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If you’re looking for a high-yield monthly dividend, there are other ways to get that income without pursuing significant risk. iShares 20+ Year Treasury Bond ETF (nasdaq:TLT), Colterpoint Net Lease Real Estate ET (NYSEARCA:NETL)And VanEck Preferred Securities Ex Financial ETF (NYSEARCA:pfxf) An investment of ~$230,000 can earn you $1,000 monthly.
The average yield of the three ETFs is 5.19%. it This works best if you are someone who already owns a home and needs something extra to make ends meet. This also works if you already have a large amount of cash and are not comfortable investing in risky equity or covered call ETFs.
Even better, the ETFs below also come with some upside at the top. let’s take a look.
iShares 20+ Year Treasury Bond ETF (TLT)
TLT buys US Treasuries and holds Treasuries longer than 20 years. It collects coupons and sends them to you monthly at a 0.15% expense ratio. TLT is boring, and I will argue very safe. It can swing somewhat in either direction depending on interest rate hikes and cuts, but the underlying asset is very strong. Treasuries are backed by the US government.
The most striking feature of TLT is that it increases significantly during recessions, as recessions often invite interest rate cuts. As interest rates go down, long-term (and high-yield) Treasuries owned by TLT become more valuable. it This is why TLT rose from $90 to over $122 in 2008. TLT is currently trading around $86, and I don’t see significant downside risk.
If a recession comes I see either rapid gains here, or a gradual climb to the upside as interest rate cuts eventually make these long-term Treasuries more valuable. Analysts expect interest rates to rise be picked up A little bit this year, if inflation comes higher, but that’s not likely to happen. And even if this happens, it will not have any major impact on TLT.
Overall, you get a 4.5% yield and ~40% upside potential over the next 24 months. If a deep recession occurs, it could even eclipse its 2020 peak of over $170.
ColterPoint Net Lease Real Estate ETF (NETL)
The ColterPoint Net Lease Real Estate ETF holds REITs that follow the net lease business model. A “net lease” is an arrangement whereby the tenant is required to pay all or part of the taxes, fees and maintenance costs for a property in addition to rent. In the most common flavor, the triple net lease, the tenant pays all three, meaning the landlord collects the rent and essentially touches nothing on the income statement.
Thus, these pure lease REITs are closest to public real estate bonds. They sign a 15 or 20-year lease with a credit-worthy tenant Walmart(nasdaq:wmt | WMT price prediction), FedEx (NYSE:FDX)Or a regional grocer collects predictable fare with built-in contracted escalators, and then delivers the cash.
Rising interest rates have created a lot of fear in the entire real estate sector, but the worst has never materialized. Real estate prices are nowhere near balloon levels, and these companies have already applied lessons from 2008 to prevent a repeat.
i hope netl To Eventually recover to its peak and provide a gain of 25-30%. In the meantime, you can cash in on the 4.69% yield. The expense ratio is on the high side at 0.60% or $60 per $10,000.
VanEck Preferred Securities Former Financial ETF (PFXF)
Preferred stocks are somewhere between common stocks and bonds, and companies issue them so as not to dilute their common stock. this stock priority is given A company collapses due to unexpected circumstances. Most importantly, these preferences come with hefty yields to entice investors who might have chosen Treasuries instead.
PFXF buys a basket of these favorites, but it does so with a very smart overlay. The PFXF ETF excludes favorites from financial companies, and I believe This makes it quite safe in the current environment. Financial companies are the largest issuers of these shares. These businesses are the first to fall in recessions, and they are lending extensively to risky AI startups.
PFXF now gives you a 6.35% dividend yield with an expense ratio of 0.40%. Independent of those dividends, it’s already up 16.5% in the last year.