5% CDs Are History. 3 ETFs Still Pay Better Than the 2% CD Rate on Offer Now

CD rates have fallen enough that the decision now looks different

A one-year CD now averages just 2.02% APY, while the Fed's funds rate is still 3.50% to 3.75%. Deal-hunting can still turn up a top CD rate of 4.50%, but that is a best-case offer, not the new market standard. After three rate cuts in the second half of 2025, waiting no longer guarantees a better guaranteed rate.

That makes the choice clearer than it feels: accept about 2% guaranteed, or pursue higher market-based income with visible tradeoffs. SCHD fits the quality-income case, JEPI fits the steadier cash-flow case, and JEPQ fits the more growth-sensitive income case.

SCHD, JEPI, and JEPQ pay from three different engines

The key split is not income versus risk. It is which kind of risk you are comfortable taking.

SCHD relies on dividend-quality equities

SCHD tracks a market-cap-weighted index of 100 dividend-paying U.S. equities, and its methodology screens for a long track record of distributions along with measures such as dividend growth and dividend yield. The fund's 30-day yield is 3.28, while its Price-Earnings ratio is 18.11. The tradeoff is straightforward: you are still taking equity risk, but the portfolio leans toward companies with a history of paying shareholders.

JEPI uses a covered-call strategy on the S&P 500

JEPI's strategy is a covered-call approach on the S&P 500 paired with low-volatility, value-leaning U.S. stocks, and it distributes the resulting premiums monthly. It remains the largest actively managed ETF in the U.S. with $41 billion in assets, and its latest distribution was 0.367 for M08 2026. The tradeoff is that the strategy can reduce upside participation in strong rallies in exchange for more consistent monthly cash flow.

JEPQ applies a similar model to the Nasdaq-100

JEPQ uses a Nasdaq-based covered call strategy and distributes the resulting premiums monthly. Since January, it has pulled in $9.6 billion, and it is up 16% this year on a total return basis. That makes it the more growth-sensitive option of the three. Investors are not only chasing income; they are also trying to stay exposed to a market that still favors large-cap technology.

How to choose among them without mixing up the tradeoffs

These ETFs do not recreate a CD's certainty. They offer market-based income instead. A practical first step is to decide which tradeoff fits the money you are putting to work.

• SCHD works best if you want dividend-screened equity exposure rather than an option-overlay strategy.
• JEPI may fit better if you want steadier-looking monthly cash flow and are willing to give up part of your upside in strong markets.
• JEPQ may fit better if you want a similar income structure but with more exposure tied to the Nasdaq-100.

If income stability matters most, JEPI is the clearest reference point, and the next scheduled payout date is its 9/1/2026 ex-dividend date. If you want more growth sensitivity in the income trade, JEPQ is the fund built around a Nasdaq-based covered call strategy. If you prefer equity income shaped by dividend history rather than option premiums, SCHD is built around a long track record of distributions.

What would weaken the case

This setup works best for investors who do not need contract-like certainty and can tolerate normal equity swings. If you need guaranteed income, a guaranteed maturity, or peace of mind that market income cannot provide, a CD may still be the better fit even at a lower stated rate. If you are mainly trying to replace a maturing 5% CD with something permanently less certain, moving into any of these funds is a tradeoff worth naming explicitly before you make the switch.