2 ASX ETFs to buy for a high-income portfolio

SPDR S&P Global Dividend Fund (ASX: WDIV) is one of the ETFs I would buy for a high-income ASX portfolio

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In my experience, most dividend investors that buy shares for income aren't heavy in exchange traded funds (ETFs). ETFs are a relatively new concept on the ASX, so perhaps haven't made their way onto some older dividend investors or retirees' horizons. Or perhaps income investors are just more traditionalist. But I think there is a place for ETFs in every dividend investors portfolio, and I'll explain why using these 2 ASX ETFs.

iShares S&P/ASX Dividend Opportunities ETF (ASX: IHD)

This ETF from BlackRock tracks an index comprised of 51 of the highest-yielding shares on the ASX. Why bother trying to sift through the big banks and resource companies looking for yield when you can just get one ETF that owns all of the best dividend payers the ASX has to offer?

What I like most about this fund is the automatic rebalancing nature of its operations. If a stock ceases to pay a dividend (take AMP Limited (ASX: AMP) for instance), it is automatically removed from the ETF without you having to do anything and replaced with a stock that does. Thus, there is little chance of you getting caught in a dividend trap. IHD charges a management fee of 0.4% and offers a trailing yield of 6.23%

SPDR S&P Global Dividend Fund (ASX: WDIV)

WDIV takes a similar strategy to IHD and applies it to companies around the world – thus you can get a slice of 99 global companies that all have a history of stable or increasing high dividends for 10 years or more, all in one ASX share. Although (as it invests in companies outside Australia) you don't get any franking credits with this ETF, it still offers a 4.8% yield on current prices, as well as valuable global exposure. The ASX only accounts for around 2% of the world's shares, so if you love income, it might pay to look outside our shores as well.

Some of WDIV's top holdings include Exxon Mobil, Japan Tobacco, AT&T and General Mills. This ETF charges a management fee of 0.5%.

Foolish takeaway

I think these 2 ETFs would have a very solid place within any dividend-focused ASX portfolio. You get instant diversification as well as automatic mechanisms that exclude underperforming companies. You could use either or both of these ETFs to build a strong foundation of income-producing assets, topped up with your favourite ASX dividend shares.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ⏸️ Dividend Shares

falling healthcare asx share price Mesoblast capital raising
⏸️ Dividend Shares

Sonic Healthcare (ASX:SHL) dividend rises 7%, share price falls after FY21 results

Triple digit profit growth and a solid dividend was not enough to impress investors on Monday.

Read more »

A smiling woman with a handful of $100 notes, indicating strong dividend payments
⏸️ Dividend Shares

The Adairs (ASX:ADH) dividend more than doubled in FY21

A record financial result will see a generous dividend paid out to Adairs shareholders.

Read more »

A businessman on a road raises his arms as dollar notes rain down on him.
⏸️ Dividend Shares

The Newcrest (ASX:NCM) dividend boosted 129%

Newcrest marks its sixth successive year of increasing dividend payments to shareholders

Read more »

Happy couple laughing while shopping in supermarket
52-Week Highs

August has been a great month so far for the Woolworths (ASX:WOW) share price

We take a look at how shares in the supermarket giant have been performing ahead of the company's full-year results

Read more »

wine glass full of coins
⏸️ Dividend Shares

The Treasury Wines (ASX:TWE) dividend bumped up by 60%

Here's how Treasury Wines dividends for FY21 have stacked up.

Read more »

Young boy cries and covers eyes with torn money on table
⏸️ Dividend Shares

The Origin (ASX:ORG) dividend has dropped 20%

What's happened to Origin's dividends?

Read more »

two people hold a sheet above their head while making a bed in a room featuring homewares.
Retail Shares

How did the Adairs (ASX:ADH) share price respond last earnings season?

The homewares retailer will be looking for another year like last year when it releases its FY21 earnings tomorrow.

Read more »

Two men excited to win online bet
Share Market News

Why the Tabcorp (ASX:TAH) dividend was boosted by 32%

The strong performance of Tabcorp's business will see a combined FY21 dividend of 14.5 cents.

Read more »