JPMorgan Equity Premium Income (JEPI) pays monthly dividends with a current 10% yield. This is one of the best passive income vehicles for a steady income stream. You can build it up overtime by reinvesting a portion of the dividends.
JEPI – $56.00 with 10% yield
The JPMorgan Equity Premium Income ETF (JEPI) is one of the most researched ETFs online and has gathered $8 billion of net money in 2022 as advisors sought income alternatives. JEPI is now the largest actively managed equity ETF, managing $13 billion despite launching in only May 2020. On the heels of JEPI’s success, JPMorgan launched the JPMorgan Nasdaq Equity Premium ETF (JEPQ) in May 2022.
JEPI exhibits Equity Premium Income by taking a three-pronged approach to total returns — dividends, options premium, and potential capital appreciation. As a whole, the strategy is seeking 7%–9% annualized income, distributed monthly, with two-thirds of the volatility and beta of the S&P 500.
With Equity Premium Income, there are two building blocks — a more defensive underlying equity portfolio and an options overlay. JEPI has a more defensive equity portfolio so the strategy does not eat all of the downside in most market environments, and uses a modernized approach to call overwriting that allows us to balance total return and income generation.
A “best case” environment for the strategy would be when markets are flat to moving up modestly, so you can “have your cake and eat it too.” If markets are gradually moving upward, we should be able to take part in the market’s upside as well as generate income. When we experience elevated market volatility, the strategy can potentially deliver above-average levels of income due to the higher premiums received for selling options.
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