Most investors who come to the ASX seeking passive income from dividends end up buying stocks like National Australia Bank Ltd (ASX: NAB) or Telstra Group Ltd (ASX: TLS).
Whilst there’s nothing wrong with buying blue chip stocks like NAB or Telstra, these shares are currently trading on rather low dividend yields, at least compared to what has, on average, been on offer in years gone by.
That’s why I think passive income seekers might want to consider an exchange-traded fund (ETF) instead.
The BetaShares Dividend Harvester Active ETF (ASX: HVST) is currently trading on a trailing dividend yield of 5.86%.
What’s more, this passive income stock pays out a dividend 12 times a year. Yep, HVST owners get a passive income paycheque every single month. Our 5.86% yield figure includes the 6.52 cents per share dividend distribution due in the middle of this month, for an annual 2025 total of 77.96 cents per unit.
However, whilst this ETF might suit investors looking to get a high yield, it might not be suitable for everyone. Let’s check out how the Dividend Harvester ETF manages to bring in such a sizeable yield.
How does this ASX passive income stock provide its 5.86% yield?
This ASX ETF is not your ordinary, index-hugging passive investment. Instead of holding a relatively consistent portfolio, HVST follows a ‘dividend harvesting’ strategy, as its name implies. This involves buying a passive income stock like Telstra or NAB after it announces a dividend but before it trades ex-dividend. The fund then collects the payout, and later sells the stock, using proceeds to buy its next income payer.
In this way, HVST can provide a relatively large dividend yield to its investors. However, there is a catch.
Buying and selling stocks just to collect dividends doesn’t usually leave any room for capital growth or compounding. As a result, HVST’s overall returns tend to underperform the broader market. In other words, the higher dividends don’t make up for the lost share price appreciation.
To illustrate, HVST units returned a total of 8.82% over the 12 months to 31 October 2025. In contrast, a simple ASX index fund, the Vanguard Australian Shares Index ETF (ASX: VAS), has returned 12.63% over the same period.
There’s also the cost to consider. HVST’s passive income strategy doesn’t come cheap. Whilst VAS charges a management fee of 0.07% per annum, HVST will set an investor back 0.72% per annum.
As such, the Betashares Dividend Harvester Active ETF might be a good fit for those investors prioritising dividend income. But perhaps not for investors looking for the best overall returns for their portfolios.
The post This ASX passive income share offers a 5.86% yield. Here’s how! appeared first on The Motley Fool Australia.
Should you invest $1,000 in Betashares Australian Dividend Harvester Fund right now?
Before you buy Betashares Australian Dividend Harvester Fund shares, consider this:
Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Betashares Australian Dividend Harvester Fund wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
And right now, Scott thinks there are 5 stocks that may be better buys…
* Returns as of 18 November 2025
.custom-cta-button p {
margin-bottom: 0 !important;
}
More reading
Motley Fool contributor Sebastian Bowen has positions in Vanguard Australian Shares Index ETF. 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 has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
Leave a Reply