Experts say investors may become more interested in yield due to capital gains tax (CGT) changes starting on 1 July next year.
With this in mind, and given the rising popularity of exchange-traded funds (ETFs), let's take a look at the best dividend ETFs of FY26.
We reviewed the one-year returns of 458 ETFs on the market to determine the best-performing ETFs targeting high dividend yields.
We have ranked these ETFs based on total one-year returns. Total returns are comprised of unit price growth and distributions.
Distributions can have several components. The main ones are dividends and realised capital gains within the fund.
Investors targeting high dividend yields via ASX ETFs need to bear realised capital gains in mind for tax purposes.
These rankings are based on full-year performance data from the Australian Securities Exchange.
Image source: Getty Images
1. iShares S&P/ASX Dividend Opp ESG Screened ETF (ASX: IHD)
IHD ETF delivered a total one-year return of 22%. The 12-month trailing distribution yield is 4%.
This ASX ETF seeks to track the returns of the S&P/ASX Sustainability Screened Dividend Opportunities Index before fees.
The index features 50 shares from the S&P/ASX 300 Index (ASX: XKO) with the highest forecast dividend yields.
Stock selection is subject to diversification, profitability, and tradability requirements. For example, they must have a minimum market cap of $500 million, a 12-month history of positive earnings per share (EPS), and no stock may have a weighting greater than 10%.
Over time, stocks can move beyond 10%, but the index provider sells them down at the next rebalance.
Index provider S&P Global also screens the stocks under environmental, social, and corporate governance (ESG) criteria to exclude selected activities. These include nuclear weapons, thermal coal, oil and gas, alcoholic beverages, gambling, and military contracting.
S&P Global also excludes ASX real estate investment trusts (REITs).
About 43% of the fund is ASX financial stocks, 27% are materials shares, including miners, and 16% are industrial stocks.
Currently, IHD ETF's top holdings are: BHP Group Ltd (ASX: BHP) (11.5%), Rio Tinto Ltd (ASX: RIO) (10%), Australia and New Zealand Banking Group Ltd (ASX: ANZ) (9.1%), and National Australia Bank Ltd (ASX: NAB) shares (8.8%).
This ASX ETF pays dividends quarterly, and the management fee is 0.23%.
IHD ETF has been trading since December 2010. The index is rebalanced semi-annually.
Average annual total returns have been 15.3% over three years, 9.7% over five years, and 8.6% over 10 years.
IHD ETF has $409 million in funds under management (FUM).
2. Global X S&P/ASX 200 High Dividend ETF (ASX: ZYAU)
ZYAU ETF gave investors a total one-year return of 19% in FY26. The trailing distribution yield is 4.3%.
This ASX ETF tracks the S&P/ASX 200 High Dividend Index before fees.
The index features 50 high-dividend shares from the S&P/ASX 200 Index (ASX: XJO).
Index manager S&P Global defines high-dividend stocks as those with the highest 12-month forecast dividend yields.
S&P Global caps the number of selected stocks per sector at 15, and no stock has a weighting greater than 10%.
ASX REITs and stocks ranked in the bottom 10% by momentum value, according to S&P Global's momentum indices, are excluded.
About 39% of the fund is ASX financial stocks, 22% are materials shares, and 12% are energy stocks.
ZYAU ETF's top holdings are: BHP (11.3%), ANZ (9.6%), NAB (9.3%), and Westpac Banking Corp (ASX: WBC) shares (9.3%).
This ASX ETF pays distributions quarterly, and the management fee is 0.24%.
ZYAU ETF has been trading since June 2015. The index is rebalanced semi-annually.
Average annual total returns have been 13.2% over three years, 6.1% over five years, and 6% over 10 years.
ZYAU ETF has $95 million in FUM.
3. Vanguard Australian Shares High Yield ETF (ASX: VHY)
The largest dividend-focused ASX ETF on the market today, with $7.6 billion in FUM, is VHY ETF.
In FY26, VHY generated a total one-year return of 18%. The trailing distribution yield is 3.6%.
VHY ETF tracks the FTSE Australia High Dividend Yield Index before fees.
The index is comprised of 92 ASX shares with the highest 12-month forecast dividend yields, sourced from professional brokers.
Rules include limiting exposure to any one industry at 40%, and a 10% weighting for any single ASX share. REITs are excluded.
About 40% of the fund is ASX financial stocks, 22% are materials shares, and 10% are energy stocks.
The VHY ETF's top holdings are: Commonwealth Bank of Australia (ASX: CBA) (10%), BHP (9.6%), Westpac (6.4%), and NAB shares (6.2%).
This ASX ETF pays distributions quarterly, and the management fee is 0.25%.
VHY ETF has been trading since May 2011. The index is rebalanced semi-annually.
Average annual total returns have been 14.3% over three years, 11% over five years, and 10.5% over 10 years.
4. State Street SPDR MSCI Australia Select High Dividend Yield ETF (ASX: SYI)
SYI ETF produced a total one-year return of 15%. The trailing distribution yield is 7.6%.
This ASX ETF tracks the MSCI Australia Select High Dividend Yield Index before fees.
State Street says the index employs a robust stock selection process that "screens for persistent and financially sustainable dividends, targets recurring income and helps avoid dividend traps".
About 48% of the fund is ASX financial stocks, 10% are healthcare shares, and 9% are communications stocks.
SYI ETF's top holdings are: NAB (10.5%), ANZ (9.9%), Westpac (9.8%), and CSL Ltd (ASX: CSL) (8.8%).
This ASX ETF pays distributions quarterly, and the management fee is 0.2%.
SYI ETF has been trading since September 2010. The index is rebalanced semi-annually.
Average annual total returns have been 12.6% over three years, 9.8% over five years, and 9.2% over 10 years.
SYI ETF has $664 million in FUM.
