The largest S&P 500 ETF yields a scant 1.06%. That confirms something some income investors may not want to be reminded of: The dividend yield on the benchmark domestic equity index hovers around multi-decade lows. By some estimate, the S&P 500 is as low as its been in 50 years.
That’s a compelling reason for income investors to examine the NEOS S&P 500 High Income ETF (SPYI ). One of the flagship ETFs in the NEOS suite, the $9.44 billion SPYI sports a distribution rate of 12.09% and delivers those payments on a monthly basis.
Read more: Q2 Symposium: Navigating the Options Boom With NEOS Investments
SPYI is higher by 12% over the past year, confirming it’s not one of those high-yielding options-based ETFs that consistently lead to eroding net asset values in the name of delivering income. Said another way, SPYI is an avenue for investors to participate in some of the S&P 500’s upside — a good thing at a time when the index resides at record highs — while commanding an impressive income stream.
SPYI Matters Now
SPYI, which turns four years old in August, is highly pertinent to investors today, and for more multiple reasons. First, there’s this interesting nugget: 2025 marked the fifth consecutive year in which S&P 500 member firms spent more on buybacks than dividends.
It’s not that companies in the index are forsaking dividends outright, but the buyback vs. dividend trend is clearly tilting in favor of the former, implying S&P 500 dividend growth is likely to be uninspiring. For income investors, SPYI brightens that reality.
Second, SPYI livens up the S&P 500 income proposition because the index has a massive 36.13% weight to the low-yielding tech sector. The Magnificent Seven stocks, which span three sectors, combine for more than a third of the index’s weight.
That’s been a drag on the index’s income profile because two of the Mag Seven — Amazon (AMZN) and Tesla (TSLA) — don’t pay dividends, and of the other five, none have a dividend yield of 1%.
Another reason SPYI may be a compelling complement to S&P 500 and other broad market ETFs is artificial intelligence (AI). To the credit of Apple (AAPL), Microsoft (MSFT) and, more recently, Alphabet (GOOGL), those companies are showing commitments to growing their payouts. However, their AI plans may necessitate prudence on the dividend front. Other hyperscalers may be leery of boosting or initiating payouts until the massive capex cycle subsides, and that could take years.
Bottom line: Investors don’t need to ditch their high-flying S&P 500 ETFs, but they can add SPYI to their respective mixes to enhance income opportunities.
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