The article discusses high-yield ETFs and their attractiveness in the current economic climate where individuals seek extra income. While some ETFs offer appealing high yields, they often come with increased risks. The piece emphasizes that most equity ETFs, particularly dividend-focused ones, generally do not include risky, ultra-high-yield stocks in significant amounts to avoid dividend traps. Investors should aim for a balance between yield and overall return, rather than chasing the highest possible yield, as this may compromise their investment strategy over time.
While some high-yield-focused dividend ETFs may reach a bit further for yield, most of them steer clear of the ultra-high-yielding names that entail a greater degree of risk.
The JEPQ's massive yield is a thing of beauty. However, investors shouldn't get their hopes up for the double-digit yield to last for the long haul.
Higher yields tend to accompany higher risk or a complete lack of growth. The maximization of total returns should be the ultimate goal of investors.
Most popular dividend ETFs tend to steer clear of dividend traps, ensuring that only a small portion of their holdings are high-risk, high-yield stocks.
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