Here’s a top ETF to buy for a passive income boost

Four investors stand in a line holding cash fanned in their hands with thoughtful looks on their faces.

Four investors stand in a line holding cash fanned in their hands with thoughtful looks on their faces.

Wouldn’t it be great if you could build an income portfolio filled with quality dividend shares without any effort?

Well, here is some good news for you. There are a number of exchange traded funds (ETFs) listed on the Australian share market that have been designed to help income investors.

One that could be worth considering is listed below. Here’s what you need to know about this popular ETF:

Vanguard Australian Shares High Yield ETF (ASX: VHY)

A top ETF for income investors to look at buying this month is the Vanguard Australian Shares High Yield ETF.

This ETF provides investors with easy access to ASX listed shares that have higher than average forecast dividends. Vanguard notes:

VHY is built smarter. Unlike most high yield equity ETFs, VHY uses forward looking broker estimates to determine which securities go in the fund. This ensures VHY can look past historical information and capture the securities that are forecast to pay a higher yield.

Vanguard also has diversity in mind when building its portfolio. The fund manager restricts the proportion invested in any one industry to 40% and 10% for any one company. This ensures that income investors are holding a diverse collection of dividend shares and not just a group of coal miners.

Included in the fund are a number of income investor favourites. This includes mining behemoth BHP Group Ltd (ASX: BHP), Australia’s largest bank Commonwealth Bank of Australia (ASX: CBA), and telco giant Telstra Corporation Ltd (ASX: TLS). Australian Real Estate Investment Trusts (A-REITS) are excluded from the index.

At the time of writing, the Vanguard Australian Shares High Yield ETF was trading with an estimated forward dividend yield of 5.6%.

The post Here’s a top ETF to buy for a passive income boost appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield ETF. 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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