Buy These 5 ETFs (SPX, VOO, VYM, VTV, JEPI) and Hold for a Lifetime of Passive Income

Is it possible to turn your portfolio into a reliable passive income machine? Absolutely, it is possible and you can achieve this goal with five carefully chosen exchange traded funds (ETFs).

To start off, you’ll definitely want to pick a couple of ETFs that provide direct exposure to the S&P 500 or SPX. Then, you can round out your portfolio with three more worthy ETF picks.

With equal-sized 20% allocations into these five funds, you’ll be on your way to collecting passive income in short order. Just be sure to conduct your own due diligence first and always apply safety-first principles to any prospective investment.

SPY and VOO: Low-Fee S&P 500 Participation

As I alluded to earlier, a good starting point for passive income hunters is find funds that track the S&P 500 or SPX. Probably the most famous U.S.-based ETF that does this is the SPDR S&P 500 ETF Trust (NYSEARCA:SPY).

Brought to you by State Street Investment Management, the SPDR S&P 500 ETF Trust is billed as the “original S&P 500 ETF.” This fund covers approximately 500 stocks across a wide range of economic sectors, from utilities to technology, industrials, consumer discretionary, and more.

Like SPX itself, the SPDR S&P 500 ETF Trust is market capitalization weighted and includes practically every U.S. blue-chip name you can think of. Some examples of SPY’s holdings are the stocks of Coca-Cola (NYSE:KO), Home Depot (NYSE:HD), Citigroup (NYSE:C), Exxon Mobil (NYSE:XOM), and Apple (NASDAQ:AAPL).

You won’t go wrong with these well-established businesses, and to sweeten the deal even further, the SPDR S&P 500 ETF Trust only deducts around 0.09% worth of annualized operating expenses per share. That equates to less than a dime per $100 invested in the fund per year, and it’s more than covered by the SPY ETF’s distribution yield (i.e., expected annual dividend yield) of 1.11%.

For even more low-cost exposure to the S&P 500, you can pair the SPDR S&P 500 ETF Trust up with the Vanguard S&P 500 ETF (NYSEARCA:VOO). As far as the fund’s holdings are concerned, VOO is practically identical to SPY since they both track SPX and include roughly 500 stocks.

There are some slight differences between these two ETFs, though. The Vanguard S&P 500 ETF offers an expected annual dividend yield of 1.17%, and VOO’s 0.03% expense ratio (i.e., annualized operating expenses deducted per share) is among the lowest in the ETF universe.

VYM and VTV: Two Underappreciated Vanguard Funds

State Street’s SPY ETF and Vanguard’s VOO ETF are well known among passive income investors. There are a couple of other Vanguard funds, however, that also deserve your attention.

The first one is the Vanguard High Dividend Yield Index Fund ETF (NYSEARCA:VYM). This is another low-cost Vanguard fund as its expense ratio stands at just 0.06%.

Passive income investors might want to boost their portfolio’s yield beyond what SPY and VOO have to offer. Thus, the Vanguard High Dividend Yield Index Fund ETF is attractive with its 2.64% dividend yield.

Amazingly, the Vanguard High Dividend Yield Index Fund ETF’s holdings list comprises a whopping 580 stocks. Among them are established dividend deliverers like JPMorgan Chase (NYSE:JPM), Procter & Gamble (NYSE:PG), Walmart (NYSE:WMT), and Broadcom (NASDAQ:AVGO).

Another lesser-known fund is the Vanguard Value ETF (NYSEARCA:VTV). While VYM concentrates on stocks with higher yields, the VTV ETF focuses on stocks that offer a good value to the shareholders.

Just to recap, the Vanguard Value ETF’s holdings list includes 323 stocks spanning a variety of market sectors. Value-oriented investors will find many familiar names in there, such as Walmart, Bank of America (NYSE:BAC), Home Depot, Johnson & Johnson (NYSE:JNJ), and Procter & Gamble.

Passive income harvesters should be glad to know that the Vanguard Value ETF features an expected annual dividend yield of 2.17% and its expense ratio is only 0.04%. Putting the VYM and VTV ETFs in your portfolio should unlock a powerful combination of yield and value for years to come.

JEPI: A Premier Monthly Income Generator

Finally, passive income seekers can top off their portfolios with the JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI). This fund could boost your bottom line with its options-trading strategies, as the JEPI ETF generates a fantastic 8.38% dividend yield.

Granted, the JPMorgan Equity Premium Income ETF isn’t quite as diversified as the other funds mentioned today. It includes 126 stocks in its holdings, but these are top-tier businesses like NVIDIA (NASDAQ:NVDA), Mastercard (NYSE:MA), Microsoft (NASDAQ:MSFT), and utilities-sector mainstay The Southern Company (NYSE:SO).

With its 0.35% expense ratio, the JPMorgan Equity Premium Income ETF will cost more than some other funds in terms of annual fees. Yet, I think you’ll agree that JEPI’s sizable yield will more than make up for the fund’s operating expenses.

In addition, the JPMorgan Equity Premium Income ETF pays out its cash distributions each and every month. This will allow you to start seeing the payments roll in sooner, and with the four other funds mentioned today, JEPI can enhance your passive income potential for the long haul.

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