Stock picking isn't for everyone. But don't let that stop you from investing, especially when there are exchange-traded funds (ETFs) to save the day.
That's because they provide investors with access to large numbers of shares through a single click of the button. This allows you to almost instantly diversify a portfolio with minimal effort.
And the good news for income investors is that there are plenty of options out there for them.
Three ASX ETFs that provide investors with a source of income are listed below. Here's what you need to know about them:
Betashares Australian Top 20 Equity Yield Maximiser Fund (ASX: YMAX)
The first ASX ETF for income investors to look at is the Betashares Australian Top 20 Equity Yield Maximiser Fund.
This fund aims to generate attractive quarterly income and reduce the volatility of portfolio returns through a covered call strategy. This is over a portfolio of the 20 largest blue-chip shares listed on the Australian share market.
The team at Betashares recently recommended the ETF as a top option to counter falling dividend yields. The fund manager notes that the covered call strategy "performs well in a neutral or gradually rising market, allowing call options to generate income without stocks being called away too often, as has been seen in recent months."
At present, it trades with a trailing 12-month dividend yield of 7.6%.
BetaShares S&P 500 Yield Maximiser (ASX: UMAX)
Another similar ASX ETF for income investors to look at is the BetaShares S&P 500 Yield Maximiser.
It is the US equivalent of the YMAX ETF. This fund has been designed to generate as much income as possible from the top 500 companies listed on Wall Street. This includes giants such as Apple, Microsoft, and Walmart.
At the last count, the ASX ETF's units were trading with a 12-month trailing 4.6% distribution yield.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
Finally, income investors may also want to check out the Vanguard Australian Shares High Yield ETF.
This ASX ETF is a more traditional option. It doesn't use any clever covered call strategies. Instead, it leverages broker research to group together around 70 ASX shares that are forecast to have bigger dividend yields compared to the market average.
Importantly, rather than just loading up purely on banks and mining giants, the fund has diversity in mind and its holdings come from all corners of the market.
At present this includes BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Telstra Group Ltd (ASX: TLS), and Transurban Group (ASX: TCL).
The Vanguard Australian Shares High Yield ETF currently trades with a dividend yield of 4.9%.
