With interest rates edging lower and term deposit returns slipping, many Australians are beginning to look to the share market for income.
But if you don't fancy stock-picking, don't worry. That's because ETFs make things simple.
In one trade you gain exposure to lots of dividend-paying shares and in some cases, access to unique sources of income that you won't find in traditional Australian portfolios.
As we head into December, here are three ASX ETFs that stand out for income-focused investors.
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Betashares Global Royalties ETF (ASX: ROYL)
The Betashares Global Royalties ETF could be worth considering. Rather than relying on banks, miners, or property trusts, this ASX ETF targets shares that generate revenue from royalties. This is a model that often provides stable, recurring cash flows.
This includes businesses like ARM Holdings (NASDAQ: ARM), with its licensing-based chip architecture, Wheaton Precious Metals (NYSE: WPM), which receives royalties from global mining operations, and Universal Music Group (AMS: UMG), which earns from music catalogues and streaming rights.
At present, this fund trades with a trailing dividend yield of 5.2%. Betashares recently highlighted it as an attractive option for income-seeking investors.
Betashares S&P Australian Shares High Yield ETF (ASX: HYLD)
The Betashares S&P Australian Shares High Yield ETF focuses on 50 high-yielding ASX shares that are selected using dividend forecasts rather than backward-looking payouts. This helps avoid some of the classic dividend traps and keeps the portfolio geared toward sustainable income.
Among its largest holdings are the likes of big four banks Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB), miner BHP Group Ltd (ASX: BHP), and retail powerhouse Wesfarmers Ltd (ASX: WES). These companies form the backbone of Australia's dividend landscape.
The Betashares S&P Australian Shares High Yield ETF currently offers a forward yield of approximately 4.7%, making it an appealing option for investors who want diversified income without overcomplicating their portfolio.
Betashares also recently flagged this ASX ETF as a top choice for income-focused investors this month.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
Finally, the Vanguard Australian Shares High Yield ETF could be a top ASX ETF for income investors.
It tracks a basket of shares with the highest forecast dividend yields based on broker expectations, giving investors exposure to some of Australia's best dividend payers.
Its top holdings currently include BHP, Commonwealth Bank of Australia (ASX: CBA), and Telstra Group Ltd (ASX: TLS). These blue-chip names have long histories of delivering fully franked dividends, even during challenging market conditions.
This fund currently trades with a 4.2% dividend yield.
