If you are wanting to generate passive income from the share market but don't like stock picking, then exchange-traded funds (ETFs) could be the solution.
They allow you to buy groups of dividend payers with a single click of the button. This removes the need to pick individual stocks and can reduce portfolio risk.
But which ASX ETFs could be good picks for income investors? Let's take a look at three that could be worth considering this year:
Vanguard Australian Shares High Yield ETF (ASX: VHY)
A popular option for income investors is the Vanguard Australian Shares High Yield ETF.
It leverages broker research to pull together in the region of 70 ASX shares that are forecast to have larger than average dividend yields. But this doesn't mean that you just end up with miners and banks. The fund operates with diversity in mind and is filled with companies from all corners of the market.
This includes the likes of BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Telstra Group Ltd (ASX: TLS), and Transurban Group (ASX: TCL).
At the last count, the Vanguard Australian Shares High Yield ETF was trading with a dividend yield of 5.2%.
Betashares Australian Cash Plus Fund (ASX: MMKT)
A very different option for income investors to consider is the Betashares Australian Cash Plus Fund.
Betashares believes this ASX ETF could be a good pick for investors that are seeking an enhanced yield from their core cash allocation.
The fund manager notes that "MMKT provides monthly income to investors by offering diversified exposure to not only Australian bank deposits, but also a range of more sophisticated money market securities usually only available to institutional investors."
The fund currently trades with a trailing dividend yield of 4.9%.
BetaShares S&P 500 Yield Maximiser (ASX: UMAX)
A third ASX ETF for income investors to consider buying for passive income is the BetaShares S&P 500 Yield Maximiser.
This fund has been designed to generate as much income as possible from the top 500 companies listed on Wall Street through a covered call strategy. This includes giants such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Walmart (NYSE: WMT).
This strategy means the fund has been able to provide investors with significantly better dividend yields than you would get by just investing in the 500 companies individually.
For example, its units were last trading with a 12-month trailing 4.1% distribution yield.
