In the world of income investing, a few hidden gems have been quietly paying out substantial monthly dividends, often overlooked by investors. These three Exchange-Traded Funds (ETFs) are making waves in the market, offering double-digit annual distribution rates on a monthly or weekly basis. Despite their potential, most income investors have never heard of them, highlighting a gap in the market. Let's delve into these three options-overlay ETFs and explore why they are worth considering for your investment portfolio.
YieldMax Ultra Option Income Strategy ETF (ULTY)
ULTY is an aggressive ETF that stands out for its structural approach. It employs a synthetic covered call strategy across a rotating book of the most volatile and traded single stocks in the U.S. market. The current top-weighted holdings include Astera Labs, IREN Limited, AMD, Fortinet, Coherent, and Palantir, among others. These stocks have implied volatilities that are often two to three times higher than the S&P 500, which drives the eye-popping yield.
Distributions from ULTY are paid weekly, with recent checks ranging from $0.39 to $0.40 per share. The fund's performance over the trailing year has been about 10% on a price-adjusted basis, indicating that almost all the income was offset by principal that has barely moved. This is a tradeoff that investors should be aware of, as it means that the fund's total return is heavily dependent on the performance of its underlying holdings.
NEOS Nasdaq-100 High Income ETF (QQQI)
QQQI takes a different approach by holding the Nasdaq-100 basket and overlaying a data-driven call-writing program using NDX index options. This ETF is particularly interesting for investors who want exposure to tech while still generating substantial income. The fund has paid 12 monthly distributions over the past year, ranging from $0.53 to $0.66 per share, with the most recent payment in May 2026 at $0.6589.
One of the key advantages of QQQI is that its price has appreciated almost 32% over the trailing year, making the income genuinely additive to the Net Asset Value (NAV). The fund's expenses run at 0.68%, which is relatively low for an ETF. However, investors should be cautious about the potential lag in performance if the Nasdaq takes off, as the short calls effectively call the top of the rally.
NEOS S&P 500 High Income ETF (SPYI)
SPYI is the conservative core of the trio, running the same NEOS playbook on the S&P 500. It holds the index constituents directly and writes data-driven SPX index calls, capturing the 1256 60/40 tax treatment that QQQI enjoys. Monthly distributions have been consistent, ranging from $0.46 to $0.56 per share since 2024, with a distribution rate of around 11.5% against a share price of $54.
The fund's total return over the past year has been impressive at 24%, and it has compounded to a 73% gain since inception. This demonstrates that the call-writing overlay has not destroyed the underlying return engine. SPYI is a defensible piece of a retirement income plan, offering a 12% monthly yield backed by the actual S&P 500, with tax efficiency baked in.
Finding the Right Fit
These three ETFs offer different tools for different investment strategies. ULTY is ideal for investors seeking the largest possible cash distribution, accepting that the share price may grind sideways or lower over time. SPYI provides a more conservative approach, offering a 12% monthly yield backed by the S&P 500, making it a suitable core holding in a retirement income plan. QQQI, on the other hand, caters to investors who want a Nasdaq tilt and can handle sharper drawdowns.
In conclusion, these options-overlay ETFs present an opportunity to generate substantial income while managing equity volatility. By understanding their unique approaches and tradeoffs, investors can make informed decisions to enhance their income-generating portfolios.
