Three High-Yield Income Plays: From REITs to Covered-Call Strategies

The Dividend Advantage in Your Portfolio

When it comes to building consistent cash flow from stocks, dividend stocks remain one of the most reliable tools in an investor’s arsenal. Data from major brokerages shows that roughly 4 out of 5 companies in the S&P 500 pay dividends to shareholders. But here’s what makes this strategy truly powerful: reinvesting those payouts can dramatically amplify your returns.

Consider this: a $10,000 investment in a broad S&P 500 index fund a decade ago would have grown to roughly $33,600 without dividends. However, if you’d automatically reinvested every quarterly payout, that same investment would have ballooned to approximately $39,700. That extra $6,000 demonstrates why income-focused stocks deserve serious attention, particularly when you can find yields substantially higher than the typical 1.1% offered by mainstream index funds.

Strategy One: Pharmaceutical Growth with Fortress Dividend Credentials

AbbVie (NYSE: ABBV) belongs to an exclusive club of companies that have raised their annual dividend payouts for more than five decades. Currently at 54 consecutive years of increases, the company shows no signs of slowing down.

The stock’s strength comes from two blockbuster pharmaceutical products. Skyrizi, an immunology treatment, generated nearly $4.1 billion in quarterly revenues during the latest reporting period, while the companion drug Rinvoq brought in $1.56 billion. Management projects these products will drive $17 billion and $10 billion in annual sales respectively by 2027, suggesting substantial room for continued revenue expansion.

The stock has already appreciated 30% year-to-date, and investors receive a compelling 3% yield on top of that appreciation potential. This combination of capital gains plus income makes it attractive for those seeking stability alongside growth.

Strategy Two: Real Estate Income with Geographic Diversification

Realty Income (NYSE: O) approaches dividends differently through its structure as a real estate investment trust. The company maintains ownership of over 15,500 properties spanning every U.S. state and select European locations. This vast portfolio encompasses grocery chains, convenience stores, home improvement retailers, dollar stores, drugstores, and dining establishments.

What distinguishes Realty Income is its commitment to monthly distributions rather than quarterly ones. The company has increased its payout 133 times since its 1969 IPO, maintaining more than 30 consecutive years of annual growth. As a REIT, regulatory requirements mandate that 90% of profits flow to shareholders as dividends, resulting in an impressive 5.7% yield. For income-focused investors, this monthly cash flow provides a predictable revenue stream that exceeds most alternatives.

Strategy Three: Leveraging Covered Calls for Enhanced Income

The JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ) offers a different approach to dividend generation. Rather than relying solely on corporate earnings distributions, this actively managed fund sells covered calls on its Nasdaq-100 holdings.

Understanding this mechanics matters: selling covered calls means the fund agrees to sell shares at a predetermined price in exchange for immediate income. This premium payment occurs regardless of stock performance, effectively boosting returns beyond what dividends alone would provide. For ETF shareholders, this approach eliminates personal options trading complexity—you can’t face margin calls or assignment complications since you own fund shares rather than managing options directly. The trade-off involves accepting that shares might be called away if prices surge, but the ongoing income stream compensates for this constraint.

The numbers speak clearly: JEPQ shares have gained just 3.6% in 2025, but the 10.1% dividend yield generates a total return of 14.2% when combined. The fund’s 0.35% annual expense ratio ($35 per $10,000 invested) is reasonable compensation for the active management and covered-call execution involved.

Comparing Your Income Options

All three positions offer distinct advantages depending on your situation. AbbVie suits investors wanting growth potential paired with a rock-solid dividend track record spanning generations. Realty Income appeals to those prioritizing consistent monthly cash flow with lower volatility. JEPQ attracts investors comfortable with slightly more sophisticated income strategies in exchange for substantially higher yield potential.

The common thread connecting them: each provides meaningful returns that substantially exceed what standard broad-market index funds typically deliver, making any of them worthy additions to a portfolio focused on generating investment income.