Investing in ASX shares for passive income?
You may want to run your slide rule over the Betashares Australian Dividend Harvester Fund (ASX: HVST).
Here's why.
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High-yielding ASX share with instant diversification
As with most exchange-traded funds (ETFs), HVST provides investors diverse exposure with a single investment.
The ETF holds 40 to 60 different ASX shares at any given time.
Betashares Australian Dividend Harvester Fund's top holdings by sector are in the financials sector (30%), the materials sector (24%) and healthcare (10%).
As at 28 February, its two biggest ASX shareholdings were BHP Group Ltd (ASX: BHP) at 12.5% and CSL Ltd (ASX: CSL) at 7.2%.
The ETF's stated goal is to offer investors mostly franked, passive income that beats the net income yield of the broader ASX.
The portfolio is rebalanced every three months, aiming to provide the highest gross yield outcome. That's part of what investors get for the 0.73% management fee.
And while most ASX dividend shares only make one or two payouts per year, HSVT makes its distributions every month.
That's a welcome feature for investors looking to secure a regular monthly passive income stream.
As are the bank-busting yields.
The ETF's 12-month distribution yield works out to 6.9%. The fund's gross distribution yield over the 12 months was 9.6%, at an average franking level of 91.6%.
That's a long way ahead of the higher end term deposit rates of around 4.5% currently. Though, investing in any ASX share, even a diversified ETF, does come with significantly more risk than putting your money in a term deposit.
HSVT's most recent monthly dividend of 7.1 cents per share was paid on 16 March, franked at 78%.
When the time comes to sell the ETF, investors may gain or lose money on the share price moves, just as with any ASX shares.
As you can see in the chart below, the HSVT share price is down 1% in 2023, roughly in line with the S&P/ASX 200 Index (ASX: XJO).
