Dividend-Generating AI and Tech ETFs: Balancing Income and Capital Preservation in a High-Interest-Rate Environment

In the current high-interest-rate environment of 2025, investors seeking both income and capital preservation face a unique challenge: balancing exposure to high-growth sectors like artificial intelligence (AI) with strategies that mitigate volatility. Dividend-generating AI and technology ETFs have emerged as a compelling solution, offering a hybrid approach that combines the transformative potential of AI-driven innovation with income-generation techniques such as covered calls and equity-linked notes (ELNs). This article evaluates the most effective ETFs in this space, their performance in recent market cycles, and their suitability for capital preservation.

The Dual Imperative: Income and Growth in a High-Rate World

High-interest-rate environments traditionally favor income-oriented strategies, as bond yields rise and dividend-paying equities become more attractive. However, AI and tech stocks—typically growth-focused and low-dividend—pose a paradox. According to a report by 247wallst, investors can bridge this gap by pairing income-focused ETFs with AI-heavy funds, creating a diversified portfolio that balances stable payouts with exposure to disruptive technologies These Dividend ETFs Also Have AI Stock Exposure^[1].

For example, the JPMorgan Equity Premium Income ETF (JEPI) employs a structured approach to generate income while maintaining AI exposure. By investing in large-cap U.S. equities (including AI leaders like Microsoft and Alphabet) and overlaying a covered-call strategy, JEPI delivers a 30-day SEC yield of 7.27% as of August 31, 2025 JPMorgan Equity Premium Income ETF (JEPI) - Yahoo Finance^[2]. Additionally, the fund allocates up to 20% of assets to ELNs and sells S&P 500 call options, which historically provided downside protection during the 2022 market downturn, outperforming the S&P 500 by 14.23 percentage points A Closer Look at JPMorgan Equity Premium Income ETF^[3].

In contrast, the Global X SuperDividend U.S. ETF (DIV) focuses on high-yield sectors such as real estate and utilities, which often incorporate AI practices. With a 30-day SEC yield of 7.32%, DIV offers elevated income but carries higher volatility due to its concentration in cyclical industries 3 ETFs That Pay Massive Monthly Dividends^[4]. While both ETFs prioritize income, JEPI's structured risk management makes it more suitable for capital preservation in turbulent markets.

Performance in Past High-Rate Cycles: Lessons from 2022–2023

Historical data from the 2022–2023 high-interest-rate period reveals the resilience of well-structured AI/tech ETFs. The Global X Artificial Intelligence & Technology ETF (AIQ), for instance, plummeted by -36.44% in 2022 but rebounded with a 55.39% return in 2023, demonstrating recovery potential amid macroeconomic uncertainty AIQ Performance History & Total Returns^[5]. Similarly, the VanEck Semiconductor ETF (SMH), a key AI infrastructure player, surged 73.38% in 2023 after a -33.53% decline in 2022 Artificial Intelligence Exchange-Traded Funds: The Intersection of...^[6]. These swings underscore the volatility inherent in AI-focused ETFs but also highlight their capacity to outperform during recovery phases.

For income-focused investors, the Liberty All-Star Equity Fund (USA), a closed-end fund (CEF) with a 10.2% yield, offers an alternative. While not strictly an ETF, USA holds 22% in AI-related tech stocks like NVIDIA and Microsoft, blending high yields with growth exposure Dividend Investors Can Cash In On AI With 10%+ Yields^[7]. Such hybrid strategies are increasingly popular as investors seek to hedge against interest rate risks without sacrificing AI growth potential.

Strategic Allocation: Balancing Risk and Reward

The key to capital preservation lies in diversification and strategic allocation. For instance, pairing JEPI's structured income approach with a growth-oriented ETF like the Vanguard Information Technology ETF (VGT)—which holds AI leaders like Microsoft and Nvidia at a 1.2% yield—can create a balanced portfolio. VGT's low expense ratio (0.084%) and broad diversification make it ideal for long-term growth, while JEPI's yield and downside protection cater to income needs 7 Best Artificial Intelligence (AI) ETFs To Buy Now^[8].

However, investors must weigh trade-offs. Options-income strategies like JEPI cap upside potential during strong equity rallies, while high-yield funds like DIV are vulnerable to sector-specific downturns. Actively managed ETFs, such as the YieldMax™ AI Option Income ETF (AIYY), offer 173.53% trailing 12-month dividend yields but face declining payout trends, with a -83.75% growth rate in dividends per share over the past year Yieldmax AI Option Income Strategy ETF (AIYY) Dividend Analysis^[9]. This volatility underscores the need for careful due diligence.

Conclusion: A Tailored Approach for 2025

In 2025's high-interest-rate environment, dividend-generating AI and tech ETFs provide a viable path for investors seeking both income and growth. Funds like JEPI and DIV demonstrate that structured strategies can mitigate volatility while maintaining exposure to AI innovation. Historical performance during 2022–2023 further validates their resilience, albeit with inherent risks. For capital preservation, pairing income-focused ETFs with diversified AI growth funds—while incorporating bonds or cash equivalents—offers a robust framework. As AI adoption accelerates, these hybrid strategies will likely remain critical for navigating macroeconomic uncertainty.