Yield Comparison: ETFs vs. Annuities
Several ETFs and mutual funds currently offer yields that are similar to or higher than typical fixed annuity payouts, while allowing you to retain ownership of your shares and simply withdraw the dividends as income. Here’s how they compare:
Yield Comparison: ETFs vs. Annuities
Fixed annuities often pay out around 5%–6% annually on the initial premium, with payments fixed for the contract period910.
High-yield ETFs can offer annual yields ranging from about 4% up to nearly 10%—often higher than most fixed annuities, although with greater risk and variability215.
Top High-Yield ETFs (2025)
These ETFs provide yields that meet or exceed typical annuity payouts:
| ETF Ticker | Name | Dividend Yield (2025) |
|---|---|---|
| KBWY | Invesco KBW Premium Yield Equity REIT ETF | 9.66% |
| XSHD | Invesco S&P SmallCap High Dividend Low Volatility | 7.35% |
| SPHY | SPDR Portfolio High Yield Bond ETF | 7.7% |
| MLPA | Global X MLP ETF | 7.5% |
| SJNK | SPDR Bloomberg Short Term High Yield Bond ETF | 7.4% |
| HYDB | iShares High Yield Systematic Bond ETF | 7.0% |
| FDHY | Fidelity Enhanced High Yield ETF | 6.7% |
| DIV | Global X SuperDividend U.S. ETF | 5.73% |
| NUDV | Nuveen ESG Dividend ETF | 5.65% |
Mutual Funds
Some mutual funds also focus on high dividends, though yields are generally in the 3%–5% range for large, diversified funds3.
Key Points
You retain your shares: Unlike an annuity, you keep your principal investment and only withdraw the dividend income each month.
Higher yield potential: Top-yielding ETFs like KBWY, XSHD, and SPHY offer yields well above most annuities215.
Risk: ETF yields are not guaranteed and can fluctuate with market conditions, while annuity payments are fixed and guaranteed by the insurer910.
Liquidity: ETFs and mutual funds allow you to sell your shares at any time, offering more flexibility than most annuities.
Summary Table: ETF Yield vs. Typical Annuity
| Product Type | Example (2025) | Annual Yield/Payout | Principal Retained? | Risk Level |
|---|---|---|---|---|
| Fixed Annuity | MassMutual, etc. | 5%–6% | No | Low (guaranteed) |
| KBWY ETF | REIT ETF | 9.66% | Yes | Moderate/High |
| XSHD ETF | SmallCap Dividend ETF | 7.35% | Yes | Moderate/High |
| SPHY ETF | High Yield Bond ETF | 7.7% | Yes | Moderate |
| MLPA ETF | MLP ETF | 7.5% | Yes | Moderate/High |
Conclusion:
If your goal is to generate income comparable to or greater than a fixed annuity while retaining your investment principal, high-yield ETFs like KBWY, XSHD, SPHY, and MLPA offer attractive alternatives. However, these come with greater market and dividend risk compared to the guaranteed payouts of an annuity215910. Always consider your risk tolerance and income needs when choosing between these options.
- https://finance.yahoo.com/news/7-best-high-yield-etfs-170025663.html
- https://www.nerdwallet.com/article/investing/high-dividend-etfs
- https://www.morningstar.com/funds/best-dividend-funds
- https://www.dividend.com/monthly-income-from-monthly-dividend-stocks-etfs-and-funds/
- https://www.bankrate.com/investing/best-high-yield-etfs-for-passive-income/
- https://www.justetf.com/en/how-to/dividend-etfs-world.html
- https://www.morningstar.com/funds/vym-vs-vig-which-vanguard-dividend-etf-should-you-buy
- https://etfdb.com/compare/dividend-yield/
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- finance.retirement_planning
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