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Best Dividend / Income ETFs on the ASX

Dividend ETFs target companies with higher-than-average distribution yields, providing regular income for investors. They are popular among retirees and those seeking passive income from their portfolios.

6
ETFs tracked
0.25%
Lowest MER
+21.4%
Best 1Y return
$8,782.4M
Total AUM
VHY
Top pick
Fees (MER) - Lower is better
VHY
0.25%IHD
0.30%SYI
0.35%HVST
0.47%UMAX
0.79%RINC
0.85%
1-Year Returns
VHY
+21.4%IHD
+21.3%SYI
+18.5%RINC
+6.6%HVST
+4.8%UMAX
+2.3%

All Dividend / Income ETFs

sorted by Score · highest firstclick any column to sort
ETF Name Score MER 1Y Return 3Y Return Yield AUM ($M)
VHYVanguard Australian Shares High Yield ETF680.25%+21.4%+14.1%7.28%7,041.2
SYISPDR MSCI Australia Select High Dividend Yield Fund500.35%+18.5%+10.2%11.86%625.3
IHDiShares S&P/ASX Dividend Opportunities ETF460.30%+21.3%+14.0%4.12%389.3
HVSTBetaShares Australian Dividend Harvester Fund300.47%+4.8%+7.6%5.50%294.9
UMAXBetaShares S&P 500 Yield Maximiser Fund190.79%+2.3%+12.5%6.18%281.7
RINCBetaShares Legg Mason Real Income ETF160.85%+6.6%+2.5%-150

Overview

Dividend ETFs target companies with higher-than-average distribution yields, providing regular income for investors. They are popular among retirees and those seeking passive income from their portfolios.

What to look for

VHY (0.25%) is the largest and cheapest, using FTSE's yield methodology. SYI (0.35%) uses MSCI's quality-screened approach. IHD (0.30%) targets the highest yields. HVST (0.47%) uses covered calls for enhanced income. UMAX applies the same covered call strategy to the S&P 500 for international income exposure.

Considerations

High dividend yields can be a sign of deteriorating business fundamentals rather than generous payouts. Companies cut dividends when profits decline. Australian dividend ETFs are heavily concentrated in banks and miners. The franking credits on bank dividends provide tax benefits for Australian tax residents, but this shouldn't be the sole reason to invest.

Compare Dividend / Income ETFs

VASvsVHY
Broad market vs high yield
VHYvsSYI
High yield income ETFs
A200vsVHY
Index tracking vs income focus

Frequently Asked Questions

What is a Dividend Income ETF?+

A Dividend Income ETF selects Australian shares based on high dividend yield and sustainability, focusing on companies with strong payout histories. Key ASX options include VHY (Vanguard Australian Shares High Yield), SYI (SPDR MSCI Australia Select High Dividend Yield), and IHD (iShares S&P/ASX Dividend Opportunities). These ETFs are heavily weighted toward banks (CBA, NAB, ANZ, WBC), miners (BHP, Rio Tinto), and property trusts, delivering grossed-up yields typically between 5.5–7.5% including franking credits.

What should investors look for when choosing a Dividend Income ETF?+

Compare grossed-up yield (including franking credits), not just the headline cash yield - VHY's franking level often exceeds 70%, significantly boosting after-tax returns for Australian taxpayers and generating refunds for pension-phase SMSFs. Review the index methodology: does it screen for dividend sustainability (SYI uses quality filters) or simply select the highest yielders (which risks yield traps)? Check sector concentration - most dividend ETFs allocate 40%+ to financials - and compare fees (VHY 0.25%, SYI 0.35%, IHD 0.30%) and distribution frequency for income planning.

Are dividends from these ETFs franked and how does that benefit Australian investors?+

Yes, a significant portion of distributions from Australian dividend ETFs like VHY and SYI carry franking credits because the underlying companies (especially Big 4 banks and BHP) pay fully franked dividends. For a taxpayer on the 32.5% marginal rate, franking credits reduce effective tax on dividends substantially. For zero-tax pension-phase SMSFs, franking credits are refunded as cash by the ATO, boosting effective yield by approximately 1.5–2.5% above the stated cash distribution - making these ETFs a cornerstone of retirement income strategies.

What are the risks of Dividend Income ETFs and who are they suited for?+

The primary risk is the yield trap - stocks with unsustainably high dividends that subsequently cut payouts, causing capital losses (e.g., Telstra's dividend halving in 2017). Heavy bank and mining sector concentration means these ETFs underperform during housing downturns or commodity busts, and offer limited exposure to growth sectors like technology. Capital growth tends to lag broader market ETFs like VAS over full market cycles. These ETFs suit income-focused retirees, pension-phase SMSFs maximising franking refunds, and investors prioritising regular cashflow over capital appreciation.

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