The Vanguard Australian Shares Index ETF (ASX: VAS) is a leading exchange-traded fund (ETF) for Australians wanting passive income.
The S&P/ASX 300 Index (ASX: XKO) is weighted towards a number of businesses with large dividend yields, which means VAS ETF investors get decent diversification as well as a solid dividend yield.
Many international-focused ETFs have very low dividend yields because the businesses inside those portfolios also have low dividend yields. ETFs simply pass through the dividends they receive to unitholders.
Thanks to the VAS ETF’s holdings, the investment can provide a pleasing distribution yield.
The Vanguard Australian Shares Index ETF has a large dividend yield
Dividends are not guaranteed of course, but payouts can be much more consistent than capital growth because dividends are funded from earnings but capital growth requires share prices to rise, which can be unpredictable at the best of times with the share market.
The Vanguard Australian Shares Index ETF regularly tells investors the fund’s dividend yield, which is the weighted average yield of the shares it holds. In other words, its largest holdings of BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA) play a much more important role in the yield of the VAS ETF than the two smallest positions.
Nearly all of the top 10 holdings inside the VAS ETF pay pleasing passive income, in my view. That includes BHP, CBA, Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), ANZ Group Holdings Ltd (ASX: ANZ), Wesfarmers Ltd (ASX: WES), Macquarie Group Ltd (ASX: MQG). Rio Tinto Ltd (ASX: RIO) and Woodside Energy Group Ltd (ASX: WDS). Goodman Group (ASX: GMG) is the only one with a low yield.
According to Vanguard, the VAS ETF had a dividend yield of 3.1% at the end of July 2026. Compared to many other broad-based ETFs, that’s an attractively high dividend yield.
How many VAS ETF units to pay for $10,000 of passive income?
With a dividend yield of 3.1%, an investor would need to own a sizeable amount of VAS ETF to generate $10,000 of dividends each year.
Currently, an investor would need to own 2,867 VAS ETF units to generate that much passive income.
I think the Vanguard Australian Shares Index ETF is a solid investment option for the long-term, with low management fees, around 300 holdings and a track record of decent returns, though it could be helpful to look at other ASX shares with strong growth potential.
The post How many Vanguard Australian Shares Index ETF (VAS) units do I need to buy for $10,000 of passive income? appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group, Macquarie Group, and Wesfarmers. The Motley Fool Australia has recommended BHP Group, Goodman Group, Macquarie Group, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.