3 Monthly Dividend ETFs That Beat SCHD’s Returns

The Schwab US Dividend Equity ETF (NYSEARCA: SCHD) has earned its popularity through an almost unmatched combination of long-term capital returns and a steady, sustainable dividend yield approaching 4%. For years, it stood as a cornerstone for income-focused portfolios. However, the fund has slipped into the red, down 2.45% over the past year, a performance largely attributed to its lack of significant exposure to the powerful technology rally that has dominated markets. This has created an opening for other exchange-traded funds that have engineered strategies to squeeze out income while simultaneously capturing tech-driven gains and providing a potential buffer against downturns.

This shift in performance does not necessarily signal the end of SCHD’s relevance. The fund’s core strategy of investing in high-quality, dividend-growing companies remains sound for long-term, conservative investors. As the source text suggests, if market dynamics eventually revert to a pre-AI ‘normalcy,’ SCHD could easily reclaim its leadership position. For now, however, the landscape for income investors has expanded, offering monthly distribution schedules and enhanced returns through more dynamic methodologies.

The Amplify CWP Enhanced Dividend Income ETF (NYSEARCA: DIVO) presents a sophisticated alternative that has significantly outperformed SCHD. This actively managed ETF follows the Enhanced Dividend Income Portfolio strategy from sub-adviser Capital Wealth Planning. Its approach is twofold: it invests in a concentrated portfolio of 20-25 high-quality, large-cap companies from the S&P 500 that have a proven history of dividend and earnings growth. Then, it strategically writes covered call options on a fraction of these holdings to generate additional premium income.

The result is a powerful income stream derived from two sources: a 2% to 3% yield from the underlying dividends and an additional 2% to 4% from the option premiums. This brings its current dividend yield to 4.54%. While its expense ratio of 0.56% is higher than SCHD’s, the performance justifies the cost for many. Historically performing on par with or slightly better than SCHD, DIVO has pulled decisively ahead in the past year, delivering a total return of 10.39% compared to SCHD’s decline of 1.94% (dividends and inflation-adjusted).

For investors seeking the stability of iconic American companies with a monthly payout, the SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA: DIA) is a compelling option. DIA tracks the price-weighted Dow Jones Industrial Average, holding the same 30 large, blue-chip U.S. stocks, including market leaders like Microsoft (NASDAQ: MSFT), Visa (NYSE: V), and IBM (NYSE: IBM). While its current yield is a modest 1.45%, its strength lies in its consistent long-term performance and the appeal of receiving income twelve times a year.

DIA’s exposure to these market leaders has driven an 11.36% return over the past year. More impressively, its long-term track record slightly edges out SCHD’s, with a total return of 278.38% over the past 20 years (dividends reinvested) compared to SCHD’s 255.76%. With a low expense ratio of just 0.16%, DIA offers a cost-effective way to outperform a dividend stalwart while getting paid monthly.

On the more aggressive end of the spectrum is the NEOS Nasdaq-100 High Income ETF (NASDAQ: QQQI). This fund fully embraces the options-driven income trend, using a data-driven covered call strategy on Nasdaq-100 stocks to convert the tech rally into a staggering 13.51% yield. The strategy involves writing call options on its holdings to generate premium income while employing a call spread approach to preserve some upside potential. It also buys protective put options to cap losses during market downturns, adding a layer of risk management.

This high-octane strategy has delivered an exceptional 25.60% in overall returns over the past year, far surpassing both SCHD and the broader market. The trade-off for this high income and strong performance is a higher expense ratio of 0.68%. QQQI represents a potent tool for income investors willing to use advanced options strategies to capitalize on the technology sector’s momentum.

The emergence of these monthly dividend ETFs does not spell the end for SCHD, but it does highlight a valuable diversification opportunity. SCHD remains a foundational holding for its proven, sustainable approach. However, for investors looking to boost their portfolio’s current income, frequency of payouts, and exposure to different market factors—particularly technology—DIVO, DIA, and QQQI offer compelling and proven alternatives.

Each fund serves a different risk and return profile. DIVO offers a balanced, actively managed approach with covered calls. DIA provides blue-chip stability and a long-term track record of outperformance. QQQI delivers explosive yield and returns through a concentrated tech and options strategy. By understanding these distinct methodologies, income investors can construct a more resilient and higher-performing portfolio that pays them not just quarterly, but every single month.