With interest rates coming down and savings accounts offering less bang for your buck, many investors are turning back to dividends as a way to generate reliable income.
Exchange-traded funds (ETFs) can be a simple way to build a diversified, income-focused portfolio without having to pick individual shares.
For example, here are three of the best ASX ETFs out there to help deliver steady passive income as we head into September.
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Vanguard Australian Shares High Yield ETF (ASX: VHY)
The Vanguard Australian Shares High Yield ETF remains one of the most popular income ETFs on the ASX. And it isn't hard to see why.
This ASX ETF invests in a portfolio of large Australian shares with higher-than-average forecast dividend yields, while also screening to avoid unsustainable payouts.
The fund currently trades with a trailing dividend yield of 4.6%, paid quarterly. Its holdings include household names like BHP Group Ltd (ASX: BHP), Westpac Banking Corp (ASX: WBC), and Telstra Group Ltd (ASX: TLS). For income-focused investors, the Vanguard Australian Shares High Yield ETF provides a diversified, low-cost way to tap into Australia's top dividend payers.
Betashares S&P Australian Shares High Yield ETF (ASX: HYLD)
The Betashares S&P Australian Shares High Yield ETF could be worth considering. It is one of the newer income ETFs on the ASX.
The fund invests in 50 high-yielding Australian shares, while screening out potential dividend traps such as those with unsustainably high yields or excessive volatility.
It currently trades on a 12-month trailing yield of approximately 4.5%, with income distributed monthly.
Top holdings include National Australia Bank Ltd (ASX: NAB), Transurban Group (ASX: TCL), Treasury Wine Estates Ltd (ASX: TWE), and Wesfarmers Ltd (ASX: WES). For retirees and income-focused investors, the combination of monthly payouts and broad sector coverage makes the Betashares S&P Australian Shares High Yield ETF a particularly attractive option. Betashares recently named it as one to consider.
Betashares Global Royalties ETF (ASX: ROYL)
Royalties might not be the first thing that comes to mind for income investing, but that's exactly what the Betashares Global Royalties ETF focuses on.
It invests in global stocks that earn a large share of their revenue from royalties and intellectual property, across industries such as mining, music, technology, and healthcare.
Its top holdings include Wheaton Precious Metals (NYSE: WPM), Universal Music Group (AMS: UMG), and Royalty Pharma (NASDAQ: RPRX). With a trailing dividend yield of 3.9%, paid monthly, the Betashares Global Royalties ETF offers diversification away from traditional dividend sectors while still providing a steady stream of passive income.
