For investors looking to generate reliable passive income, exchange-traded funds (ETFs) offer a simple and diversified way to achieve this goal.
Rather than picking individual dividend stocks, an income-focused ETF can provide broad exposure to high-yielding companies while smoothing out risk.
If you're in the market for an ASX ETF to boost your passive income, here are three top options to consider right now.
Vanguard Australian Shares Index ETF (ASX: VAS)
One of the best all-round ETFs for long-term passive income is the Vanguard Australian Shares Index ETF. This fund aims to track the performance of the S&P/ASX 300 Index, which means it provides exposure to 300 of Australia's biggest and best businesses.
This includes major blue chip stocks such as BHP Group Ltd (ASX: BHP), Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW), and Telstra Group Ltd (ASX: TLS). Many of these companies are known for paying consistent dividends, meaning Vanguard Australian Shares Index ETF. investors benefit from a steady stream of income.
At present, VAS is trading with a dividend yield of approximately 3.6%, making it an attractive choice for investors seeking stable and growing payouts over time.
Betashares Australian Top 20 Equity Yield Maximiser Fund (ASX: YMAX)
If you're looking to supercharge your passive income, the Betashares Australian Top 20 Equity Yield Maximiser Fund could be worth considering. This ASX ETF invests in the top 20 blue chip stocks on the ASX while employing a covered call strategy to generate additional income.
The covered call strategy works by selling call options on its holdings, creating extra income on top of dividend payments. This can be particularly beneficial in sideways or gradually rising markets, as it enhances overall yield and reduces volatility.
Currently, the fund offers a trailing 12-month dividend yield of 7.7%, making it one of the highest-yielding ETFs on the ASX. This could make the ETF a good option for investors who prioritise cash flow over capital growth and want to maximise their passive income stream. Betashares recently named it as a buy for investors looking to counter falling dividend yields.
Betashares Australian Cash Plus Fund (ASX: MMKT)
For those who want a low-risk income option, the Betashares Australian Cash Plus Fund could be a great option. It was also named as one to buy by Betashares.
This ASX ETF provides exposure to a diversified mix of Australian bank deposits and institutional money market securities, offering capital stability alongside regular income.
At present, MMKT delivers a trailing annual dividend yield of 4.7%, with dividends paid monthly. This frequent payout schedule could make it a top option for investors who want consistent cash flow without the volatility of the stock market.
