3 Passive Income ETFs for Your Retirement Strategy

Market uncertainty and growing concern about the future of social security are forcing investors to focus more and more on creating reliable sources of income. Social Security Administration projections suggest that the program’s trust funds may have trouble maintaining full payouts in the coming decades, underscoring the importance of developing independent sources of income for retirement.

Personal retirement planning has never been more important as demographic changes put pressure on traditional support systems. While Social Security has served as a cornerstone of retirement planning for generations of Americans, evolving financial realities require a more proactive approach to income generation.

Exchange funds (ETFs) offer an efficient way to create diversified income streams without the complexity of managing individual securities. Here are three ETFs designed to provide reliable sources of income for retirement portfolios.

Value-oriented cash flow generation

The Pacer US Cash Cows 100 ETF (COWZ 0.52%) employs a distinct strategy focused on maximizing shareholder value through cash flow generation. The Pacer US Cash Cows 100 ETF identifies companies with high yields of free cash flow, a key indicator that usually indicates both financial strength and the ability to maintain consistent dividend payments.

The ETF provides investors with a modest return of 1.89%. While its expense ratio of 0.49% is higher than many comparable funds in the space, the unique investment approach helps justify the premium.

This ETF methodology targets companies that generate significant cash flow in excess of their operating needs. The portfolio’s largest positions demonstrate this approach, featuring established names such as Hewlett Packard Enterprise, Airbnb, Nukor, Qualcommand Chevron.

Over the past five years, excluding fees, the ETF has slightly outperformed S&P 500 on a full return basis.

^SPX data on YCharts

Traditional approach to dividend growth

The iShares Core Dividend Growth ETF (DGRO 0.50%) favors companies that demonstrate consistent dividend growth over time. The fund maintains a competitive 0.08% expense ratioallowing investors to retain higher returns while providing access to quality dividend paying companies in the US market.

The iShares Core Dividend Growth ETF has a minimum requirement of five consecutive years of dividend growth to be included in the portfolio. This disciplined approach is reflected in the five largest holdings: ExxonMobil, Microsoft, Apple, JPMorgan Chaseand Chevron — all recognized market leaders with strong dividend histories. The ETF currently offers investors a solid yield of 2.2%.

The fund’s main strength lies in its commitment to companies that regularly increase their dividend payouts. This strategy is consistent with historical market data, showing that dividend-growing companies have performed exceptionally well over the long term. Such consistent growth in distribution often indicates strong business fundamentals and expanding market presence.

The fund has underperformed the S&P 500 over the previous five years, but it has still delivered steady share price gains and stable dividends over that period.

^SPX data on YCharts

Advanced income strategy

The JPMorgan Equity Premium Income ETF (EPI 0.22%) uses an innovative approach to profit. The JPMorgan Equity Premium Income ETF combines high-dividend stocks and an options overlay strategy designed to increase monthly income while helping to manage portfolio volatility.

The ETF’s sophisticated approach has attracted considerable attention from investors, particularly for its ability to generate above-average returns. The portfolio’s largest positions reflect this strategy, featuring established names such as Trane technologies, Purpose of the platform, Progressive, Southern Companyand AbbVie.

The fund currently offers investors a strong yield of 7% while maintaining a moderate expense ratio of 0.35%. Since its launch in 2020, the ETF has delivered a lower total return than the S&P 500, but has maintained its focus on generating consistent income, making it an ideal retirement portfolio vehicle.

^SPX data on YCharts

An important component of retirement planning

Creating multiple streams of passive income is a smart approach to retirement. These ETFs offer a variety of income methods, from traditional dividend growth to more sophisticated option-based strategies.

Randy Zuckerberg, former Facebook CMO and spokesperson and sister of Meta Platforms CEO Mark Zuckerberg, serves on The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. George Budwell has positions in AbbVie, Chevron, JPMorgan Chase, Microsoft and the iShares Trust-iShares Core Dividend Growth ETF. The Motley Fool has positions in and recommends AbbVie, Airbnb, Chevron, JPMorgan Chase, Meta Platforms, Microsoft, Progressive and Qualcomm. The Motley Fool recommends long $395 January 2026 Microsoft calls and short $405 January 2026 Microsoft calls. A motley fool has a disclosure policy.