Buy this ASX ETF for big retirement income

A couple sit on the deck of a yacht with a beautiful mountain and lake backdrop enjoying the fruits of their long-term ASX shares and dividend income.

A couple sit on the deck of a yacht with a beautiful mountain and lake backdrop enjoying the fruits of their long-term ASX shares and dividend income.

If you’re not a fan of stock picking, then exchange traded funds (ETFs) are here to make your life easier. That’s because they allow you to invest in a group of shares through a single investment.

And with ETFs catering for every occasion, there’s likely to be something out there that fits with your investment goals.

For example, if you’re looking to generate income in retirement, then the ETF listed below could be a great option for you.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

The Vanguard Australian Shares High Yield ETF could be a top option for a retirement portfolio. That’s because this popular ETF provides investors with easy access to ASX listed shares that have higher than average forecast dividends.

Vanguard notes that instead of looking backwards, it relies on broker estimates to build a portfolio of shares that are expected to be among the biggest dividend payers in the next 12 months. It explains:

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.

The fund manager also has diversity in mind when building its portfolio. It limits 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.

Included in the fund are a number of income investor favourites. This includes BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS), and Woodside Energy Group Ltd (ASX: WDS). Australian Real Estate Investment Trusts (A-REITS) are not included in the ETF.

At the time of writing, the Vanguard Australian Shares High Yield ETF was trading with an estimated forward dividend yield of 5.2%.

The post Buy this ASX ETF for big retirement income 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 positions in and has recommended Telstra Group. 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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