Dr J Rould
Full-Time Tech Investor, Quantum/Cybersecurity, Philosophy Background
The new generation of covered-call income ETFs on the S&P 500 and Nasdaq 100 is preferable to traditional dividend funds like SCHD, serving as counterbalances built to underperform in bull markets and outperform in flat or down ones. Given a bullish long-term market outlook, plain S&P 500 or Nasdaq 100 funds should still outperform them over decades. x.com x.comÂ
SPYI, QQQI, JEPQ, JEPI and QDVO are tier-one income ETFs, pairing high yields with minimal NAV decay and solid records. NEOS' SPYI yields about 10-12% with very stable NAV, using a tax-efficient options strategy that keeps more upside than covered calls; QQQI applies it to the Nasdaq-100 for 13-15%. JPMorgan's JEPQ yields 8-10% via ELNs and JEPI 7-9% with a defensive tilt, while Amplify's QDVO yields 9-11% from growth stocks plus options income. x.com x.com x.com x.com x.com x.comÂ
XQQI and XSPI will be two of the highest-performing covered-call ETFs of the next decade, better than QQQI and SPYI, because they should keep up with or slightly outperform their underlying indexes while paying monthly distributions. Canadian leveraged index-based income ETFs have shown how this works over the last five years. x.comÂ
QQQ remains the better way to grow wealth than QQQI, because taxes on QQQI's distributions further erode its return even for holders who reinvest them. A post the author replies to notes QQQI lets holders keep distributions without selling shares, which some prefer. x.comÂ
The Nasdaq 100 high-income ETF QQQI is a core long-term hold, with its distributions reinvested to compound over time. x.comÂ
The NEOS S&P 500 High Income ETF suits investors who want cash income over capital appreciation. $400,000 in it could generate about $4,200 a month in distributions, versus about $347 a month from the Vanguard S&P 500 ETF. Both may deliver a similar total return of around 12%, one through more income and the other through more price appreciation. Critics such as @Budgetdog_ note the payout comes from a covered-call strategy that caps upside and may partly return capital. x.com x.comÂ
The S&P 500 fund VOO beats covered-call income ETFs like GPIX and QQQI because covered calls cap upside, leaving long-run returns worse. Since GPIX's October 2023 inception, VOO has compounded 26.4% a year versus GPIX's 23.6%, while QQQ's 25.4% beat QQQI's 21%. Fees add drag of about 1.1% for GPIX and 2.2% for QQQI versus 0.1% for VOO, and large monthly payouts are tax-inefficient. x.com x.comÂ
Schwab US Dividend Equity, JPMorgan Nasdaq Equity Premium Income, Vanguard S&P 500 and NEOS S&P 500 High Income together deliver monthly cash flow without selling shares, while SCHD and VOO add growth. The four-ETF portfolio produces almost $48,000 a year of passive income, with a goal of $80,000 by 2028. It is one piece of a wider portfolio, with rental real estate handling growth and tax efficiency. x.com x.com x.comÂ
The Nasdaq 100 is suited to be a core holding thanks to having the largest size and liquidity among top tech ETFs, even though its roughly 19-22% annualized 10-year return trails the leaders. Semiconductor ETFs topped the decade at around 35-38% a year. x.comÂ
Covered-call income ETFs like SPYI make investors pay twice: they take the full drawdown, then give away most of the recovery. Per @Signal8Ai, SPYI gained 1.1% in May while the S&P 500 ran 9.4%, surrendering 88% of the rebound after February's slide. Put credit spreads collect the premium without giving up upside when the bounce comes. x.comÂ
JEPI, JEPQ, SPY, QQQ, QYLD, RYLD, XYLD and SGOV are worth selling, because their more retail-friendly equivalents offer lower fees, better performance and tax savings. x.comÂ
