JEPI’s Dividend Keeps Falling. Should We Be Concerned?

My Portfolio:   / dividendbull  

Since being launched over four years ago now, the JPMorgan Equity Premium Income ETF, ticker JEPI, has easily become one of the most popular high-yielding dividend ETFs. It pays out monthly dividends and offers a yield that typically ranges between 7% and over 10%. Additionally, this ETF has offered better share price upside than other covered call funds that exist. Since its launch in May of 2020, JEPI’s provided a total return of 62.07%, or roughly 12.42% per year up to this point. Those are pretty good returns from a fund that offers such a high yield; there’s a lot of high-yielding investments out there that haven’t offered these kinds of returns.

But there’s been a phenomenon with JEPI over the past two years that’s left some people concerned, based on what I’ve seen on websites like Reddit and Seeking Alpha. If we bring up a chart of JEPI’s monthly dividend payouts, you’ll notice the dividends this ETF has been paying have been slowly going down over time. Between 2021 and 2022, JEPI saw a really impressive amount of dividend growth, and 2022 was the year the S&P 500 was suffering due to interest rates going up. But starting in 2023 JEPI’s dividends slowly started to go down. This ETF doesn’t pay a consistent dividend from month to month, so some months it would increase and some it would decrease.

But there’s been a very noticeable trend as time goes on, where the dividends have been continuing to fall. Compared to late 2022 and today, JEPI’s dividend amount has nearly been cut in half. It was paying roughly 61 cents in late 2022 whereas now it’s paying around 32 cents per share. And that’s all the while this fund has seen share price growth. These falling dividend amounts have some people concerned about whether JEPI is still a holding that’s worth considering for people who specifically want a high amount of monthly income. Becuase we've been seeing the yeild of the ETF slowly go down over the last year. So in this video, we’ll take a deep look at this ETF and understand how the dividends are determined, why they’ve been going down, and if JEPI is still worth considering for income focused investors.