The Vanguard Australian Shares Index ETF (ASX: VAS) is sending its distribution to investors today, providing another pleasing passive income payment.
The exchange-traded fund (ETF) is the largest on the ASX, so it's about to boost a lot of investors' bank accounts.
This particular fund tracks the S&P/ASX 300 Index (ASX: XKO), meaning it's invested in 300 of the biggest businesses on the ASX.
Quarterly payout
The VAS ETF pays investors something every three months. It collects payouts from names like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), CSL Ltd (ASX: CSL), National Australia Bank Ltd (ASX: NAB), Wesfarmers Ltd (ASX: WES), Macquarie Group Ltd (ASX: MQG), and Goodman Group (ASX: GMG) and then sends the money to investors.
For the distribution date of 31 March 2024, the VAS ETF is paying a distribution of 84.792 cents per unit today.
If someone owned 100 Vanguard Australian Shares Index ETF units, which are currently worth around $9,600, they'd receive a total distribution of $84.79.
What about the distribution reinvestment plan?
Companies, trusts and ETFs can offer the ability for investors to reinvest their dividends or distributions to receive new shares or new units. But what is the price of those units?
The VAS ETF said that for this payment, the reinvestment price is $97.9497 per unit.
What is the distribution yield?
Every investor will have a different purchase cost for their VAS ETF units. Due to that, I'll look at the distribution yield based on the price at 31 March 2024.
With the distribution of 84.792 cents per unit, this payout represents a distribution yield of 0.86%.
This payout was 47% higher than the 31 March 2023 payout, so there has been a significant increase, though no growth is guaranteed from here.
According to Vanguard, the VAS ETF's overall dividend yield was 3.7% at 31 March 2024, which excludes the effect of franking credits.
The fund has a higher dividend yield than many other funds focused on the global share market because many of its larger holdings have high yields thanks to a generous dividend payout ratio.
For example, the two biggest sector allocations in the portfolio are ASX financial shares (29.7% of the ETF) and ASX mining shares (22.1% of the ETF) which are known for their yields.
There are other individual, large ASX shares in the portfolio that also have large dividend yields including Woodside Energy Group Ltd (ASX: WDS), Telstra Group Ltd (ASX: TLS), Coles Group Ltd (ASX: COL) and Medibank Private Ltd (ASX: MPL).
