2 ETFs That Keep Paying You Even If the S&P 500 Goes Nowhere for Years

Two exchange-traded funds (ETFs) are designed to provide income even if the S&P 500 fails to perform over extended periods. These strategies have yielded annual returns exceeding 10%, but investors should weigh the trade-offs, including potential reduction in upside and the associated fees and tax treatment.

JEPI and WEEL are the two ETFs worth considering. JEPI utilizes a combination of actively managed stocks and equity-linked notes. The fund focuses on large-cap defensive U.S. equities and sells one-month out-of-the-money call options on S&P 500 index futures. This approach sacrifices some upside for a higher current income stream.

Investors should note that the income is taxed as ordinary income, making JEPI more suitable for tax-advantaged accounts like Roth IRAs or Traditional IRAs. JEPI's distribution yield is 7.94%, and its expense ratio is 0.35%.

WEEL, on the other hand, employs the options wheel strategy, systematically selling cash-secured puts on a diversified basket of sector ETFs and other liquid funds with listed options. If the put options expire worthless, the investor retains the premium and starts anew. If assigned, the strategy transitions to writing covered calls against the newly acquired positions until they're eventually called away, at which point the cycle repeats.

Treasury bills make up a significant portion of the portfolio as collateral for short put positions. WEEL generates an 11.86% distribution rate, with a 0.99% net expense ratio after fee waivers, reflecting its complexity and the use of underlying ETFs.