American Dividend-Paying ETF: Dollar Passive Income Strategy for Brazilian Investors

The Opportunity to Dollarize Your Income with Monthly Dividends

In recent years, many Brazilian investors have faced a dilemma: how to build a reliable source of income in hard currency without leaving their assets vulnerable to exchange rate instability and domestic interest rates? The increasingly common answer lies in exchange-traded funds that offer recurring payments: ETFs that distribute monthly dividends.

These instruments combine the convenience of a fund with the liquidity of a stock and, above all, with the regular cash flow that every passive income investor seeks. For the Brazilian investor who wants to dollarize part of their earnings and maintain a steady contribution, this strategy represents an important step toward a more diversified and protected portfolio.

In the upcoming topics, we will explore how these mechanisms work, what are the best available options in the market, and how Brazilians can start building this dollarized income stream.

How Do ETFs That Pay Monthly Dividends Work

An American ETF that pays dividends works simply: it aggregates a selection of stocks or bonds with a consistent profit distribution history, replicating a specific index. The main advantage is that instead of building an individual portfolio of dozens of international securities, the investor acquires a single share and already has diversified exposure with automated payments.

These distributions usually occur monthly and are credited in dollars to the brokerage account, which can be reinvested or converted according to the personal strategy. Funds tend to focus on sectors with predictable cash flow — such as energy, telecommunications, utilities, and real estate investment trusts (REITs) — or on assets that prioritize steady returns to investors.

The key difference compared to traditional ETFs is that these dividend-focused funds sacrifice potential appreciation in exchange for continuous income generation. For those seeking to build a robust passive income, this trade-off often makes a lot of sense.

The 6 Main ETFs with Monthly Distributions for Passive Income

1. Global X SuperDividend ETF (SDIV): Global Exposure with High Yield

If the goal is to receive a consistent dollar income with diversified international exposure, SDIV is one of the most well-known options. Created in 2011, this fund replicates an index that selects 100 global stocks with the highest dividend yields, maintaining an equal weighting to avoid excessive concentration.

Technical Profile:

• Price: ~US$ 24.15
• Assets Under Management: US$ 1.06 billion
• Annual Fee: 0.58%
• Dividend yield (12m): 9.74%
• Distribution: Monthly in dollars

Portfolio Characteristics: SDIV’s composition is marked by geographic diversification. About 25% is in the US, 15% in Brazil, 12% in Hong Kong, and the rest spread across Canada, the UK, and emerging markets. Sector-wise, it predominantly includes financials (~28%), energy, real estate (~13%), and utilities.

Advantages:

• Predictable monthly dividends ideal for those seeking steady cash flow
• International diversification reduces dependence on a single economy
• Focus on high-yield companies with a solid track record

Risk Considerations:

• Companies with very high dividends may have weak fundamentals, risking dividend cuts
• Strong link to emerging markets and cyclical sectors like energy and financials
• Management fee above the average for passive ETFs

2. Global X SuperDividend U.S. ETF (DIV): U.S. Focus with Controlled Volatility

For those who prefer exclusive concentration in the U.S. market without sacrificing attractive dividends, DIV is a strategic choice. The fund selects 50 U.S. stocks with the highest dividend yields, provided they have reduced historical volatility compared to the S&P 500.

Operational Data:

• Price: ~US$ 17.79
• Assets Under Management: US$ 624 million
• Annual Fee: 0.45%
• Dividend yield (12m): 7.30%
• Daily volume: About 240,000 shares

Sector Composition: The portfolio maintains a quite defensive profile, with utilities at ~21%, REITs at ~19%, energy at ~19%, basic consumption at ~10%, and communications/healthcare in the remainder. This structure minimizes exposure to volatile sectors like technology.

Advantages:

• Dividends above 7% annually in strong currency
• Traditionally resilient sectors during economic crises
• Reduced volatility that smooths losses in downturn cycles

Limitations:

• Sector concentration may impair performance during unfavorable periods for utilities and energy
• Limited to only 50 U.S. stocks, missing international opportunities
• Risk of “dividend traps” when companies deteriorate financially

3. Invesco S&P 500 High Dividend Low Volatility ETF (SPHD): Stability and Balanced Income

SPHD balances elegantly the pursuit of passive income with protection against sharp fluctuations. Launched in 2012, the ETF replicates an index that selects 50 S&P 500 companies with the highest dividend yields and lowest historical volatility, limiting sector exposure to 25%.

Key Information:

• Price: ~US$ 48.65
• Assets Under Management: US$ 3.08 billion
• Annual Fee: 0.30%
• Dividend yield (12m): ~3.4%
• Average volume: ~700,000 shares

Approach and Philosophy: SPHD rebalances semiannually (January and July) to maintain a balance between attractive dividends and stability. Its typical portfolio includes names like Pfizer, Verizon, Altria, and Consolidated Edison — mature companies with predictable cash flow.

Attractions:

• Combination of monthly income with capital preservation
• Exposure to established blue chips
• Systematic rebalancing that avoids concentration in unstable assets

Challenges:

• Moderate dividend return (~3.4%), lower than high-yield funds
• Low potential for share appreciation in bullish markets
• About 50% concentrated in three main sectors

4. iShares Preferred and Income Securities ETF (PFF): The Path of Preferred Stocks

PFF stands out by investing in a specific class: preferred stocks. These securities occupy an intermediate position between common stocks and debt, offering fixed dividends (usually monthly) with lower volatility, though sensitive to interest rate changes.

Technical Characteristics:

• Price: ~US$ 30.95
• Assets Under Management: US$ 14.11 billion
• Annual Fee: 0.45%
• Dividend yield (12m): ~6.55%
• Average volume: ~3.5 million shares

Composition and Strategy: PFF includes over 450 assets, predominantly preferred shares of large U.S. financial institutions. Financials account for over 60%, followed by utilities, energy, and telecommunications. Banks like JPMorgan, Bank of America, and Wells Fargo are significant holdings.

Benefits:

• High monthly income even during volatile periods (above 6% annually)
• More predictable behavior than common stocks
• High diversification with over 400 issuers

Associated Risks:

• High sensitivity to rising interest rates in the U.S.
• Low growth potential — focus is on income, not appreciation
• Sector concentration in finance makes the portfolio vulnerable to credit crises

5. Global X NASDAQ-100 Covered Call ETF (QYLD): Maximum Income with Trade-offs in Appreciation

QYLD implements a sophisticated strategy: covered call selling on the Nasdaq-100, turning market volatility into a monthly cash flow. With a yield above 13%, it is one of the most profitable options for passive income in dollars.

Operational Data:

• Price: US$ 17.47
• Assets Under Management: US$ 8.09 billion
• Annual Fee: 0.60%
• Dividend yield (12m): 13.17%
• Average volume: ~7 million shares

How It Works: The fund buys all Nasdaq-100 stocks and simultaneously sells call options on the index. The premiums collected monthly are fully distributed to shareholders, creating a highly predictable income stream.

Composition: Technology makes up about ~56% of the portfolio (Apple, Microsoft, NVIDIA, Amazon, Meta), communications ~15%, and discretionary consumption ~13%. The exposure is inherently concentrated in growth sectors.

Advantages:

• Exceptionally high yield for passive income (above 13% annually)
• Automated strategy that eliminates manual options trading
• Additional protection in sideways or declining markets via collected premiums

Disadvantages:

• Limited capital gains — in strong Nasdaq appreciation, the fund lags behind
• Variable income depending on market volatility
• Potential risk of long-term capital erosion

( 6. JPMorgan Equity Premium Income ETF )JEPI###: High Income with Lower Volatility

Launched in 2020, JEPI quickly became the world’s largest active dividend ETF, with over US$ 40 billion under management. It combines active selection of S&P 500 stocks with structured instruments that generate recurring income.

Main Information:

• Price: ~US$ 57.46
• Assets Under Management: US$ 40 billion
• Annual Fee: 0.35%
• Dividend yield (12m): ~8.4%
• Average volume: ~5 million shares

Hybrid Strategy: JEPI constructs a portfolio of approximately 100 to 150 defensive stocks (Coca-Cola, AbbVie, UPS, PepsiCo, Progressive) and complements it with Equity-Linked Notes — instruments that replicate selling calls on the S&P 500, generating monthly premiums distributed to shareholders.

Risk Profile: With an estimated beta of only 0.56 relative to the S&P 500, JEPI exhibits significantly lower volatility than a 100% equity fund, making it attractive for investors seeking income with capital preservation.

Positive Points:

• Robust income (around 8% annually) with reduced equity risk exposure
• Liquidity and operational stability ensured by the fund’s size
• Potential tax advantages for some international investors

Considerations:

• Limited participation in strong market appreciation
• Sophisticated active management with performance risk
• Slightly higher annual fee than average passive funds

Paths for Brazilians to Invest in ETFs with Monthly Dividends

( International Brokers: Direct Access

The most straightforward way is through international platforms like Passfolio, Nomad, Interactive Brokers, Stake, Avenue, Inter Securities, and BTG Pactual. These intermediaries allow opening dollar accounts, transferring resources via international transfer, and directly purchasing American ETFs. Dividends are automatically credited to the account and can be reinvested or converted.

) BDRs on B3: Local Alternative

There are BDRs ###Brazilian Depositary Receipts### of some ETFs listed on B3, such as IVVB11 that replicates the S&P 500. However, this route has limitations: few BDRs of ETFs with monthly dividends are available, and taxation may be less efficient than direct investment.

( Derivatives Trading: Complementary Strategy

A third option is trading CFDs )contracts for difference### of international ETFs on specialized platforms. This method allows speculating on appreciation or depreciation without owning the asset, offering leverage. It is a more active approach that complements the passive monthly dividend strategy for more experienced investors.

Building Your Dollar Passive Income Strategy

Choosing among the various ETFs that pay dividends depends on your risk profile, time horizon, and specific objectives. For maximum income, QYLD leads. For balance between income and stability, JEPI and SPHD are excellent. For international diversification, SDIV stands out. For a focus on defensive preferred stocks, PFF offers a unique option.

The key is understanding that these funds turn exposure to the U.S. market into a predictable cash flow — a valuable differential for Brazilian investors seeking to build protected assets against currency and domestic interest rate fluctuations.