Veteran index fund and exchange-traded fund (ETF) provider Vanguard recently announced a new slate of ASX ETFs. Amongst them was the Vanguard International Shares High Yield ETF (ASX: VIHY).
ASX shares are well known for their income potential (not to mention those beloved franking credits). So this new ASX ETF has some stiff local competition. Additionally, the ASX is also home to a few ASX ETFs, both locally and internationally focused, that prioritise generating dividend income for their investors. Some popular examples include the BetaShares S&P Australian Shares High Yield ETF (ASX: HYLD) and the State Street SPDR S&P Global Dividend ETF (ASX: WDIV).
So today, let's see how this new ASX ETF from Vanguard measures up.
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What's in this new VIHY Vanguard ETF?
To start off with, the Vanguard International Shares High Yield ETF tracks the FTSE All-World ex Australia High Dividend Yield Net Tax Index. This index represents more than 2,300 individual dividend stocks from all over the world. VIHY itself currently holds around 1,600, so already we can see that this is a relatively massive fund in terms of scope.
Like many internationally-focused ETFs in Australia, VIHY is America-heavy. As of 31 May, 41% of its portfolio consisted of US stocks. Japan contributed the next-highest weighting at 9.9%, followed by the United Kingdom (7.1%), Canada (4.6%), Switzerland (4.5%), France (4.4%), and Taiwan (3.5%).
But let's get into what this ASX ETF actually holds in its portfolio.
Many of its top holdings are well-known US dividend payers. These include JPMorgan Chase & Co, Exxon Mobil Corp, Johnson & Johnson, Cisco Systems, Chevron Corp, Coca-Cola, Philip Morris International, Toyota, and Procter & Gamble.
Moving on to this ASX ETF's dividend potential, VIHY pays out its dividend distributions quarterly. It has only declared one payment to investors so far, a dividend distribution worth 49.49 cents per unit. This will be paid out later this month on 16 July.
If we annualise this payment (by assuming that its next three match its first), we get a potential 12-month dividend distribution total of $1.98 per unit. At the current (at the time of writing) price of $54.68, we get a potential yield of 3.62%.
Now, that's very arbitrary at this stage. We don't yet know what VIHY's next few dividend payments will look like. However, if investors are looking for an easy income investment that would diversify an ASX-heavy dividend portfolio, this ASX ETF might be worth considering.
