The S&P 500 hit record highs multiple times in late July 2025. While investors seeking capital appreciation should be thrilled, those wanting income from their equity investments are likely a little disappointed. The SPDR S&P 500 ETF (SPY ) recently had a 12-month distribution yield of just 1.1%. Many income-minded advisors and investors have turned to covered call ETFs this year to compensate.
The Goldman Sachs S&P 500 Premium Income ETF (GPIX ), the JPMorgan Equity Premium Income ETF (JEPI ), and the NEOS S&P 500 High Income ETF (SPYI ) are a few popular sector-diversified examples. These ETFs all offer yields of 8% or higher. Meanwhile, YieldMax offers a suite of covered call ETFs based on just individual stocks like Amazon and Tesla.
Meet the Newest Income ETFs on the Block
However, with the launch of a suite of premium income ETFs today, State Street Investment Management has taken covered call ETFs to a different level. On the New York Stock Exchange, the following ETFs will begin trading today:
- The Materials Select Sector SPDR Premium Income Fund (XLBI)
- The Communication Services Select Sector SPDR Premium Income Fund (XLCI)
- The Energy Select Sector SPDR Premium Income Fund (XLEI)
- The Financial Select Sector SPDR Premium Income Fund (XLFI)
- The Industrial Select Sector SPDR Premium Income Fund (XLII)
- The Technology Select Sector SPDR Premium Income Fund (XLKI)
- The Consumer Staples Select Sector SPDR Premium Income Fund (XLSI)
- The Real Estate Select Sector SPDR Premium Income Fund (XLRI)
- The Utilities Select Sector SPDR Premium Income Fund (XLUI)
- The Health Care Select Sector SPDR Premium Income Fund (XLVI)
- The Consumer Discretionary Select Sector SPDR Premium Income Fund (XLYI)
Calling & Searching for Income
State Street is the leader in the sector ETF space. The Communications Services Select Sector SPDR ETF (XLC ) and the Financial Select Sector SPDR (XLF ) have $24 billion and $53 billion in assets, respectively. These two funds are four times larger than the closest peer.
Many people think of communications stocks as dividend payers like AT&T and Verizon Communications. While XLC owns these, the ETF sports a 1% yield. This is mainly because lower-yielding companies Alphabet and Meta Platforms represent close to 40% of the fund, while other nonyielding stocks like Netflix are heavily weighted. XLC owns 24 stocks.
XLCI, like its new siblings, will sell call options to generate additional income. While we expect XLCI to rise and fall less than XLC, some investors will find the higher income appealing.
Income to Take to More Than the Bank
Financials are another sector many might think of as generating dividend income. However, XLF’s largest holding is Berkshire Hathaway, a nondividend-paying company. Meanwhile, XLF’s second-largest position is in JPMorgan. The bank’s 1.9% recent dividend yield is higher than the S&P 500 but is still modest for many investors. We think XLFI could appeal to those seeking diversified exposure to financial stocks but want a higher yield.
We believe given State Street Investment Management’s strong leadership in sector ETFs, these new products will garner attention. However, we believe education about how they are constructed and how they can fit into an income-oriented portfolio will be needed.
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