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, making it an attractive option for retirees seeking stable income without the volatility associated with equity-based strategies [2][6]. Income Generation - JMBS generates income from homeowners' monthly mortgage payments, distributing these as monthly dividends to shareholders, ensuring predictable cash flow for retirees [3]. - The fund has maintained an unbroken payment history since its inception in 2018, reflecting its reliability [3]. Dividend Sustainability - JMBS has shown strong dividend resilience across different interest rate environments, with recent monthly payments around $0.20 per share [4]. - The fund's safety is bolstered by its predominantly agency-backed securities, which are guaranteed by the U.S. government, thus minimizing credit risk [5]. - The current interest rate environment supports income generation, with low prepayment risk due to elevated mortgage rates, leading to stable cash flows [5]. Management and Performance - JMBS has a 0.22% expense ratio, which is higher than passive alternatives but justified by its active management strategy that has resulted in a 5.04% yield, significantly above comparable passive MBS funds [6]. - The fund has delivered strong total returns, combining price appreciation with distribution payments, and has outperformed the broad bond market over a five-year period [7].