When this turbulent market leaves you uneasy, I understand. Let's examine the ideal dividend payers suited for such swings.

Those would be two funds delivering 8%+ yields we can gather calmly. And since both trade at attractive prices right now, they provide a stronger base during any declines compared to the S&P 500.

They are both covered-call funds, designed for market swings because:

They deliver 8%+ dividends that help us weather dips without selling holdings for needed cash.
They include familiar stocks: These funds feature well-known large caps with an added layer: They apply an options approach to part of their holdings that performs well amid uncertainty (details below).
They are attractively priced, as investors have overlooked these volatility-focused options while the market surged from its March lows. This creates a timely buying opportunity at reduced costs.

As the name suggests, these funds write covered-call options on their holdings, offering a measured approach to boosting income.

This method entails granting the option to purchase a fund's stocks at a set future date and price. Regardless of how the options resolve, the fund retains the fee, or premium, received for those rights.

The approach excels in uneven markets because, beyond the premiums collected, the fund often retains the underlying stocks when they do not reach the option's target, or strike, price.

The limitation? Covered-call writing may limit upside in strong rallies, as top holdings get sold or called away. We accept this since portfolio expansion in such periods sustains these 8%+ yields until volatility returns.

Let's review our two funds demonstrating this method:

A 9.2% Yielder Trading at an 11% Discount

The Nuveen S&P 500 Dynamic Overwrite Fund (SPXX) appears similar at first to the standard S&P 500 index fund, the State Street SPDR S&P 500 ETF Trust (SPY).

It holds all the index components, such as technology leaders like NVIDIA (NVDA) and Microsoft (MSFT), plus key names from other areas like JPMorgan Chase & Co. (JPM) and Pfizer (PFE).

Its distinction from SPY emerges with the options strategy. The fund writes calls on 35% to 75% of its assets based on conditions. These premiums substantially support its distribution, enabling SPXX to yield nine times more than SPY at 9.2%.

Moreover, this elevated payout has increased, rising 38% over the past five years:

Regarding value, SPXX trades at an 11.4% discount to net asset value currently, below its five-year average of 3.6%. This equates to acquiring the S&P 500 at roughly 89 cents per dollar. The discount has widened recently due to calm conditions:

SPXX Available at a Reduced Price

With rising volatility, as more shift from SPY to SPXX, the discount should narrow toward its typical level.

Next, we broaden our S&P 500 and tech exposure via a balanced global covered-call fund.

A Worldwide Covered-Call Fund Yielding 8.1% With Monthly Distributions

The BlackRock Enhanced Equity Dividend Trust (BDJ) maintains balance across sectors: Financials lead at 16.7% of assets, followed by technology at 15.7%, industrials at 14.6%, and healthcare at 12.8%.

It also offers international reach, with roughly 10% of holdings outside the US.

BDJ provides an 8.1% dividend that has risen 32% over the past decade, excluding occasional specials paid five times in that period:

Source: Income Calendar

BDJ targets 80% of assets in dividend stocks. It enhances the yield by writing calls on about 49% of holdings as of April 30. It distributes monthly, aligning with regular expenses.

Currently at an 8.2% discount, below its 5.6% five-year average, a return to that norm with volatility would add price support.

Combined, this pair offers diversification, an average 8.7% yield with monthly income from BDJ, and purchase at a discount for a reliable high-income buffer against future events.

Begin With BDJ and SPXX, Then Incorporate Monthly Payers Up to 14.9%

Covered-call funds are not the sole closed-end fund choices for handling downturns while expanding income.

These vehicles provide additional monthly payers that match expenses.

Monthly distributions add reassurance during declines, arriving consistently regardless of conditions.

I have selected three strong monthly payers as effective options for any scenario. Strong rallies would close their discounts and lift prices.

Flat markets would use those discounts as protection. In either case, their high monthly yields up to 14.9% can be collected steadily.

I recommend reviewing these three monthly payers now while pricing remains favorable. Click here for introductions and a free report with names and tickers.

Acquire them today to receive your initial monthly distribution soon.

Further BDJ Research:

Warren Buffett Dividend Stocks
Dividend Growth Stocks: 25 Aristocrats
Future Dividend Aristocrats: Close Contenders

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.