Should You Invest $1,000 in Global X SuperDividend ETF Now?

Before investing in Global X SuperDividend ETF, consider this:

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Matt DiLallo holds positions in Apple and has short options on Apple. The Motley Fool is invested in and recommends Apple, Microsoft, and Nvidia. Additionally, The Motley Fool endorses certain options involving Microsoft. The Motley Fool maintains a disclosure policy.

The views expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.