Are you an income investor seeking above-market dividend returns from ASX exchange-traded funds (ETFs)?
Here are two options that you might like to consider.
Both of these ETFs are delivering income that is well above today's deteriorated market average dividend yield of 3.3%.
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Betashares Australian Dividend Harvester Active ETF (ASX: HVST)
Since inception in June 2022, HVST ETF has delivered an average annual gross total return of 11.34% and a net return of 9.02%.
The 12-month gross distribution (dividend) yield is 7.2% and the net yield is 5.6%. The franking level is 67.8%.
Betashares says HVST is perfect for investors who prioritise cash flow, like self-managed superannuation funds (SMSFs) and retirees.
The ETF aims to provide franked income that exceeds the net annual income yield of the broader market.
The HVST ETF is an active ETF, so it doesn't follow an index.
Instead, HVST's managers pick the shares, generally sticking to the ASX 100 and maximising exposure to highly franked, dividend-paying stocks.
HVST ETF holds between 40 and 60 shares at any given time.
Currently, its top holdings are BHP Group Ltd (ASX: BHP), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corporation (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ), and Wesfarmers Ltd (ASX: WES).
The annual management fee is 0.65% plus 0.07% in estimated expenses.
Unique point of difference
HVST pays dividends on a monthly basis.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
Since inception in May 2011, VHY ETF has delivered an average annual gross total return of 9.85% and a net return of 9.58%.
The VHY ETF is currently trading on a trailing annual dividend yield of 8.4%. The franking level in FY25 was 42%.
Vanguard says VHY ETF is designed to give investors exposure to shares that have higher forecast dividends than their peers.
VHY tracks the FTSE Australia High Dividend Yield Index before fees, and pays distributions quarterly.
VHY currently holds 75 shares across all market sectors excluding real estate investment trusts (REITs).
No more than 40% of funds are invested in any one industry, and no more than 10% of funds are invested in any one ASX share.
The VHY ETF's top holdings are BHP, Commonwealth Bank of Australia (ASX: CBA), Westpac, NAB, and Telstra Group Ltd (ASX: TLS).
Unique point of difference
The VHY ETF is evidence that investors can enjoy great dividends AND capital growth from one investment.
Over the past five years, the VHY ETF has risen in value by 47%. It outperformed the ASX 200, which increased by 44%.
