If you're searching for a source of income but aren't sure which shares to buy or don't have sufficient funds to invest in a truly diverse manner, then ETFs could be a good option for you.
There are a number of ETFs that have been set up to give investors exposure to a collection of dividend shares.
Three that I think are worth considering are listed below:
Vanguard Australian Shares High Yield ETF (ASX: VHY)
The first option for income investors to consider buying is the Vanguard Australian Shares High Yield ETF. I think this exchange traded fund is a quality option for income investors due to the diversity of its holdings. It provides investors with exposure to many of the highest yielding shares on the ASX through a single investment. This includes the banks, telcos, and miners such as BHP Group Ltd (ASX: BHP). At present I estimate that its units offer a FY 2021 dividend yield of at least 5%.
Vanguard Australian Shares Index ETF (ASX: VAS)
Another ETF for income investors to consider buying is the Vanguard Australian Shares Index ETF. It has been designed to mirror the lesser followed S&P/ASX 300 index. This means it gives investors exposure to blue chips such as Coles Group Ltd (ASX: COL) and Telstra Corporation Ltd (ASX: TLS), and also smaller companies like Accent Group Ltd (ASX: AX1) and Baby Bunting Group Ltd (ASX: BBN). I like the diversity this gives investors. At present, I estimate that its units offer a FY 2021 dividend yield of at least 3%.
VanEck Vectors Australian Banks ETF (ASX: MVB)
Finally, if you're looking at bank shares but can't decide which ones to buy, the VanEck Vectors Australian Banks ETF could be the answer. This is because this ETF gives investors the opportunity to get a piece of them all through a single investment. The VanEck Vectors Australian Banks ETF is invested in Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four banks, the regional banks, and also Macquarie Group Ltd (ASX: MQG). I estimate that its units currently provide a ~4.5% partially franked FY 2021 dividend yield.
