3 Top ETFs to Buy in May for Passive Income
By Matt DiLallo ā May 3, 2025 at 4:47 AM
As financial independence becomes an ambition for many, building a reliable stream of passive income has gained increasing attention among investors. In pursuit of this goal, the thoughtful selection of exchange-traded funds (ETFs) can play a crucial role. Here are three top ETFs that Iām planning to buy in May, each with its unique strategy to generate income.
1. Schwab U.S. Dividend Equity ETF (SCHD)
The Schwab U.S. Dividend Equity ETF has made a name for itself by holding 100 top high-yield dividend stocks, making it an excellent choice for investors seeking income through dividends. This ETF not only emphasizes income generation but also focuses on sustainable companies, which have a track record of consistent and reliable dividend payments.
By investing in SCHD, you tap into a diversified pool of stocks that are likely to provide attractive returns over the long term while mitigating risks associated with individual stocks. As of May 9, 2025, the current price for SCHD is $25.71, reflecting a slight change of -0.27%.
2. JPMorgan Nasdaq Equity Premium ETF (JEPQ)
For those looking to enhance their income potential, the JPMorgan Nasdaq Equity Premium ETF is an intriguing option. This unique ETF generates income by writing call options against its underlying stocks, allowing it to capitalize on market volatility. Engaging in this strategy provides the potential for higher returns, especially in a fluctuating market environment.
By investing in JEPQ, you gain exposure to growth stocks in the Nasdaq market while benefiting from the additional income generated by the option writing strategy. This represents an innovative approach to income generation while maintaining a portfolio with significant growth potential.
3. Vanguard Total Bond Market ETF (BND)
Incorporating fixed-income assets into a diversified investment portfolio is essential for balancing risk, and the Vanguard Total Bond Market ETF stands out as a solid choice. This fund holds a wide range of high-quality government and corporate bonds, providing stability and steady income to investors.
The BND is particularly appealing during periods of market uncertainty, as bond markets tend to behave differently than stock markets, offering a buffer against volatility. Furthermore, the consistent interest payments from bonds can significantly contribute to passive income needs.
Conclusion
Investing in ETFs can be a straightforward way to build passive income and work towards financial independence. The Schwab U.S. Dividend Equity ETF, JPMorgan Nasdaq Equity Premium ETF, and Vanguard Total Bond Market ETF each offer unique strategies for generating income, making them worthy considerations for any investor’s portfolio.
By strategically selecting these ETFs, I aim to enhance my passive income stream, ultimately covering living expenses and relieving the financial pressures that many face. As always, it is essential to conduct thorough research and evaluate your financial goals before making investment decisions.