It's a big day for one of the more popular index exchange-traded funds (ETFs) on the ASX today. If you own units of the Vanguard MSCI Index International Shares ETF (ASX: VGS), then congratulations are in order. That's because today, you are set to receive your next dividend distribution.
Many investors might associate dividend payments with ASX shares. But exchange-traded funds pay out dividends, too (although they are usually called distributions).
Most ETFs, including this one from Vanguard, are structured as a trust. This means that they are obliged to pass on any dividend income they receive from the shares that they hold to investors.
Since the Vanguard International Shares ETF holds many dividend-paying shares within it, investors are entitled to receive their fair share of these dividends in the form of ETF distributions.
This fund is rather large in scope. It holds close to 1,500 individual companies hailing from more than 20 advanced economies around the world. These include Japan, the United Kingdom, Canada, Europe, and Singapore.
But the lion's share (by far) comes from the United States. More than 70% of the Vanguard International Shares ETF's portfolio is weighted towards US companies. The largest of these include well-known names like Apple, Microsoft, Johnson & Johnson, Procter & Gamble and Exxon Mobil.
Payment incoming for Vanguard International Shares ETF
All of these companies are long-term dividend payers. US companies typically pay dividends every quarter, and the Vanguard International Shares ETF does as well.
As we discussed earlier, the latest of these is coming investors' way today. This latest payment will come in the form of a 34.83 cents per unit distribution. That's slightly above the 34.29 cents per unit distribution that was received for the same quarter last year.
But investors would have needed to own units of the ETF before the ex-dividend date of 3 October to be eligible for payment today.
Today's distribution brings the total dividend distributions that this ETF has paid out over the past 12 months to $1.74 per unit. That gives the Vanguard VGS ETF a trailing dividend distribution yield of 1.9% on the current unit price of $91.15.
