If you’re looking to add some dividend shares to your portfolio, then it could be worth considering exchange traded funds.
This is because there are a few exchange traded funds that give you exposure to a large number of dividend shares through a single investment.
The advantage of this is that it provides investors with the ability to diversify on a budget.
With that in mind, here are two exchange traded funds that I think would be great options for income investors:
Vanguard Australian Shares High Yield ETF (ASX: VHY)
The first exchange traded fund for income investors to consider buying is the Vanguard Australian Shares High Yield ETF. As its name implies, this exchange traded fund has a focus on high yield shares.
In total, the fund is invested in 66 of the highest yielding blue chip shares on the Australian share market. This comprises a diverse group of shares, with no industry accounting for more than 40% of the fund and no single company accounting for more than 10%. Among its holdings you will find the banks, BHP Group Ltd (ASX: BHP), Coles Group Ltd (ASX: COL), and Telstra Corporation Ltd (ASX: TLS). I estimate that its units offer a FY 2021 dividend yield somewhere in the region of 4% to 5%.
VanEck Vectors Australian Banks ETF (ASX: MVB)
Another exchange traded fund to consider buying is the VanEck Vectors Australian Banks ETF. I think this fund is a great option for investors that are wanting exposure to the banking sector, but aren’t sure which bank to buy.
This is because the fund gives investors the opportunity to get a piece of them all through a single investment. It is invested in the Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four banks, the regional banks, and also investment bank Macquarie Group Ltd (ASX: MQG). As with the other fund, I estimate that its units currently provide a 4% to 5% partially franked FY 2021 dividend yield.
Where to invest $1,000 right now
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- Telstra and 2 more ASX shares I’d like to buy with $5,000
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited and Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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