ASX investors are especially in favour of dividend investments to boost passive income.
Over the past few years, inflationary pressures have impacted Australian living standards and discretionary income. According to The Australian, real income per person last quarter was slightly lower than it was a year ago and only 1.5% higher than it was a decade ago. The past 10 years have been the weakest decade of growth since 1983.
Dividends can help meet higher living costs by boosting passive income. The Australian franking credit system also makes dividends extremely tax-efficient. Publicly listed Australian companies can attach franking credits to their dividends. This reflects the amount of tax already paid to the Australian Tax Office (ATO) on those earnings. Shareholders then receive a credit for the tax already paid by the company, reducing their tax liability.
Instead of building a portfolio of individual high-yield ASX companies, ASX investors can invest in one or more exchange-traded funds (ETFs). This strategy allows investors to maintain a diversified portfolio while also reducing brokerage costs. Those interested in dividend-focused ETFs should consider the following ASX ETFs.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
The Vanguard Australian Shares High Yield ETF provides ASX investors with exposure to Australian companies with high dividend yields, relative to the market. As of 31 March 2025, its forecast dividend yield was 4.9%, with distributions paid quarterly. For a management expense of 0.25%, investors gain exposure to 67 companies. Diversification is achieved by restricting the proportion of any one industry to 40% of the total ETF and 10% in any one company. This ETF could be a great option to boost passive income.
BetaShares Australia Top 20 Equity Yield Max Fund ETF (ASX: YMAX)
ASX investors looking for higher passive income should consider the BetaShares Australia Top 20 Equity Yield Max Fund. For a management fee of 0.59%, investors gain access to an actively managed portfolio of the 20 largest Australian companies. The distribution yield for this ETF is materially higher than VHY at 8.0%. Distributions are also paid quarterly.
SPDR S&P/ASX 200 Resources ETF (ASX: OZR)
ASX investors looking for a diversified ETF that is concentrated in the resources sector should have a serious look at the SPDR S&P/ASX 200 Resources ETF. For a management expense ratio of 0.34%, investors gain exposure to 48 holdings derived from Australia's major dividend-paying resources companies in a single trade. With a dividend yield of 4.71%, it is comparable to VHY. In contrast to VHY and YMAX, distributions are paid semi-annually.
