If you're looking to add some dividend shares to your portfolio, then it could be worth considering exchange traded funds.
This is because there are a few exchange traded funds that give you exposure to a large number of dividend shares through a single investment.
The advantage of this is that it provides investors with the ability to diversify on a budget.
With that in mind, here are two exchange traded funds that I think would be great options for income investors:
Vanguard Australian Shares High Yield ETF (ASX: VHY)
The first exchange traded fund for income investors to consider buying is the Vanguard Australian Shares High Yield ETF. As its name implies, this exchange traded fund has a focus on high yield shares.
In total, the fund is invested in 66 of the highest yielding blue chip shares on the Australian share market. This comprises a diverse group of shares, with no industry accounting for more than 40% of the fund and no single company accounting for more than 10%. Among its holdings you will find the banks, BHP Group Ltd (ASX: BHP), Coles Group Ltd (ASX: COL), and Telstra Corporation Ltd (ASX: TLS). I estimate that its units offer a FY 2021 dividend yield somewhere in the region of 4% to 5%.
VanEck Vectors Australian Banks ETF (ASX: MVB)
Another exchange traded fund to consider buying is the VanEck Vectors Australian Banks ETF. I think this fund is a great option for investors that are wanting exposure to the banking sector, but aren't sure which bank to buy.
This is because the fund gives investors the opportunity to get a piece of them all through a single investment. It is invested in the Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four banks, the regional banks, and also investment bank Macquarie Group Ltd (ASX: MQG). As with the other fund, I estimate that its units currently provide a 4% to 5% partially franked FY 2021 dividend yield.
