If you're building an income portfolio but don't feel like you have sufficient funds to maintain a truly diverse portfolio, then exchange traded funds (ETFs) could be the answer.
There are a number of ETFs that have been set up to give investors exposure to a collection of dividend shares. All through a single investment.
Two that could be worth considering are listed below:
BetaShares S&P 500 Yield Maximiser (ASX: UMAX)
The first ETF for income investors to consider is the BetaShares S&P 500 Yield Maximiser.
This ETF has been designed to generate attractive quarterly income and reduce the volatility of portfolio returns. To achieve this, BetaShares has implemented an equity income investment strategy over a portfolio of shares comprising the S&P 500 Index.
This index is of course home to 500 of the largest companies listed on Wall Street. Among the companies you'll be investing in include Apple, Exxon Mobil, Johnson & Johnson, Microsoft, and United Health.
At the last count, its units were providing investors with a 6.4% distribution yield.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
Another ETF that could be a good option for income investors is the Vanguard Australian Shares High Yield ETF.
This ETF provides investors with exposure to companies that have higher than average forecast dividends. Importantly, this is done with diversification in mind. Vanguard restricts the proportion invested in any one industry to 40% of the total ETF and 10% for any one company. This ensures that you're holding a diverse collection of dividend shares.
Among the companies included in the fund are Commonwealth Bank of Australia (ASX: CBA) and the big four banks, as well as mining giants such as BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).
The Vanguard Australian Shares High Yield ETF currently trades with an estimated forward dividend yield of 5.8%.
