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JEPQ delivers an 11.52% dividend yield by promoting coated calls on Nasdaq-100 shares however caps upside positive aspects throughout rallies.
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QQQ returned 22.27% year-to-date and 106.68% over 5 years with out choices methods. JEPQ’s yield got here at the price of 10-12 share factors in annual returns.
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JEPQ’s month-to-month distributions fluctuate 50% based mostly on volatility. The fund holds 43.7% in expertise shares with 168% portfolio turnover.
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The JPMorgan Nasdaq Fairness Premium Revenue ETF (fairly the mouthful!) (NASDAQ:JEPQ) has attracted almost $32 billion in property with a easy and interesting characteristic: a remarkably excessive 11.52% dividend yield. The fund holds Nasdaq-100 shares and sells coated name choices towards these positions, producing constant month-to-month premiums that fund distributions whereas capping upside when shares rally. The core query: does sacrificing capital appreciation for double-digit earnings make monetary sense?
JEPQ holds a portfolio mirroring the Nasdaq-100, concentrated in mega-cap expertise shares. The fund sells name choices on these positions, amassing premiums that produce month-to-month distributions. When markets are risky, choice premiums rise, probably growing payouts. When shares surge, these name choices restrict positive aspects. The fund’s 0.35% expense ratio is aggressive, and it has paid month-to-month distributions with out interruption since its Might 2022 inception. Fee quantities fluctuate considerably—starting from $0.34 to $0.68 per share—as a result of they depend upon market volatility moderately than underlying dividend fundamentals.
JEPQ’s high holdings reveal the chance price. Nvidia (NASDAQ:NVDA), the fund’s largest place at 8.02%, gained 33.27% year-to-date and 1,316.40% over 5 years. Apple (NASDAQ:AAPL) at 7.58% returned 13.53% this yr and 126.16% over 5 years. Microsoft (NASDAQ:MSFT) at 6.48% delivered sturdy Azure development, whereas Alphabet (NASDAQ:GOOG) at 5.88% posted its first $100 billion income quarter. Broadcom (NASDAQ:AVGO) rounds out the highest 5 at 4.95%.
The benchmark Invesco QQQ Belief (NASDAQ:QQQ), which holds related shares with out coated calls, returned 22.27% year-to-date and 106.68% over 5 years. Throughout November’s tech selloff, QQQ dropped 4.6% in a single day however recovered 6.7% within the subsequent rally. JEPQ holders obtained their dividend through the decline however captured minimal upside through the rebound as a consequence of capped name choices. Over 4.5 months from July by early December, QQQ gained 10.8%—exceeding JEPQ’s annual dividend yield by capital appreciation alone.
