If you're building an income portfolio but don't have sufficient funds to maintain a diverse portfolio, don't worry.
That's because exchange-traded funds (ETFs) could potentially help you achieve this goal.
For example, the two ASX ETFs listed below offer investors exposure to a large collection of dividend shares in one fell swoop. In many respects, this provides instant diversification to a portfolio. Here's what you need to know about them:
Vanguard Australian Shares Index ETF (ASX: VHY)
The first ASX ETF for income investors to look at is the Vanguard Australian Shares High Yield ETF.
It offers investors low-cost exposure to a group of 76 ASX shares that have higher forecast dividends relative to the market average.
And while miners and banks like BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA) traditionally pay the biggest dividends, you won't just be buying them. That's because, for diversification reasons, Vanguard restricts the proportion invested in any one industry to 40% and 10% for any one company.
In addition, Australian Real Estate Investment Trusts (A-REITS) are excluded from the index. This means there's no real exposure to the property market.
The ETF currently trades with a trailing dividend yield of 5.9%.
BetaShares S&P 500 Yield Maximiser (ASX: UMAX)
Another ASX ETF for income investors to look at is the BetaShares S&P 500 Yield Maximiser.
This ETF has been designed to give investors access to the top 500 companies listed on Wall Street. This includes giants such as Apple, Exxon Mobil, Johnson & Johnson, Microsoft, and Walmart.
Through a clever covered call strategy, this actively managed fund is expected to earn quarterly income that is significantly greater than the dividend yield of the underlying share portfolio over the medium term.
At the last count, its units were providing investors with a trailing 6.7% distribution yield.
