3 ETFs That Could Turn Your Portfolio Into a $1 Million Passive Income Machine
Wall Street's latest flavor of "set it and forget it" just got a crypto-sized upgrade. These ETFs aren't your grandpa's index funds—they're liquidity rockets strapped to the blockchain revolution.
The Contenders
1.
The DeFi Dominator
: Cuts out traditional banks like a hot knife through regulatory butter. Current yield? Let's just say it makes Treasury bonds look like a parking ticket.
2.
The Bitcoin Cash Cow
: Bypasses Wall Street's usual 2-and-20 fee buffet. Because why pay hedge fund managers yachts when algorithms work for RAMen noodles?
3.
The Staking Juggernaut
: Compounds returns while you sleep—assuming you can sleep through 20% APY announcements.
The Fine Print
Yes, the SEC still hates this. No, your financial advisor won't approve. And that's exactly why it works—while traditional finance argues about expense ratios, these ETFs eat their lunch with blockchain's trademark efficiency.
The Bottom Line
Will they actually print $1 million? In this economy? Maybe—if you believe in math more than Janet Yellen's printer. Either way, it's the closest thing to free money since the last Fed pivot.
Image source: Getty Images.
Can you get $1 million in passive income?
I have to say, collecting $1 million in passive income, presumably annually, is a tall order. It's not like you're going to be able to have a $2 million portfolio and a 50% dividend yield, generating $1 million.
A more typical dividend yield for good blue chip companies is between 2% and 4%, with plenty of exceptions higher and lower. Some well-regarded companies do have yields of 5% or 6% or more, though.(NYSE: VZ), for example, recently yielded 6.4%, and(NYSE: O) yielded 5.7%. Meanwhile, theindex, which holds 500 of America's biggest companies, sported an overall dividend yield of only 1.2% recently. (Many of those 500 companies don't pay a dividend at all.)
So, here are some scenarios that show how much passive income you might generate with different kinds of portfolios:
|
$500,000 |
3% |
$15,000 |
|
$1,000,000 |
3% |
$30,000 |
|
$2,000,000 |
3% |
$60,000 |
|
$33,333,333 |
3% |
$1,000,000 |
Source: Calculations by author.
You'd need a portfolio worth $33,333,333, per the table above, if you want to collect $1 million annually via an overall average dividend yield of 3%. The table below doubles that to 6% and shows that you'd only need a $16,666,667 portfolio.
|
$500,000 |
6% |
$30,000 |
|
$1,000,000 |
6% |
$60,000 |
|
$2,000,000 |
6% |
$120,000 |
|
$16,666,667 |
6% |
$1,000,000 |
Source: Calculations by author.
Take some comfort in the other numbers, though. You might set up $30,000 or $60,000 or some other excellent amount of passive income with a more reasonable-sized portfolio.
3 ETFs that could generate lots of passive income for you
You might now be wondering which ETFs to consider for that wonderful passive income. Here are three solid contenders:
|
Schwab U.S. Dividend Equity ETF (SCHD -0.04%) |
3.9% |
11.49% |
11.24% |
|
Fidelity High Dividend ETF (FDVV -0.20%) |
3.1% |
17.56% |
N/A |
|
Vanguard High Dividend Yield ETF (VYM -0.29%) |
2.6% |
13.79% |
10.51% |
Source: Yahoo! Finance and Morningstar.com, as of August 6, 2025.
Each offers a solid dividend yield along with impressive average annual gains. Such returns are not guaranteed, of course, and some ETFs will post poor or even negative results now and then. But overall, these have done well and are poised to continue.
If you want fatter yields, you might consider the(PFF -0.13%), which recently sported a yield of 6.5%. Its average annual gains are far lower, though, as it's a fund specializing in preferred stocks, which tend to be generous dividend payers with little stock-price appreciation.
Another option to consider is a covered-call ETF such as the(JEPI 0.12%) or the(JEPQ -0.02%), recently yielding 8.4% and 11.2%, respectively. But read up on these kinds of ETFs first to make sure you understand what you're investing in and how they work.
However you go about it, give serious consideration to loading up much of your long-term portfolio with dividend payers, as they can generate a lot of passive income for you.
