The Australian market is home to some of the highest dividend yields globally.
Data from S&P Global shows Australia has historically been one of the highest-yielding equity markets in the world.
A great way to gain exposure to these high yields is through ASX ETFs.
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The ETF advantage
Investors have long looked to banks, insurers and miners for strong dividends.
However the problem with individual dividend shares is that investors are exposed to the fortunes of a relatively small number of companies.
A dividend cut from one major holding can have a meaningful impact on your income, while concentrating too heavily in one sector can also increase risk.
Dividend-focused ETFs offer a simple way to spread that risk across a basket of companies in a single investment.
They can provide exposure to dozens of dividend-paying businesses, while also taking much of the stock-picking work out of building an income-focused portfolio.
Of course, not all dividend ETFs are created equal.
Investors should consider the underlying holdings, fees, dividend history, diversification and whether the ETF's strategy is designed to provide a sustainable income stream rather than simply chase the highest possible yield.
With that in mind, here are three great options to consider right now.
Betashares Australian Dividend Harvester Fund (ASX: HVST)
HVST aims to deliver a high level of franked income that exceeds the net income yield of the broader Australian share market over the long term, while providing investors with diversified exposure to Australian shares.
One key advantage of this fund is its monthly distributions.
This creates a more consistent passive income stream than individual shares, which usually pay dividends semi-annually.
At the time of writing, it offers a 12-month gross distribution yield of roughly 7%.
Betashares S&P Australian Shares High Yield ETF (ASX: HYLD)
HYLD ETF is another great ASX ETF for dividends.
It aims to track the performance of an index (before fees and expenses) that provides exposure to a share portfolio of 50 high-yielding Australian companies.
The fund also provides monthly distributions.
It currently offers a 12 mth gross distribution yield of approximately 5%.
BetaShares S&P 500 Yield Maximiser Fund (ASX: UMAX)
While Australian shares offer great yields, this fund looks to provide high dividends through international stocks.
UMAX aims to generate attractive monthly income and reduce the volatility of portfolio returns by implementing an equity income investment strategy over a portfolio of stocks comprising the S&P 500 Index.
It also provides monthly distributions and currently offers a 12-month distribution yield of over 5%.
