Most ASX exchange-traded funds (ETFs) don't offer a 4% dividend yield right now.
Even buying the often-lucrative Vanguard Australian Shares Index ETF (ASX: VAS) will only get you a trailing dividend distribution yield of around 3.22% today. Even an ETF that focuses on bank stocks, the traditional base of an ASX dividend investor's portfolio, wouldn't get you close to 4%. To illustrate, the VanEck Australian Banks ETF (ASX: MVB) currently trades on a yield of 3.15%.
Yet one ETF does seemingly offer a yield of over 4% today. That would be the BetaShares Global Energy Companies ETF (ASX: FUEL).
This fund from popular provider Betashares does pretty much what it says on the tin. It allows ASX investors to access a portfolio of the world's largest energy companies, mostly in the oil and gas industry.
These are not the related minnows we have on the ASX, such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO). You'll instead find the likes of BP, Shell, Exxon Mobil, ConocoPhillips and Chevron here.
These companies are some of the largest of their kind in the world. You might recognise many from your last trip to the service station.
How much does this ASX ETF pay in dividends?
They have all been around a long time, and have mature businesses that can spin off a lot of cash under the right circumstances.
To illustrate, over the past 12 months, this ASX ETF has doled out two dividend distributions. The first was the 13.22 cents-per-unit payment from July last year. The second was the 11.81 cents-per-unit distribution that investors saw back in January. Its next dividend payment will be announced on 30 June next week.
Yesterday, FUEL units closed at $6.20 each. Plugging that annual total of 25.03 cents per unit in dividend distributions into that price, and we get a trailing dividend distribution yield of 4.04%.
Not bad. However, I would caution investors searching for income in today's market from loading up on this ASX ETF.
Yesterday, I wrote a piece discussing why I think oil shares are going to make poor income stocks, at least for the next few years. In a nutshell, I argued that there are trends pushing down the price of oil itself, and I don't see those abating anytime soon, now that the situation in the Middle East thankfully looks like it has calmed.
If you're desperate to add energy to your income portfolio, then perhaps a small position in a globally-focused and diversified ETF like FUEL can be justified. After all, I could be wrong about energy prices.
However, I wouldn't make this ASX ETF a central pillar of a dividend portfolio today. Instead, a more diversified, income-focused ETF like the Vanguard Australian Shares High Yield ETF (ASX: VHY) might be a better fit.
