Maximizing Income: Three Dividend-Paying Assets and a Covered Call Strategy Worth Considering

When seeking to build consistent portfolio income, the landscape offers more opportunities than many realize. According to major financial institutions, roughly 80% of large-cap stocks distribute earnings back to shareholders. The real question isn’t whether to pursue dividend investing, but which vehicles deliver the best risk-adjusted returns.

The Case for Dividend Reinvestment

A practical comparison illustrates why this matters. A $10,000 investment in a broad market index a decade ago would have grown to approximately $33,600. However, those who captured and reinvested the quarterly payouts saw their positions climb to nearly $40,000 instead. This compounding effect demonstrates why income-focused strategies deserve serious consideration, particularly for those seeking superior yields compared to the 1.1% offered by standard index funds.

The challenge lies in identifying which income vehicles offer genuine value without excessive risk exposure.

AbbVie: A Half-Century of Dividend Growth

AbbVie (NYSE: ABBV) represents a rare category of mature companies—one with 54 consecutive years of annual dividend increases and no signs of breaking stride. This track record signals management’s confidence in the business model’s durability.

The company’s financial engine centers on two immunology-focused therapies. Skyrizi produced approximately $4.1 billion in quarterly revenue, while Rinvoq contributed $1.56 billion during the same period, together representing a meaningful portion of the firm’s $12.1 billion quarterly total. Forward projections suggest Skyrizi could reach $17 billion in annual sales by 2027, with Rinvoq potentially generating $10 billion.

The stock has appreciated 30% over the past year while maintaining a 3% dividend yield—a combination that appeals to investors balancing growth with regular income. This stability-with-growth profile makes it a foundational holding for many income-focused portfolios.

Realty Income: Monthly Distributions and Real Asset Backing

Realty Income (NYSE: O), structured as a real estate investment trust, operates differently from traditional corporations. It holds over 15,500 properties spanning every U.S. state plus European markets, with tenants ranging from grocery operators to home improvement retailers, dollar stores, and pharmacy chains.

What distinguishes this REIT is its monthly dividend commitment—a rarity in the equity world. Since going public in 1969, management has increased payouts 133 times, establishing a track record of over three decades of annual growth. REIT regulations mandate distributing 90% of profits as dividends, resulting in a 5.7% yield that significantly outpaces traditional dividend stocks.

The diversified tenant base and long-term lease structures provide defensive characteristics during market volatility, while the monthly payment schedule offers predictable cash flow for living expenses or reinvestment.

The Covered Call Income Strategy: JEPQ as a Case Study

For investors seeking higher income generation from growth-oriented equities, the JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ) demonstrates an alternative approach that has become increasingly popular among best stocks for covered calls strategies.

This actively managed fund focuses on Nasdaq-100 constituents but differentiates itself through a covered call overlay. Rather than simply holding the underlying index, the fund systematically sells out-of-the-money call options through equity-linked note structures. This tactic generates additional income while limiting upside participation.

The mechanics matter: because investors purchase ETF shares rather than managing options directly, the typical risks associated with option trading—assignment, margin calls, or leveraged losses—don’t apply. The primary exposure is standard equity price fluctuation.

Performance data reveals the trade-off inherent in this strategy. Share price appreciation reached only 3.6% year-to-date, which some might view as underwhelming. However, the 10.1% dividend yield transforms the total return to 14.2% annually. An expense ratio of 0.35% ($35 per $10,000 invested) remains reasonable for an actively managed vehicle employing this income-generating technique.

Balancing Yield and Risk

Each approach offers distinct advantages. Individual dividend aristocrats like AbbVie provide growth coupled with reliable distributions and lower expense overhead. REITs such as Realty Income deliver superior yields through mandated payout requirements and monthly distribution schedules. Covered call strategies via vehicles like JEPQ sacrifice some upside to generate substantial current income suitable for specific portfolio roles.

The optimal selection depends on individual circumstances: time horizon, risk tolerance, and whether current income or capital appreciation takes priority. What remains consistent is that vehicles paying distributions significantly outperform those that don’t, particularly when dividends are reinvested across market cycles.