What is an income ETF?

An income ETF is a publicly traded fund that holds income-producing assets, such as dividend stocks and bonds. These funds aim to reward investors with high distributions and target capital appreciation as a secondary objective. Low commission rates start at $0 for U.S. listed stocks & ETFs*. Margin loan rates from 5.83% to 6.83%.

How do ETFs make money?

Most ETF income is generated by the fund's underlying holdings. Typically, that means dividends from stocks or interest (coupons) from bonds. Dividends: These are a portion of the company's earnings paid out in cash or shares to stockholders on a per-share basis, sometimes to attract investors to buy the stock.

Should you invest in equity income ETFs?

By maintaining exposure to stocks, investors can access potential growth from equity markets while seeking dividends for income with equity income ETFs. Companies with mature businesses, healthy balance sheets, and strong cash flows have often returned profits to investors in the form of dividends, providing a source of income.