Generation of Income in Strong Currency: The Main ETFs with Monthly Distributions

Diversify your portfolio beyond local borders has become a fundamental strategy for those looking to protect their wealth and build dollar-denominated income streams. In volatile economic scenarios, fluctuating exchange rates, and ongoing inflationary pressures, Brazilian investors are increasingly seeking to supplement their earnings with international assets that offer predictability and consistent returns.

ETFs that pay monthly dividends are consolidating as a practical solution in this context. Unlike building an individual portfolio of American stocks — a costly and labor-intensive task — these funds provide access to multiple assets with a single investment, lower costs, and automatic dividend processing. The yields are deposited directly in dollars into your brokerage account, where they can be reinvested or converted as needed.

How Monthly Dividend ETFs Work and Generate Passive Income

A monthly dividend ETF gathers a carefully selected set of assets — usually shares of companies with a proven track record of profit distribution — and distributes earnings to shareholders regularly.

The mechanics are simple: as long as you hold the shares, dividends are automatically processed and deposited into your account. There’s no need to track each individual payment or deal with the complexity of managing dozens of different assets.

These funds typically focus on sectors with robust cash flow — energy, telecommunications, utilities, and real estate (REITs) — as well as mature companies that prioritize returning value to shareholders. The result is a income source that persists even during periods of sharp volatility, a valuable attribute for those seeking to preserve and expand wealth over the long term.

The 6 Main ETFs for Dollar Passive Income

1. Global X SuperDividend ETF (SDIV) — Global Reach with High Yield

SDIV offers exposure to an international universe of high-distribution stocks. Created in 2011, this fund tracks an index selecting 100 stocks worldwide based on dividend yields and moderate volatility.

Key Data

• Approximate price: US$ 24.15
• Assets under management: US$ 1.06 billion
• Annual fee: 0.58%
• Dividend yield (12 months): 9.74%
• Distribution: Monthly in dollars

Composition

The portfolio balances sectors like financial (~28%), energy (~17%), real estate (~13%), along with utilities and consumer sectors. Geographically, it concentrates on the US (~25%), Brazil (~15%), and Hong Kong (~12%), with presence in other emerging markets.

Advantages and Limitations

The main attraction lies in genuine diversification — multiple geographies, sectors, and currencies — ideal for those seeking dollar passive income without dependence on a single economy. However, this international exposure in cyclical sectors (energy, financial) exposes the portfolio to greater fluctuations. Companies with very high dividends may face cutbacks if their fundamentals deteriorate. The management fee is also a point to consider compared to conventional passive funds.

2. Global X SuperDividend U.S. ETF (DIV) — American Focus with Controlled Volatility

For investors preferring to focus on the North American market, DIV is a strategic choice. The fund selects 50 US stocks with the highest dividend yields, but only those with moderate historical volatility.

Key Data

• Approximate price: US$ 17.79
• Assets under management: US$ 624 million
• Annual fee: 0.45%
• Dividend yield (12 months): 7.30%
• Distribution: Monthly in dollars

Portfolio Characteristics

A defensive profile is prominent: utilities (~21%), real estate (~19%), energy (~19%), basic consumption (~10%), and other sectors. Fast-growing sectors like technology are practically absent.

Advantages and Challenges

Stability is the main advantage — in crises, sectors like energy and utilities tend to resist better. The strict selection for low volatility smooths out losses in negative phases. However, high sector concentration creates vulnerability if these segments face prolonged adversities. Also, with only 50 assets, the fund might miss growth opportunities outside this group. The risk of “dividend traps” — when companies with attractive yields deteriorate quickly — also warrants attention.

3. Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) — Robust Balance

SPHD combines two complementary criteria: it selects S&P 500 stocks that pay high dividends but only those with contained historical fluctuations. The fund rebalances biannually (January and July) to maintain this balance.

Key Data

• Approximate price: US$ 48.65
• Assets under management: US$ 3.08 billion
• Annual fee: 0.30%
• Dividend yield (12 months): ~3.4%
• Distribution: Monthly in dollars

Portfolio Dynamics

Real estate (~23%), essential consumption (~20%), and utilities (~20%) form the core. Names like Pfizer, Verizon, Altria, and Consolidated Edison — established companies with predictable cash flows — are common. Accelerated growth sectors and high volatility are avoided by principle.

Potential and Limitations

The smart beta methodology offers stability with yield — rare to find. Disciplined rebalancing prevents risky concentrations. However, the yield of ~3.4% is lower than other high-yield ETFs. The low growth potential of the shares means capital gains are not the goal. Half the portfolio in just three sectors represents notable concentration, vulnerable to macroeconomic shocks specific to those segments.

4. iShares Preferred and Income Securities ETF (PFF) — Hybrid Assets for Stable Income

PFF operates in a specific segment: preferred stocks (preferred stocks). These securities occupy an intermediate position between common stocks and debt — offering fixed, regular dividends, usually monthly, with lower volatility than ordinary stocks but higher sensitivity to interest rate changes.

Key Data

• Approximate price: US$ 30.95
• Assets under management: US$ 14.11 billion
• Annual fee: 0.45%
• Dividend yield (12 months): ~6.55%
• Distribution: Monthly in dollars

Strategic Composition

The fund tracks an index with over 450 issues — predominantly preferred shares of large financial institutions. The financial sector (banks, insurance) accounts for over 60% of the portfolio, with utilities and energy completing the picture. Major names like JPMorgan, Bank of America, and Wells Fargo frequently issue such securities to raise capital more efficiently.

Advantages and Limitations

The monthly yield above 6% attracts those seeking predictable cash flow. The smoother behavior of preferred stocks offers relative protection during turbulent periods. Diversification across more than 400 issuers dilutes individual credit risks. Conversely, when US interest rates rise, new preferred issues become more attractive, reducing the market value of existing ones — a blow to ETF holders. The focus is on income, not growth, so long-term appreciation is limited. Financial sector crises would directly impact most of the fund despite issuer diversification.

5. Global X NASDAQ-100 Covered Call ETF (QYLD) — Sophisticated Income Generation Strategy

QYLD implements a sophisticated tactic: it executes a monthly “covered call” strategy on the Nasdaq-100 stocks. The fund buys all index assets and simultaneously sells call options on them. The premiums are fully distributed to shareholders, turning market volatility into cash flow.

Key Data

• Approximate price: US$ 17.47
• Assets under management: US$ 8.09 billion
• Annual fee: 0.60%
• Dividend yield (12 months): 13.17%
• Distribution: Monthly in dollars

Exposure Profile

Tracking the Nasdaq-100, the portfolio is concentrated in technology and innovation: IT (~56%), communications (~15%), discretionary consumption (~13%). Apple, Microsoft, NVIDIA, Amazon, and Meta are among the largest holdings.

Attractions and Trade-offs

A monthly yield above 13% is among the highest in the segment — ideal for those prioritizing active income. Automatic options management spares investors from operating derivatives themselves. In sideways or declining markets, received premiums act as a cushion, softening losses. However, it’s a clear trade-off: during strong index appreciation, QYLD lags because gains are paid out to option buyers. Premiums vary with volatility — in calm periods, yields decrease. There’s also a risk of gradual capital erosion over the very long term, an important consideration for wealth preservation.

6. JPMorgan Equity Premium Income ETF (JEPI) — Quality and Derivatives Blend

Launched in 2020, JEPI quickly amassed billions under management thanks to an innovative approach: it combines high-quality stocks with structured derivatives that generate continuous income and reduce volatility.

Key Data

• Approximate price: US$ 57.46
• Assets under management: US$ 40 billion
• Annual fee: 0.35%
• Dividend yield (12 months): ~8.4%
• Distribution: Monthly in dollars

Operational Structure

JEPI uses two layers: active selection of about 100 to 150 S&P 500 stocks focusing on value and low volatility (health, basic consumption, industrial), combined with structured instruments that replicate selling options on the index. The premiums are passed as monthly dividends. This hybrid setup delivers steady income with reduced exposure to the peaks and troughs typical of pure equities.

Portfolio Positioning

Unlike ETFs heavily exposed to technology, JEPI favors stability. Names like Coca-Cola, AbbVie, UPS, PepsiCo, and Progressive are common. This results in more predictable performance and low correlation with Nasdaq swings.

Opportunities and Limitations

With a yield near 8% and an estimated beta of only 0.56 relative to the S&P 500, JEPI is a benchmark for low-risk dollar passive income. The US$ 40 billion in assets under management ensure liquidity and operational solidity. Part of the income qualifies as long-term capital gains in the US, offering potential tax benefits. The downside: during strong market rallies, JEPI underperforms — call sales only capture part of the gains. Its sophisticated active management requires constant technical skill; poor asset selection or derivative management would impact performance. The 0.35% fee is reasonable but above the average for simple passive ETFs.

Quick Comparison: Which to Choose?

Each of these six funds serves different needs:

For maximum international diversification: SDIV offers global reach but with higher volatility.

For a defensive US focus: DIV and SPHD prioritize stable sectors. SPHD has lower fee and larger assets; DIV leans more toward utilities and energy.

For predictable income with less risk: PFF, via preferred stocks, provides stability but is sensitive to interest rate changes.

For maximum yield: QYLD leads with over 13%, but sacrifices capital appreciation. JEPI offers 8.4% with moderate risk — a middle ground.

Practical Steps to Start

Via international brokers: Accounts on platforms offering access to US exchanges allow direct ETF purchases. Steps: open an account, transfer funds via FX/international transfer, buy shares. Dividends are paid monthly in dollars.

Via local BDRs: B3 offers deposit certificates (BDRs) representing foreign assets. However, the availability of BDRs for monthly dividend ETFs is still limited, and taxation may be less favorable.

Final Reflection: Dollar Income as a Strategic Tool

Building income in a strong currency is a relevant decision in an economy with local inflation pressures. ETFs paying monthly dividends simplify this journey — they don’t require expertise to build complex portfolios, offer genuine diversification, and automate dividend receipt.

Choosing among SDIV, DIV, SPHD, PFF, QYLD, and JEPI isn’t about “which is best,” but which aligns with your profile: risk appetite, time horizon, immediate income needs, and wealth preservation or growth objectives. Carefully studying each, monitoring performance periodically, and adjusting as your situation evolves is the safest path toward genuine, lasting dollar passive income.