The iShares S&P 500 ETF (ASX: IVV) is one of the most popular and effective investments because it offers low-cost exposure to the S&P 500. It also provides investors with passive income.
The exchange-traded fund (ETF) is highly diversified because it tracks the S&P 500, an index of 500 of the largest companies listed in the US.
Investors can utilise different share markets to build a passive income stream. The IVV ETF is certainly an option to consider. Let’s see what it would take to generate $1,000 of annual passive income from the ASX ETF.
Passive income from the IVV ETF
ETFs act as conduits for investors. They pass through the dividend income they receive to the investor.
The ETF portfolios have a significant influence on how much dividend income is generated.
If the portfolio is invested in high-yielding stocks, then the ETF itself will likely have a high dividend yield. But, the reverse is also true â if the holdings have a low dividend yield then the ASX ETF will also have low dividend yield.
At the end of August 2026, the IVV ETF reportedly had a dividend yield of 1.04%. That’s certainly not a high yield, but it’s better than nothing.
With a yield that low, an investor would need a sizeable investment to unlock $1,000 of dividend income.
To generate $1,000 of passive income at a dividend yield of 1.04%, we’re talking about requiring a $96,000 investment.
I think it’s clear you wouldn’t buy the IVV ETF with the thought of generating dividends. The dividend income is a bonus when it comes to owning units of this fund.
Why it can still be a great investment
Just because it doesn’t have a high dividend yield doesn’t mean it’s not a great investment.
The IVV ETF may be the most effective way to get exposure to a portfolio of high-quality US shares. But, we should think of these stocks as global businesses, not just US businesses â they give exposure to the global economy.
The iShares S&P 500 ETF’s top holdings include Nvidia, Apple, Microsoft, Alphabet, Amazon.com, Broadcom, Meta Platfoms, Micron Technology and Tesla.
If we’re going to invest in global blue-chips, the above names are the sorts of stocks I’d want to own.
In my view, it’s unsurprising that the strongest and biggest businesses manage to compound their earnings at a good pace. The IVV ETF has returned an average of 12.96% over the last five years.
I think the fund gives excellent investment exposure, for an extremely low cost of just 0.04%.
So, I wouldn’t buy the IVV ETF for passive income, but it’s an excellent investment for low-cost wealth-building.
The post How much must I invest in IVV ETF shares to earn a $1,000 passive income in 2027? appeared first on The Motley Fool Australia.
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More reading
- Own US ETFs like IVV or NDQ? Here’s why your dividends are so low
- Invested in ASX IVV or other iShares ETFs? Here’s your next dividend
- 10 top ASX ETFs to watch in 2027
- Want to invest in AI? Here are the best ASX ETFs for 2027
- 5 ASX ETFs for Aussie investors to buy and hold for 20 years
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 Alphabet, Amazon, Apple, Broadcom, Meta Platforms, Micron Technology, Microsoft, Nvidia, Tesla, and iShares S&P 500 ETF. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.