3 Dividend ETFs That Yield Over 9% And Are Actually Worth Buying

ProShares Russell 2000 High Income (ITW) yields 11.37%. iShares Treasury BuyWrite (TLTW) yields 14.71%. Westwood Midstream Income (MDST) yields 9.03%.
ITWO’s daily reset covered call approach captures more advantages than traditional monthly covered call ETFs.
MDST owns midstream energy pipelines, which earn toll-based revenue from increased US energy exports to Europe.
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If you are focused on the long term and also want high returns, it is a good idea to look into ProShares Russell 2000 High Income ETF (BATS:ITW), iShares 20+ An Treasury Bond BuyWrite Strat ETF (BATS:TLTW)and Westwood Salient Enhanced Midstream Income ETF (NYSE:MDST).

When you see a return that exceeds 9%, your first reaction should be skepticism. History shows that dividend stocks and ETFs that pay near double-digit yields actually get hurt and end up underperforming. However, there are always outliers that you can analyze.

Rejecting any high-yield option means missing out on legitimate opportunities for significant passive income. A select group of exchange-traded funds have cracked the code on generating substantial returns without resorting to financial engineering that is destined to collapse.

These ETFs have exposure to long-term headwinds and can outperform the market while giving you solid dividend yields without taking on excessive risk.

They are also well positioned ahead of several interest rate cuts later this year.

ITWO targets high monthly income from US small-cap stocks while tracking long-term total returns comparable to the Russell 2000 Index. It tracks the Cboe Russell 2000 Daily Covered Call Index before taxes and expenses. Take a long position in the Russell 2000 Total Return index and a short position in call options for additional income.

ITWO is newer and better positioned than many other covered call ETFs because of the number of stocks it has exposure to, plus the upside potential of the Russell 2000. Smaller-cap stocks have underperformed for some time. Falling interest rates are revisiting these stocks, with the index performing strongly in recent months.

Moreover, ITWO’s “daily reset” approach contrasts with traditional covered call ETFs, which sell monthly options and often cap more growth in bull markets. ProShares claims the ITWO method generates higher returns efficiently while better capturing returns over time, potentially aligning long-term returns closer to the unhedged Russell 2000.

ITWO has a yield of 11.37% and distributes monthly dividends. The expense rate is 0.55%.

TLTW is watching iShares 20-Year Treasury Bond ETF and (NASDAQ:TLT) as the base index and then add an income overlay on top of it. TLT itself has high yields of 4.4%, and this additional income overlay increases the dividend yield to 14.71%.

However, unlike traditional stock index-backed call ETFs, they don’t carry as much risk. Bonds are safer and unlikely to crash, especially from current levels. In any case, I see huge potential for growth. If a recession or downturn occurs, TLTW can give you a solid upside in addition to dividend yields if interest rates are cut sharply.

The chart on TLTW looks ugly if you zoom out, but that’s mostly due to interest rate hikes devaluing high-yield Treasuries. TLTW has traded much more positively in recent months as interest rates have fallen. The lower the bond yield, the higher the TLTW will move.

The expense rate is 0.35%.

The Westwood Salient Enhanced Midstream Income ETF is an actively managed, non-diversified, exchange-traded fund. Midstream businesses operate on a fee-based model and derive their revenue from the volume of energy flowing through their pipelines.

Thus, these businesses are some of the most stable and highly profitable. They are very robust in the current environment as Europe has moved to North America for its energy demand. American exports to Europe have increased, and these pipelines are constantly in demand. Recent events surrounding Venezuela may make these businesses even more profitable, as Venezuelan oil is heavy and perfect for US refiners.

The years ahead look bright for core midstream energy infrastructure companies.

MDST yields 9.03% and pays dividends monthly. The expense ratio is 0.80% or $80 per $10,000.

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This realization hits like a bolt of lightning when you realize not only how much better your returns could be, but that there are amazing offers out there, such as an app where new self-directed investment accounts funded with as little as $50 can receive up to $1,000 worth of shares.

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