As an investor, you're always on the lookout for companies that have demonstrated sustainable growth. It's no different when it comes to exchange-traded funds (ETFs), such as Vanguard Australian Shares Index ETF (ASX: VAS), and their dividends.
With a mouth-watering yield of around 7.4%, you naturally wonder whether the ETF — which seeks to track the S&P/ASX 300 Index (ASX: XKO) — produces consistent distribution growth.
Let's take a look at the data to see if we can answer that question.
Wild ride for income seekers
As many would know, the Vanguard Australian Shares Index ETF has been one of the most popular dividend-paying ETFs in Australia for many years now. Its simple and low-cost way of gaining exposure to some of the largest publically traded companies makes it a staple among passive investors.
It probably doesn't come as a surprise that this investment option boasts a considerable payout. Topping the holdings list are dividend titans such as BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia Ltd (ASX: CBA), and CSL Limited (ASX: CSL).
In the last 12-month period, the ASX-listed VAS ETF has poured out a monumental $6.26 per unit in distributions to holders. That is an almost unbelievable 2.7 times increase compared to the amount paid out to holders in the previous annual window. So, we can certainly say the payments have increased.
However, investors reliant on the income might have had a hard time stomaching the reduction witnessed in FY20 and FY21, as shown above. Though, we should keep in mind that most dividend payers struggled to maintain their payments during this unprecedented time.
Furthermore, the massive resurgence in annual distributions comes amid record dividends from the likes of miners and oil and gas shares.
What's next for ASX Vanguard (VAS) ETF?
No one can predict whether Vanguard's VAS ETF will continue with wild variations in payments or begin to provide steady dividend growth. In fact, not even Vanguard has much of a say over this. The ETF is a proxy for the top ASX 300 shares, which will determine their own future dividends.
Although, what we do know is the next quarterly distribution will come with an ex-dividend date of 1 October. For the payment to grow year on year, it will need to be greater than $1.407 per unit.
