Does the Vanguard MSCI Index International Shares ETF (ASX:VGS) pay dividends?

The Vanguard MSCI Index International Shares ETF (ASX: VGS) might not be the most popular exchange-traded fund (ETF) on the ASX. That honour goes to the Vanguard Australian Shares Index ETF (ASX: VAS). But it is still one of the most popular funds that track shares listed outside Australia.

Vanguard’s VGS ETF is massive in scope. It tracks the MSCI World ex-Australia Index (AUD), which is an index that aims to provide exposure to the stock markets of most of the advanced economies of the world. The fund covers more than 20 countries. These range from the United States, Singapore and Japan to Canada, the United Kingdom and Hong Kong. It also covers most countries in Europe.

As such, the VGS ETF holds an extraordinarily large number of companies within its underlying portfolio – close to 1,500. 

But despite this sheer number of holdings, it’s the US tech giants that still dominate this ETF. Between them, Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Amazon.com Inc (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) and Tesla Inc (NASDAQ: TSLA) make up approximately 15.24% of this ETF’s weighting, despite being five shares out of almost 1,500.

With an ETF of this size, scale and scope, many investors might be wondering if they can expect dividend payments? 

What kind of dividend distributions does the VGS ETF pay out?

Well, let’s take a look at the Vanguard MSCI Index International Shares ETF’s income potential.

So as an ETF, VGS is obliged to pass on any dividends it receives from its holdings straight to investors through dividend distributions. And amongst its near-1,500 holdings, there are more than a few dividend payers, including both Apple and Microsoft.

As such, VGS does indeed pay dividend distributions. In fact, it forks these out four times a year. Its latest announced payment will be sent to investors on 20 April. This payment will be worth 40.84 cents per unit.

VGS’s previous three dividend distributions were worth 43.12 cents, 34.26 cents and 81.3 cents per unit.

That comes to a (as of 20 April) trailing annual amount of 199.52 cents, or just under $2, per unit.

VGS units are presently trading at a price of $98.93, up 0.25% for the day so far. That gives this ETF a trailing yield of 2.02% right now. Since none of VGS’s shares are ASX shares, there are no franking credits that come with these distributions. 

So that’s the kind of dividend income an ASX investor can expect from the Vanguard MSCI Index International Shares ETF. 

The post Does the Vanguard MSCI Index International Shares ETF (ASX:VGS) pay dividends? appeared first on The Motley Fool Australia.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen owns Alphabet (A shares), Amazon, Apple, Microsoft, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Alphabet (A shares), Amazon, Apple, Microsoft, Tesla, and Vanguard MSCI Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Alphabet (C shares) and has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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