This 5% Monthly Payer Beats Vanguard's VMBS With Higher Income For Retirees

Core Viewpoint - The Janus Henderson Mortgage-Backed Securities ETF (JMBS) offers a 5.04% yield, presenting a strong alternative to traditional bond funds for retirees seeking monthly income [1] Income Generation - JMBS generates income from homeowners' monthly mortgage payments, distributing these as monthly dividends to shareholders, ensuring predictable cash flow for retirees [2] - The fund has maintained an unbroken payment history since its inception in 2018, reflecting its reliability [2] Dividend Sustainability - JMBS has shown remarkable dividend resilience across varying interest rate environments, with recent monthly distributions around $0.20 per share [3] - The fund's management team possesses deep expertise in the mortgage market, contributing to its effective portfolio strategy and security selection [3] Dividend Safety - The underlying securities of JMBS are predominantly agency-backed, which means the U.S. government guarantees principal and interest payments, significantly reducing credit risk [4] - The current interest rate environment supports robust income generation, with low prepayment risk due to elevated mortgage rates, leading to stable cash flows [4] Expense Ratio and Yield - JMBS has a 0.22% expense ratio, which is higher than passive alternatives but justified by its 5.04% yield, providing additional income for retirees [5] - This yield advantage helps cover living expenses without depleting principal, making the active management premium worthwhile for cash flow-focused investors [5] Total Return Performance - JMBS has delivered strong total returns, combining price appreciation with distribution payments, and has outperformed the broad bond market over a five-year period [6] Alternative Options - Investors may consider the Vanguard Mortgage-Backed Securities ETF (VMBS), which has a lower expense ratio of 0.03% and a yield of 3.96%, offering a cost-effective alternative for retirees prioritizing expenses over yield [8]