I'd Pick this 1 High Dividend ETF to Live Off Dividends FOREVER...(2025)
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At the time of the video, the dividend yields were:
- JEPQ: 10.9%
- GPIQ: 11.17%
- QQQI: 15.5%
At the time of the video, the dividend yields were:
This video explores how to generate passive income through high-dividend ETFs, focusing on covered call ETFs which offer potentially faster routes to dividend-based living compared to dividend growth ETFs. The speaker reviews three high-dividend covered call ETFs (JEPQ, GPIQ, QQQI) using a point-based system to determine the best option for long-term dividend income.
The key characteristics of a covered call ETF are that it's an investment fund using a covered call strategy to generate high income. It holds a portfolio of stocks and sells (writes) call options on those stocks. This generates premiums distributed to investors as high dividend income.
The advantage is high dividend income. The disadvantage is limited upside potential because share price appreciation is sacrificed for higher income; you trade more income for less potential upside.
QQQI achieves superior tax efficiency through several strategies: It takes advantage of tax law harvesting opportunities, utilizes NDX index options classified as Section 1256 contracts (subject to lower tax rates at a 60/40 split; 60% taxed at the lower long-term capital gains rate, 40% at the higher short-term capital gains rate), and receives some income as qualified dividends from the stocks it holds. The other ETFs don't employ these specific strategies, resulting in higher tax rates on their income (ordinary income).
Over the last year, the total returns were:
The video notes that QQQI decreased less than the other two ETFs during a recent market correction. A comparison of total returns over three years is deemed unfair because JEPQ has a longer track record.