Realty Income, Energy Transfer, JEPQ, and SCHD: A good portfolio for income?

Investors seeking reliable income have no shortage of options today. For the most risk-averse, short-term bonds are currently offering annual yields of more than 4%, although they provide little to no potential for capital appreciation. 

This article explores why a portfolio combining Realty Income NYSE:O, Energy Transfer (NYSE: ET), JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ), and Schwab U.S. Dividend Equity ETF (NYSEARCA: SCHD) could be an attractive choice for income-focused investors, offering a blend of high yields, dividend growth, and long-term capital appreciation.

The four assets have dividend yields of 5.12%, 6.70%, 11.18%, and 3.12%, respectively. This means that a $100,000 investment spread across the four assets equally would bring in $6,450 in dividend payouts a year.

Realty Income is one of the best REITs in the industry

Realty Income is a top company in the real estate industry, where it acquires property and leases them to some of the biggest retailers like 7-Eleven, Dollar General, Walgreens, Chipotle, and Lowe’s.

Its business model is known as the triple-net approach, where the tenant is responsible for paying for property taxes, maintenance, and other costs. 

Realty Income has a dividend yield of 5.12% and is known for making these payments monthly. In its most recent results, the company said that its net income to common shareholders jumped to $311 million in the first quarter, while the adjusted funds from operations (AFFO) rose by 6.6% to $1.13.

The company will likely continue doing well and growing its dividends as it has done in the past decades. For one, it has a long history of making these payments and has hiked its dividends for over 57 years. 

Technicals suggest that the Realty Income stock has more upside in the near future. It has formed an ascending channel and remained above the 100-day Exponential Moving Average (EMA). If more gains happen, it may jump from the current $62 to last year’s high of $75.

Realty Income stock chart | Source: TradingView

Energy Transfer is a top MLP company

Energy Transfer is another top dividend company to consider. It is a top player in the energy industry, where it offers key solutions like transportation, processing, and storage of products. It owns 107,000 miles of natural gas pipelines and 18,000 miles of crude oil pipelines. It also deals with products like ethane, propane, and butane. 

The company uses a Master Limited Partnership (MLP), which has tax advantages. Also, its revenue comes from fees and long-term contracts, meaning that it is paid for transporting and storing energy products regardless of the daily oil and gas prices.

Energy Transfer is benefiting from the ongoing US-Iran war that has led to a strong demand for oil and gas, especially for exports.

SCHD is about to become the biggest dividend ETF

The Schwab US Dividend Equity ETF has crossed the $100 billion assets milestone and is about to overtake the Vanguard Dividend Appreciation ETF (VIG). It is often seen as an anti-AI fund because most of its companies are in the healthcare, consumer staples, energy, industrials, and financials. It does not have high-flying companies like Nvidia and Micron.

SCHD has a modest dividend yield of just 3%. However, it compensates this small yield with its payout growth, with its ten-year CAGR being 10%. Also, it has done well this year, with the year-to-date gains being over 20%.

JPMorgan Nasdaq Equity Premium Income ETF

JPMorgan’s JEPQ ETF is a top fund that aims to generate income by investing in some of the biggest technology companies in the world. It also uses a covered call approach to generate income, with its dividend yield sitting at over 11%.

The fund’s benefit is that it has a long history of generating strong returns. For example, its total return in the last three years stood at over 70%. 

While the JEPQ ETF has done well over the years, Goldman Sachs’ GPIQ ETF has had a better return of over 90%.

READ MORE: Love the JEPQ and QQQI ETFs? Here’s why Goldman Sachs GPIQ is better