Key Points

• These exchange-traded funds pay you every month. SCHD pays every quarter.
• Their overall performance has also been better than the SCHD.
• SCHD has slipped into the red this year, whereas others have raced ahead.
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Part of the reason why the Schwab US Dividend Equity ETF (NYSEARCA:SCHD) is so popular is that it is almost unmatched when you compare it to other dividend ETFs. Of course, there are many other ETFs that pay good dividends, but very few are going to get you a recipe that not only gets you long-term capital returns, but a steady, sustainable dividend yield close to 4%.

However, SCHD isn’t in a league of its own, and there are monthly dividend ETFs that have managed to outperform it. So for income investors, it could be a good idea to hold these funds alongside SCHD in your portfolio. 

SCHD is down 2.45% over the past year, because it does not have significant exposure to the ongoing tech rally. Many ETFs have managed to reach an arrangement where they’re squeezing out income while providing tech exposure while also providing a downside buffer. Will these novel ETFs eat SCHD’s cake? Probably not, but it’s worth looking into them if you want to boost your portfolio. If market dynamics go back to the pre-AI “normalcy,” you can always retreat back to SCHD.

Amplify CWP Enhanced Dividend Income ETF (DIVO)

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Amplify CWP Enhanced Dividend Income ETF (NYSEARCA: DIVO) is the perfect compromise between an ETF that outperforms SCHD and takes advantage of options, without leaning too much on that strategy.

The ETF is actively managed and follows the Enhanced Dividend Income Portfolio strategy managed by the fund’s sub-adviser, Capital Wealth Planning. The strategy centers on investing in 20-25 high-quality large-cap companies from the S&P 500 with a history of both dividend and earnings growth.

Then, a fraction of those holdings is used to write covered call options for more income. What you end up with is 2% to 3% income from dividends and an additional 2% to 4% from option premiums.

The dividend yield at the moment is 4.54%. The expense ratio is 0.56%, or $56 per $10,000. DIVO has historically been on par or slightly better than the SCHD. However, it has pulled ahead significantly in the past year. SCHD is down 1.94% (with dividends, inflation-adjusted), whereas DIVO is up 10.39%.

SPDR Dow Jones Industrial Average ETF Trust (DIA)

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SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA: DIA) tracks the performance of the Dow Jones Industrial Average. The DJIA is a price-weighted index of 30 large, blue-chip U.S. stocks and is one of the most famous indexes.

In practice, DIA holds essentially the same 30 stocks that make up the DJIA, weighted according to the index’s price-weighted methodology rather than by market capitalization. It gets you a small monthly yield of around 1.45% at the moment. This is great if you just want to outperform SCHD while getting paid 12 times a year. 

The DIA ETF is up 11.36% over the past year, as it has exposure to companies like Microsoft (NASDAQ: MSFT), Visa (NYSE: V), and  IBM (NYSE: IBM). The exposure to these hotter sectors of the market has allowed DIA to outperform SCHD over the past 20 years, albeit slightly. The overall total return of SCHD (dividends reinvested) over the past 20 years is 255.76%, compared to DIA’s 278.38%. The expense ratio is 0.16%, or $16 per $10,000.

NEOS Nasdaq-100 High Income ETF (QQQI)

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NEOS Nasdaq-100 High Income ETF (NASDAQ: QQQI) is one of the new ETFs that heavily rely on options to convert the heavy options trading trend and the tech rally into solid income.

QQQI uses a data-driven covered call options strategy that buys Nasdaq-100 stocks while writing call options on those holdings to generate premium income. Plus, the call spread approach allows for better upside and captures gains whenever possible.

QQQI also buys protective put options to cap losses during downturns. QQQI gets you a 13.51% yield and has an expense ratio of 0.68%, or $68 per $10,000. It has managed to deliver 25.60% in overall returns over the past year.

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