While bond strategies may still have merit for yield-seekers, equity income ETFs can offer several unique benefits.
Equity income ETFs can serve as a one-ticker solution for both cash flow and capital appreciation. These strategies can generate consistent yield while leaving investors with opportunities to cultivate capital appreciation.
See more: Bring the Income Home With PAPI’s Active ETF Approach
Equity income strategies’ benefits are especially prevalent in lower-rate environments. While the Federal Reserve trims interest rates, these ETFs can offer strong cash flow and growth prospects.
Activate the Advantages in Equities
For a good example, take a closer look at the Parametric Equity Premium Income ETF (PAPI ). PAPI functions as a helpful investment for building monthly income and long-term value.
To fulfill its income-generating goals, PAPI employs a two-step strategy. First, PAPI’s active portfolio management team acquires a strong selection of dividend-paying stocks. This includes reliable corporate names like Walmart, Kinder Morgan, and Aflac.
When it comes to choosing companies to add to its portfolio, PAPI seeks companies that have displayed good yields and minimal risk over the last twelve months. As a result, the fund has good, balanced exposure to a variety of sectors across the equity spectrum.
PAPI’s equity selections can offer investors more than just dividends. Through returns on PAPI’s equity portfolio, investors can tap into long-term growth.
Along with the dividend-paying equity portfolio, PAPI employs a call writing strategy on the S&P 500. Call options in this strategy are short-dated and laddered to mitigate risk while broadening opportunities for upside appreciation.
With multiple avenues for catching cash, PAPI offers compelling yield for its investors. As of Sept. 30, 2024, the fund’s distribution yield is 7.56%. This is paired with a lower net expense ratio of 0.29%, despite the fund being actively managed.
For more news, information, and analysis, visit The ETF Yield Channel.
