My Passive Income Journal

Generating Income With ETFs

Generating income with ETFs would have to be one of the simplest passive income ideas.

I’ve written several articles about this already. Here is a selection:

How to Generate High Yield Income with Covered Call ETFs

My High Yield Diversified Income Portfolio

How to Build a Private Income Portfolio

A Guide to Cashflow Investing

Covered Call ETFs For Passive Income

ETFs do all the hard work of managing a portfolio and generating income.

With ETFs, it is as simple as selecting a few different ETFs from different sectors and markets that are specifically designed to produce income ….. and you’re sorted!.

What Type of ETFs Produce Income?

Many ETF providers understand that regular income is what many of us need.

After all, cashflow (regular money in our pockets) is what we all live off.

So, here is a list of the types of ETFs that produce income:

  • Dividend Yield ETFs
  • Real Estate (REIT) ETFs
  • Dividend Harvesting ETFs
  • Corporate Bond ETFS
  • Covered Call ETFs
  • Cash Floating Rate ETFs
  • International Dividend Growth ETFs
  • Fixed Income ETFs
  • Emerging Market Bonds ETFs
  • Mortgage REIT ETFs
Generating Income With ETFs
Generating Income With ETFs

How To Construct an Income Portfolio with ETFs

Spreading risk across sectors and income types is wise. There is no point having all our eggs in one basket.

Having a portion of our money across a few different types of assets is easily achievable with ETFs.

For example, here is a theoretical portfolio spread across 5 ETF types that have very little overlap in their underlying holdings.

As follows:

  • 20% in a High Yield US Dividend ETF (USA stocks)
  • 20% in a Global REIT ETF (Global property)
  • 20% in a US Corporate Bond ETF (USA corporate debt)
  • 20% in a S&P500 Covered Call ETF (Covered call income from S&P500 index)
  • 20% in a Mortgage REIT ETF (Industrial real estate debt)

Using the above ETF portfolio, we can see that the holdings are evenly spread across 5 distinct themes:

  • domestic dividend stock income
  • global property income
  • domestic corporate debt income
  • domestic call option trading income
  • mortgage debt income

This type of portfolio would provide very high income and be well diversified. It’s just an example to get the thoughts flowing about generating income with ETFs.

Start Generating Income With ETFs

So, begin your research, look to create wide diversification to protect from different market cycles, choose quality liquid ETFs that pay regular distributions (quarterly or monthly) …. and there you have the beginnings of a robust income portfolio only using ETFs.

Generating income with ETFs is truly a simple and elegant solution to our future cashflow needs.

Income investing has completely changed my life – that’s why I love sharing what I know freely in all the My Passive Income Journal articles.


Hugh Walker

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