JEPQ’s 10% Dividend Is Legendary, But At What Cost?

4 days ago 7

Michael Williams

Thu, December 11, 2025 astatine 9:42 AM CST 4 min read

24/7 Wall St.

JEPQ delivers an 11.52% dividend output by selling covered calls connected Nasdaq-100 stocks but caps upside gains during rallies.
QQQ returned 22.27% year-to-date and 106.68% implicit 5 years without options strategies. JEPQ’s output came astatine the outgo of 10-12 percent points successful yearly returns.
JEPQ’s monthly distributions fluctuate 50% based connected volatility. The money holds 43.7% successful exertion stocks with 168% portfolio turnover.
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The JPMorgan Nasdaq Equity Premium Income ETF (quite the mouthful!) (NASDAQ:JEPQ) has attracted astir $32 cardinal successful assets with a elemental and appealing feature: a remarkably precocious 11.52% dividend yield. The money holds Nasdaq-100 stocks and sells covered telephone options against those positions, generating accordant monthly premiums that money distributions portion capping upside erstwhile stocks rally. The halfway question: does sacrificing superior appreciation for double-digit income marque fiscal sense?

JEPQ holds a portfolio mirroring the Nasdaq-100, concentrated successful mega-cap exertion stocks. The money sells telephone options connected these positions, collecting premiums that nutrient monthly distributions. When markets are volatile, enactment premiums rise, perchance expanding payouts. When stocks surge, those telephone options bounds gains. The fund's 0.35% disbursal ratio is competitive, and it has paid monthly distributions without interruption since its May 2022 inception. Payment amounts fluctuate significantly—ranging from $0.34 to $0.68 per share—because they beryllium connected marketplace volatility alternatively than underlying dividend fundamentals.

JEPQ's apical holdings uncover the accidental cost. Nvidia (NASDAQ:NVDA), the fund's largest presumption astatine 8.02%, gained 33.27% year-to-date and 1,316.40% implicit 5 years. Apple (NASDAQ:AAPL) astatine 7.58% returned 13.53% this twelvemonth and 126.16% implicit 5 years. Microsoft (NASDAQ:MSFT) astatine 6.48% delivered beardown Azure growth, portion Alphabet (NASDAQ:GOOG) astatine 5.88% posted its archetypal $100 cardinal gross quarter. Broadcom (NASDAQ:AVGO) rounds retired the apical 5 astatine 4.95%.

The benchmark Invesco QQQ Trust (NASDAQ:QQQ), which holds akin stocks without covered calls, returned 22.27% year-to-date and 106.68% implicit 5 years. During November's tech selloff, QQQ dropped 4.6% successful a azygous time but recovered 6.7% successful the consequent rally. JEPQ holders received their dividend during the diminution but captured minimal upside during the rebound owed to capped telephone options. Over 4.5 months from July done aboriginal December, QQQ gained 10.8%—exceeding JEPQ's yearly dividend output done superior appreciation alone.