Market selloffs can truly challenge the resilience of even the most experienced investors. Although volatility is an inherent part of participating in the stock market, there are effective strategies to mitigate its impact and protect your investments.
Exchange-traded funds (ETFs) offer investors the ability to gain exposure to a wide array of companies, sometimes numbering in the thousands, all through a single ticker symbol. Specifically, dividend-paying ETFs not only provide diversification but also generate passive income, making it easier for investors to withstand the ups and downs of market volatility.
Consider the standout performance of the JPMorgan Equity Premium Income ETF (JEPI 0.19%), the Vanguard Utilities ETF (VPU 0.99%), and the Vanguard Energy ETF (VDE 2.28%). These three funds are currently some of the best options available for investors looking to enhance their portfolios.
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Maximize Your Passive Income with This Reliable ETF
Lee Samaha (JPMorgan Equity Premium Income ETF): This ETF is designed for investors who prioritize low volatility returns while still expecting a steady flow of monthly income, independent of market conditions. By investing in this ETF, you may have to sacrifice some upside potential during a bull market, but you will gain the assurance of consistent monthly income and downside protection during bear market phases.
As previously highlighted, this ETF has consistently generated positive total returns and has outperformed the S&P 500 (^GSPC 0.13%) through the end of March. Although the market downturn in April has negatively impacted its year-to-date performance, its relative outperformance against the S&P 500 has actually improved.
There are several compelling reasons to consider investing in this ETF right now. Firstly, at the time of this writing, it is trading at a modest discount to its net asset value, presenting a potential bargain for astute investors.
JEPI data by YCharts.
Additionally, with a trailing dividend yield approaching 7.5%, this ETF can provide investors with substantial income. The fund’s unique investment strategy, which involves utilizing derivatives to gain positive exposure during market downturns while holding U.S. equities, continues to ensure a reliable source of monthly passive income. If you are concerned about moderately declining or stagnant markets this year, this ETF is an excellent investment option.
Gain Peace of Mind with the Vanguard Utilities Index Fund ETF
Scott Levine (Vanguard Utilities Index Fund ETF): While some may find comfort in a warm cup of chamomile tea before bed, an even better solution for navigating the current market volatility is to invest in a dependable ETF that offers consistent passive income—such as the Vanguard Utilities Index Fund ETF. Given that utility stocks typically generate stable revenues and consistent cash flows, they often become a focal point on investors’ buy lists during periods of economic uncertainty. With the Vanguard Utilities Index Fund ETF boasting a 2.9% 30-day SEC yield and an impressively low 0.09% expense ratio, this fund is particularly attractive at the moment.
Although this fund encompasses gas and water utilities, electric utilities comprise the majority—approximately 62%—of the Vanguard Utilities Index Fund ETF’s portfolio. The fund’s top three holdings—NextEra Energy, Southern Company, and Duke Energy—are among the largest regulated utilities available on the public markets, collectively representing a significant 25.6% weighting.
To grasp why the Vanguard Utilities Index Fund ETF is an enticing choice for investors seeking to strengthen their portfolios against market volatility, consider that this fund has yielded a total return exceeding 26.6% over the past year, vastly outperforming the S&P 500’s 5.9% total return during the same timeframe. While this past performance does not guarantee future results, it is certainly noteworthy and worth considering.
Discover a Superior Option for Value and Income Investment
Daniel Foelber (Vanguard Energy ETF): The energy sector emerged as one of the top-performing segments during the first quarter of 2025, yet it faced significant selloffs in April, making it the worst-performing sector during that month, even underperforming technology and consumer discretionary stocks.
^IXR data by YCharts.
Various factors, including potential tariffs, could hinder economic growth, leading to decreased demand for oil and gas, and subsequently lower prices. Meanwhile, OPEC+ is ramping up production, which could further disrupt the supply-demand balance. Given these circumstances, it is understandable that energy stocks have experienced a pullback. However, this market correction may present an excellent buying opportunity for long-term investors.
The Vanguard Energy ETF stands out as an exceptional option for those looking to acquire shares in high-yield oil and gas companies. This ETF targets a diverse range of U.S. oil and gas companies across various sectors, including upstream (exploration and production), midstream (energy infrastructure and transportation), and downstream (refining and marketing).
Major integrated companies such as ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) collectively account for about 38% of the fund. Other prominent holdings include leading exploration and production firms like ConocoPhillips and EOG Resources, midstream giants such as Williams Companies, Oneok, and Kinder Morgan, as well as downstream players like Phillips 66, oilfield service leaders like Schlumberger, and liquefied natural gas operators like Cheniere Energy, among others.
Many oil and gas companies utilize dividends to distribute profits back to their shareholders, with major players like ExxonMobil and Chevron maintaining remarkable records of increasing their dividends even amid severe industry downturns. In fact, ExxonMobil has raised its dividend for an impressive 42 consecutive years, while Chevron boasts its own remarkable streak of 38 years.
However, it is important to note that not all oil and gas companies exhibit the same consistency as ExxonMobil and Chevron. Thus, investing in an ETF can help mitigate the risks associated with potential dividend cuts.
The Vanguard Energy ETF features a minimal expense ratio of just 0.09% and allows a minimum investment of only $1, making it an affordable way to gain exposure to the energy sector without requiring a substantial capital commitment. The fund’s price-to-earnings ratio stands at 13.3, with a yield of 3%, making it an appealing choice for value investors seeking reliable passive income.
JPMorgan Chase is an advertising partner of Motley Fool Money. Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cheniere Energy, Chevron, EOG Resources, JPMorgan Chase, Kinder Morgan, and NextEra Energy. The Motley Fool recommends Duke Energy and Oneok. The Motley Fool has a disclosure policy.
