On Tuesday I looked at a couple of exchange traded funds (ETFs) that I felt would be good for investors looking for international exposure.
Today, I thought I would look at ETFs that could be top options for income investors.
Two that I think would be worth considering right now are listed below. Here’s why I like them:
VanEck Vectors Australian Banks ETF (ASX: MVB)
The first ETF to consider buying for dividends is the VanEck Vectors Australian Banks ETF. As its name implies, it gives investors exposure to the banking sector. This could make it a great option if you want to invest in the sector but you’re not quite sure which bank to buy above others. The VanEck Vectors Australian Banks ETF gives you a piece of the big four banks, the regionals, and also investment bank Macquarie Group Ltd (ASX: MQG). Estimating what the yield will be in FY 2021 is incredibly difficult because of the pandemic. But I would expect something in the region of 4%, rising towards 6% in FY 2022 when trading conditions (hopefully) have improved materially. In light of this and the outlook for interest rates, I think now could be an opportune time to invest.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
If you already have some of the banks in your income portfolio, then you might want to go for a more diversified option. The one that ticks a lot of boxes for me is the Vanguard Australian Shares High Yield ETF. This exchange traded fund has a focus on high yield shares and is invested across a total of 66 of them. 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%. Many blue chip favourites are included in the fund such as the banks, BHP Group Ltd (ASX: BHP), Coles Group Ltd (ASX: COL), Fortescue Metals Group Limited (ASX: FMG), and Telstra Corporation Ltd (ASX: TLS). I estimate that its units offer a FY 2021 dividend yield in the range of 4% to 5%.
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More reading
- Forget Westpac’s term deposits and buy these ASX dividend shares
- How to earn a passive income of $50,000 with ASX dividend shares
- 2 quality ASX dividend shares for income investors to buy today
- Looking for dividends? Buy these ASX ETFS in September
- ETF provider VanEck to launch 4 new ASX ETFs
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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