With the future of Social Security uncertain, these three ETFs offer attractive income opportunities for retirement planning.
With market uncertainty and growing concern about the future of Social Security, investors are increasingly turning their attention to building reliable income streams. The Social Security Administration’s projections suggest that the program’s trust funds may face difficulty maintaining full benefit payments for decades to come, leaving the program with an independent source of income in retirement. The importance of developing
Personal retirement planning has never been more important as demographic changes put pressure on traditional support systems. Social Security has served as the foundation of retirement planning for generations of Americans, but evolving economic realities call for a more proactive approach to income generation.
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Exchange-traded funds (ETFs) offer an efficient way to build a diversified income stream without the complexity of managing individual securities. Here are three ETFs designed to generate a reliable income stream for your retirement portfolio.
Creating value-oriented cash flow
Pacer US Cash Cows 100 ETF (COWZ 0.52%) employs a unique strategy focused on maximizing shareholder value through cash flow generation. The Pacer US Cash Cows 100 ETF identifies companies with high free cash flow yields. This is typically a key indicator of both financial resilience and the ability to maintain consistent dividend payments.
The ETF offers investors a modest yield of 1.89%. Its expense ratio of 0.49% is higher than many comparable funds in the sector, but its unique investment approach justifies the premium.
This ETF methodology targets companies that generate significant cash flows in excess of operating requirements. The portfolio’s largest positions demonstrate this approach, featuring established names such as Hewlett Packard Enterprise, Airbnb, Nucor, Qualcomm, and Chevron.
Over the past five years, excluding fees, the ETF has slightly outperformed the S&P 500 on a total return basis.
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Traditional dividend growth approach
The iShares Core Dividend Growth ETF (DGRO 0.50%) prioritizes companies with consistent dividend growth over the long term. The fund maintains a competitive expense ratio of 0.08%, allowing investors to retain more of their earnings while gaining access to high-quality dividend companies across the U.S. market.
The iShares Core Dividend Growth ETF has a minimum requirement of five consecutive years of dividend growth to be included in the portfolio. This disciplined approach is reflected in our top five holdings: ExxonMobil, Microsoft, Apple, JPMorgan Chase & Co., and Chevron, all market leaders with solid dividend histories. Currently, the ETF offers investors a stable yield of 2.2%.
The fund’s core strength lies in its commitment to companies that regularly increase their dividends. This strategy is consistent with historical market data, showing that dividend growth companies outperform over the long term. Such consistent distribution growth often indicates a strong business foundation and expanding market presence.
Although this fund has lagged the S&P 500 over the past five years, it has still delivered strong stock appreciation and stable dividends over this period.
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Strengthen profit strategy
JPMorgan Equity Premium Income ETF (JEPI 0.22%) takes an innovative approach to income generation. The JPMorgan Equity Premium Income ETF combines high-dividend stocks with an options overlay strategy designed to improve your monthly income while helping you manage portfolio volatility.
ETFs’ sophisticated approach has attracted significant investor attention, particularly their ability to generate above-average yields. The portfolio’s largest positions reflect this strategy and feature established names such as Trane Technologies, Meta Platforms, Progressive, Southern Company, and AbbVie.
The fund currently offers investors an effective yield of 7% while maintaining a modest expense ratio of 0.35%. Since its inception in 2020, the ETF has delivered lower total returns than the S&P 500, but its focus on generating consistent returns makes it an ideal vehicle for a retirement portfolio.
^SPX data by YCharts
Essential elements of retirement planning
Building multiple streams of passive income is a smart approach to ensuring retirement security. These ETFs offer a variety of ways to generate income, from traditional dividend growth to more sophisticated options-based strategies.
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Motley Fool’s Ascent. George Budwell has positions in AbbVie, Chevron, JPMorgan Chase, Microsoft, and iShares Trust-iShares Core Dividend Growth ETF. The Motley Fool has positions in and recommends AbbVie, Airbnb, Chevron, JPMorgan Chase, Meta Platforms, Microsoft, Progressive, and Qualcomm. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
