Pleasingly, superannuation has a lower tax rate than many individuals, trusts and companies. The nature of the superannuation (and how we access the money) makes it very easy to invest for the long term.

I think receiving passive income is one of the best elements of owning shares. Being paid money into our bank accounts every year for no ongoing effort sounds good to me.

One of the main benefits of superannuation is that less of the passive income return is lost to tax. I believe that the after-tax figure is what Australian investors should focus on.

If a full-time working Australian is paid passive income in their own name, they may lose a third (or more) of that dividend income to tax. That effect can make passive income seem much less appealing.

Superannuation is often the best place to invest for passive income due to the lower tax rate in the accumulation phase of life, compared to a full-time earner's individual tax rate.

However, each person's tax situation is different, so we'll just run through a particular dividend income level and not consider tax rates from now on.

How much is needed in superannuation for $60,000 of annual passive income?

Being paid $60,000 in dividends each year is appealing to me. I'm nowhere near that goal, but I'd love to reach that level of income one day.

One of the most important decisions to consider is the investments that we want to own and the dividend yield that comes with that.

I think ASX shares are the best choice for passive income, with the attached franking credits being a great bonus.

Reaching $60,000 of annual dividends depends on the size of the dividend yield and the portfolio size.

For example, if an Australian investor had investments with a 6% dividend yield, it would require a $1 million portfolio. If the portfolio had a 3% dividend yield, it would need to be a $2 million portfolio for $60,000 annual income.

As you can see, different investments provide different dividend yields. So, it depends on what Aussies want to choose.

Which ASX dividend shares I'd look at

There are a number of different investment options that investors can choose on the ASX with good dividend yields like real estate investment trusts (REITs), quality operating companies, exchange-traded funds (ETFs) and good listed investment companies (LICs).  

I think REITs are very attractive at these valuations amid high interest rates. Some of my leading ideas are Centuria Industrial REIT (ASX: CIP), Dexus Industria REIT (ASX: DXI), Rural Funds Group (ASX: RFF) and Charter Hall Long WALE REIT (ASX: CLW).

Some of the leading operating companies out there include Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Wesfarmers Ltd (ASX: WES), Lovisa Holdings Ltd (ASX: LOV), Telstra Group Ltd (ASX: TLS) and Medibank Private Ltd (ASX: MPL).

There are a few very attractive ETFs that could be useful options for dividend income such as WCM Quality Global Growth Fund (ASX: WCMQ), Vanguard Australian Shares Index ETF (ASX: VAS) and Vanguard Australian Shares High Yield ETF (ASX: VHY).

Some of the LICs that I highly rate for superannuation include MFF Capital Investments Ltd (ASX: MFF), WCM Global Growth Ltd (ASX: WQG), Future Generation Australia Ltd (ASX: FGX), Future Generation Global Ltd (ASX: FGG) and Hearts and Minds Investments Ltd (ASX: HM1).

The post How much is needed in superannuation to target a $60,000 annual passive income? appeared first on The Motley Fool Australia.

ASX exchange traded funds (ETFs) can also be used to build an income stream, while spreading money across a portfolio of different holdings.

That can make them a handy option for investors who want dividends, but do not want to rely on one or two companies doing all the work.

With that in mind, here are three excellent ASX ETFs that could be worth considering for passive income.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

The Vanguard Australian Shares High Yield ETF could be a simple option for investors wanting passive income from Australian shares.

This fund focuses on shares listed on the local market that are expected to provide higher dividend yields than the broader Australian share market.

That naturally gives it exposure to some of the ASX's more mature, cash-generating businesses. These may include companies from sectors such as financials, resources, telecommunications, consumer staples, and infrastructure.

Among its holdings are giants such as BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), and Telstra Group Ltd (ASX: TLS).

Betashares Global Royalties ETF (ASX: ROYL)

The Betashares Global Royalties ETF offers a very different type of income exposure.

Rather than focusing on traditional dividend shares, this fund invests in companies that earn royalty income.

That can include royalties linked to areas such as music, intellectual property, pharmaceuticals, mining, energy, and other assets.

Royalty companies can earn a share of revenue from an asset without always carrying the same operating burden as the company producing, selling, or managing that asset directly.

This does not make them risk-free, but it can create attractive cash flow characteristics.

Betashares S&P 500 Yield Maximiser Complex ETF (ASX: UMAX)

A third ASX ETF to consider for passive income in September is the Betashares S&P 500 Yield Maximiser Complex ETF.

This fund gives investors exposure to a portfolio of US shares based on the S&P 500, while using an income-focused options strategy. This means it is able to produce more income than the underlying share portfolio would normally pay on its own.

That could be attractive for investors who want exposure to the US market but would also like regular distributions.

The trade-off is that this strategy can limit some of the upside when US shares rise strongly.

But for income-focused investors, UMAX could still be a useful option. It provides exposure to leading US companies while aiming to turn that portfolio into a stronger income generator.

The post 3 excellent ASX ETFs for passive income appeared first on The Motley Fool Australia.

Three main priorities for retirees to focus on are: 

• Reliable income
• Diversification
• Enough growth to keep pace with inflation.

A common mistake is simply targeting the three highest-yielding ETFs, since high distributions often come with substantially higher risk.

This simple three-ASX ETF portfolio can provide a balanced allocation across these priorities. 

Vanguard Australian Shares High Yield ETF (ASX: VHY)

This ASX ETF provides exposure to Australian companies that tend to pay relatively high dividends. This creates a reliable stream of investment income without needing to sell investments regularly. 

For Australian investors, the dividends can also come with franking credits. This may improve the after-tax income depending on individual circumstances. 

Importantly, VHY still provides exposure to shares, so it offers the potential for long-term capital growth that can help protect against inflation.

However, VHY's role isn't simply "high dividends" alongside superannuation.

In a retirement portfolio, its main attraction is that it can turn a portion of an Australian equity allocation into a relatively strong cash-flow-producing asset while retaining exposure to businesses that can grow over time.

Vanguard Australian Fixed Interest Index ETF (ASX: VAF)

This ASX ETF can play a vital role in a retiree's portfolio by providing exposure to Australian government and investment-grade corporate bonds. 

This asset class is often considered less volatile than shares. 

Its primary purpose is to provide stability and regular income. This can help to reduce the overall risk of a portfolio that also contains equity ETFs. 

Having a defensive allocation like VAF can be particularly valuable in retirement because it provides an asset that can potentially be drawn on during periods of share-market weakness, reducing the need to sell shares when prices are depressed. 

While VAF is unlikely to deliver the same long-term growth as shares, it is a useful counterbalance to the higher risk and growth potential of equity investments.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

The final complement to superannuation is the VGS fund. 

It provides broad exposure to international shares, particularly companies across major developed markets outside Australia. 

Its main purpose is to provide long-term growth and diversification, reducing reliance on the Australian share market, which is relatively concentrated in sectors such as banks and resources. 

This fund gives retirees exposure to a much wider range of global businesses and industries, helping spread investment risk across different economies and markets. 

While its value can fluctuate significantly and it does not provide the same focus on dividend income, it can provide valuable capital growth over the long term. 

This is vital to helping a retirement portfolio keep pace with inflation and supporting income needs further into retirement.

The post 3 ASX ETFs that are a perfect compliment to your superannuation appeared first on The Motley Fool Australia.

$10,000 per month, or $120,000 per year, is roughly double the median full-time Australian wage.

Getting there requires a large amount of capital, a reasonable yield, and the patience to leave both alone.

Here is the actual maths, using three holdings I would happily build that income around.

Three ASX dividend shares to build the income

Telstra Group Ltd (ASX: TLS) is the defensive anchor.

Telstra shares closed Monday at $4.63 and yielded 4.56%, with franking running at roughly 90%.

FY26 delivered EBITDAaL of $8.2 billion and a fresh $1 billion buyback, alongside a full-year dividend of 21 cents per share.

The shares have fallen 7.03% over twelve months and now sit close to their 52-week low of $4.56.

APA Group (ASX: APA) does the heavy lifting on yield.

The company closed at $10.83 with a 5.39% distribution yield and a market capitalisation of $14.42 billion.

FY26 underlying EBITDA rose 8.3% to $2,183 million and free cash flow increased 3.2% to $1,118 million.

The FY26 distribution was 58.0 cents per security, and management has guided to 59.0 cents in FY27.

The important caveat is that APA's distributions are only partially franked, at around 31%.

Vanguard Australian Shares High Yield ETF (ASX: VHY) provides the diversification.

It holds 92 companies led by the major banks and BHP, and Vanguard forecasts a yield of 4.2%, or 5.5% once franking credits are counted.

Units closed Monday at $85.61.

The maths on $10,000 a month

Spread evenly across the three, the cash yield averages 4.72%.

To generate $120,000 a year at that rate, you need roughly $2.54 million invested.

Franking credits change the picture slightly.

With franking credits taken into account, Telstra's payout grosses up to about 6.33% and APA's to roughly 6.11%, while VHY reaches 5.5%.

The blended grossed-up yield is close to 5.98%, which brings the capital requirement down to about $2.01 million.

Whether you can actually use those credits depends on your marginal tax rate, and for many retirees in pension phase they are refundable in full.

Why these ASX dividend shares and not the banks

The instinct for most income investors is to buy the big four and stop thinking.

Commonwealth Bank of Australia (ASX: CBA) currently yields 3.21%.

At that rate, $120,000 a year would require $3.74 million.

Telstra and APA are not more exciting businesses than the banks, but they pay materially more per dollar invested.

APA in particular has now raised its distribution for 22 consecutive years, which matters more than any single year's yield.

A payment growing at 1.7% a year, as guided for FY27, is not inflation-beating on its own.

Combined with reinvestment, though, it compounds into something serious across two decades.

What could go wrong

Yield is never a promise.

Telstra shares have fallen 7% over the year, so a stable dividend has still meant a weaker total return.

APA carries substantial debt, which is the standard trade-off in regulated infrastructure and becomes more expensive if the Reserve Bank raises the cash rate on 29 September.

Foolish takeaway

Nobody reaches $10,000 a month in a single step.

The realistic path is contributing consistently, reinvesting every distribution, and letting two decades do the work.

A $2 million portfolio sounds impossible until you model it as thirty years of steady contributions inside a growing market.

These three holdings would form a sensible core for that portfolio.

For anyone building toward that number, ASX dividend shares remain the most straightforward income engine on the local market.

The post How to earn $10,000 in passive income a month with these ASX dividend shares appeared first on The Motley Fool Australia.

Commonwealth Bank (ASX: CBA) is advertising a 12-month term deposit special of 5.15%, whilst Australia's 10-year government bond yield reached around 5.19% on Tuesday, its highest level in 15 years.

The Reserve Bank has held the cash rate at 4.35% since May.

Suddenly, doing nothing pays something.

What cash actually pays right now

CommBank's standard 12-month rate is 4.75%, with a 5.15% special offer available for a limited time.

Shorter terms pay considerably less, at 3.30% for three months and 3.45% for six.

In contrast, Betashares Australian High Interest Cash ETF (ASX: AAA) is the listed alternative.

The ETF holds nothing but deposits with banks, including National Australia Bank (ASX: NAB), Bank of Queensland (ASX: BOQ) and Rabobank, charges 0.18% a year, and currently offers a cash yield net of fees of 4.43%.

Income is paid monthly, and the fund holds roughly $4.9 billion.

The trade-off is a slightly lower rate in exchange for never locking your money away.

What ASX dividend shares pay after tax

This is where the comparison gets interesting.

Vanguard Australian Shares High Yield ETF (ASX: VHY) holds 92 companies led by the major banks and BHP.

Vanguard forecasts a yield of 4.2%, rising to 5.5% once franking credits are counted.

Units closed Monday at $85.61.

On the headline number, the term deposit wins comfortably.

A rate of 5.15% beats 4.2%, and it does so without any chance of losing your capital.

Franking is the thing that changes the maths.

Consider an investor on a 39% marginal rate including the Medicare levy.

The term deposit returns roughly 3.14% after tax.

VHY delivers about 3.36%, because franking credits offset most of the tax on the grossed-up income.

In pension phase, where those credits are fully refundable, VHY returns 5.5% against the term deposit's 5.15%.

Why the margin is thinner than it looks

Two or three tenths of a percentage point is not much reward for taking equity risk.

A term deposit cannot fall in value, but VHY certainly can.

The fund is also heavily concentrated in banks and resources, which are the sectors most exposed to a rate rise.

ANZ Group Holdings Ltd (ASX: ANZ) now expects the Reserve Bank to lift the cash rate to 4.60% in November, and a higher cash rate would push term deposit offers higher again.

The real case for ASX dividend shares

Yield is the wrong reason to own ASX dividend shares at these rates.

Instead, growth is the right reason.

A term deposit pays 5.15% this year and an unknown number next year, but it will never pay you more than the rate you agreed to on the day you signed.

A dividend from a growing business rises over time, and the capital behind it can rise with it.

APA Group (ASX: APA) has now raised its distribution for 22 consecutive years, which no deposit product on earth can match.

Foolish takeaway

If you need the money within two years, take the term deposit.

The certainty is worth more than two tenths of a percentage point.

If you are investing for a decade or more, ASX dividend shares still make more sense, though for reasons that have nothing to do with beating cash this year.

The underlying truth is that cash has become a genuine competitor again.

The post Term deposits are paying more than ever. Are ASX dividend shares still worth it? appeared first on The Motley Fool Australia.

The Reserve Bank of Australia meets on 29 September. Morgan Stanley expects a hike, which would be the first move higher in this cycle.

Most Australians will not think about what that means for their retirement savings. But given the implications, this question is worth five minutes of your time.

How your superannuation has actually performed

The average superannuation fund did well in FY26.

Chant West estimates the median growth fund returned around 9% in FY26, making it a fourth consecutive year of strong returns.

International listed shares did most of the heavy lifting.

Every asset class delivered a positive return over the year with the single exception of Australian real estate investment trusts.

It's important to compare this performance to two broadly-held ASX market ETFs.

Vanguard Australian Shares Index ETF (ASX: VAS) tracks the S&P/ASX 300 Index across 321 securities for a fee of 0.07% a year.

The fund returned 5.79% over the year to 31 July 2026 and 8.92% annually across the past decade.

Vanguard Australian Shares High Yield ETF (ASX: VHY) is far more concentrated, holding 92 companies led by Commonwealth Bank, BHP Group and the other major banks.

Its forecast yield is 4.2%, or 5.5% once franking credits are counted, and it returned 17.87% over the year to 31 July 2026.

What a rate rise would actually do

The Reserve Bank held the cash rate at 4.35% on 11 August.

Its statement left little doubt about the direction of future interest rates.

The Board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if upside risks materialise.

However, not everyone agrees the move comes this month.

For example, Westpac chief economist Luci Ellis sees November as the more likely date.

A hike would hit a superannuation fund in three places.

Bond prices fall when yields rise, so the defensive part of your portfolio takes an immediate mark-to-market hit.

Australian real estate investment trusts and infrastructure assets are repriced lower, because their long-dated cash flows are worth less.

Bank shares face slower credit growth and higher deposit costs, and they are a very large part of the local index.

The parts of your superannuation that would hold up

Not everything suffers.

Cash and term deposit allocations earn more, which helps anyone in a conservative or pension-phase option.

Similarly, resources companies are largely driven by commodity prices rather than domestic rates.

And then there are global equities, which are the biggest single driver of most balanced funds, and which respond to United States policy far more than Australian policy.

What I would not do

Switching your superannuation to cash ahead of a possible rate rise is the classic mistake.

You crystallise any loss, you miss the recovery, and you have to be right twice to come out ahead.

For investors who care about long-term returns, time in the market is much more important than timing the market.

Foolish takeaway

A September rate rise would trim returns, not wreck them.

Bonds and rate-sensitive Australian shares would take the hit, while cash and global equities would cushion it.

If your superannuation sits in a default balanced option and you have twenty years to run, the correct response is almost certainly nothing at all.

If you are drawing an income and are heavily weighted toward bank shares, it may be worth checking your allocation.

Either way, the decision should reflect your time horizon, which is usually much longer term than a single rate decision.

The post Could a September rate hike hurt your superannuation returns? appeared first on The Motley Fool Australia.

VGS offers global exposure and a tilt towards growth, while VHY focuses on high-yielding Australian shares.

So, which Vanguard ETF comes out on top?

VGS: Global growth in one ETF

This popular Vanguard ETF invests in around 1,300 companies across developed markets worldwide.

The US accounts for the bulk of the portfolio, with exposure to countries including Japan, the UK, Canada, France, Switzerland and Germany.

Its largest holdings include NVIDIA, Apple, and Microsoft. That gives investors exposure to some of the world's biggest technology companies, alongside businesses across healthcare, consumer and industrial sectors. 

VGS charges a management fee of 0.18% per year. Over the past 12 months, it has delivered a return of around 7.4%. Over the past 10 years, the Vanguard ETF has returned approximately 184%.

VGS also recently paid a distribution of around 80 cents per unit.

VHY: The dividend-focused alternative

This popular Vanguard ETF takes a completely different approach.

Rather than looking overseas, VHY targets Australian companies with higher forecast dividend yields. Its major holdings include BHP Group Ltd (ASX: BHP), Westpac Banking Corp (ASX: WBC), Rio Tinto Ltd (ASX: RIO) and Telstra Group Ltd (ASX: TLS), alongside other major Australian companies. 

For income-focused investors, that's the major attraction. The fund carries a forecast yield of around 4.2%, rising to approximately 5.5% once franking credits are included.

And VHY hasn't exactly been left behind on performance. It delivered a 7.4% return over the past year and a return of 46% over the past decade. 

VHY charges a 0.25% management fee, slightly more than VGS. Its portfolio also has significant exposure to the Australian banking and resources sectors, meaning investors aren't getting the same geographic or sector diversification offered by VGS.

Which Vanguard ETF wins?

There isn't an obvious winner for every investor. VHY could be the better fit for investors who prioritise regular dividend income and want exposure to established Australian businesses. The potential benefit of franking credits is another attraction for eligible Australian investors.

VGS, meanwhile, offers something VHY simply can't: global diversification and access to sectors such as technology that have a much smaller presence on the Australian share market. 

For an investor focused primarily on long-term capital growth and diversification, I'd give VGS the edge.

But for investors seeking income today, VHY has a compelling proposition.

Ultimately, the better Vanguard ETF depends on whether your priority is global growth or Australian dividend income.

The post VGS vs VHY: Which Vanguard ETF comes out on top? appeared first on The Motley Fool Australia.

A $90,000 income is a realistic target for many Australians.

That level sits just below average full-time earnings, which reached $2,083.70 a week in May 2026, or roughly $108,000 a year before tax.

So what would it actually take to generate $90,000 without working for it?

Why ASX dividend shares can do the job

Australian companies pay out more of their earnings than almost anywhere else in the world.

Franking credits are the reason.

Our system refunds the company tax already paid on dividends, which encourages generous payout ratios and makes ASX dividend shares unusually effective for generating income.

The maths on a $90,000 income

Let us use a real fund rather than a hypothetical portfolio.

Vanguard Australian Shares High Yield ETF (ASX: VHY) tracks the FTSE Australia High Dividend Yield Index.

The ETF holds 92 companies, charges 0.25% a year and manages a little over $8 billion.

The fund carries a forecast yield of 4.2%, or 5.5% once franking credits are included.

At 4.2%, generating $90,000 in cash distributions requires about $2.14 million. On the grossed-up figure of 5.5%, the number falls to roughly $1.64 million.

That difference is entirely franking credits.

These credits arrive as a tax offset rather than as cash in your account, so the answer lies somewhere between those two numbers depending on your marginal rate.

What you would actually own

VHY ETF is concentrated by design.

Its largest holdings are Commonwealth Bank (ASX: CBA), BHP Group (ASX: BHP), Westpac (ASX: WBC), National Australia Bank (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ).

That is a portfolio dominated by the major banks and one very large miner.

Performance has been strong recently, returning 17.87% over the year to 31 July 2026, and 10.22% annually over the past decade.

Distributions are paid quarterly, which suits anyone trying to replace a fortnightly or monthly pay packet.

How long it would take to get there

Someone investing $2,000 a month at VHY's decade-long return of 10.22% would pass $1.6 million in a little over 20 years.

Add a lump sum of $100,000 at the start and that timeline shortens by about three and a half years.

Reinvesting distributions also contributes to the compounding.

Drawing income early slows down your progress because every dollar spent along the way is a dollar that never compounds.

The catch with relying on ASX dividend shares

Dividends are not contractual.

Banks cut them in 2020, and miners cut them whenever commodity prices fall.

A 4.2% yield also assumes you never need to sell units to cover a shortfall.

Inflation is the other problem, and it is the one most income investors underestimate.

With the cash rate held at 4.35% and the Reserve Bank warning that inflation is still too high, a fixed $90,000 buys less every single year.

An income portfolio needs to grow its distributions, not simply pay them.

Foolish takeaway

Somewhere between $1.6 million and $2.1 million is the most representative answer.

That may sound like a large number, and it takes decades of contributions and compounding to reach.

The encouraging part is that you do not need to get there in one leap.

Reinvesting distributions along the way does most of the heavy lifting.

For anyone building toward financial independence, ASX dividend shares remain one of the most practical tools available.

The post How much do you need invested in ASX dividend shares to replace a $90,000 salary? appeared first on The Motley Fool Australia.

Australians have a variety of investment options for generating income in retirement. Bonds, term deposits, dividend shares and property are all options for passive income.

I think shares are best placed to provide good passive income because they can offer both a good dividend yield and rising payouts driven by profit growth.

Term deposits and bonds offer a fixed return, while the net rental yields from residential property are not particularly appealing to me.

So, let's explore using ASX shares to generate the six-figure annual sum.

Retire on $100,000 of income at 60

Every household has different spending requirements and retirement goals, but $100,000 would be a pleasing level of investment income for most households.

If we invest well, someone could start their retirement with $100,000 of income, and those payouts could steadily grow over time.

Investors wanting $100,000 per year will need a sizeable portfolio, with the exact amount depending on the investment portfolio's dividend yield.

If an investor had assets that had an average dividend yield of 5%, they would need a portfolio size of $2 million. If someone wanted to retire on $100,000 per year and they had $1.5 million, we'd be talking about a dividend yield of approximately 6.66%.

Investors may be wondering what sorts of investments could deliver that sort of dividend yield.

Passive dividend income ideas

Many Aussie investors are probably aware of, and perhaps invested in, Vanguard's most popular option, which focuses on ASX shares: Vanguard Australian Shares Index ETF (ASX: VAS). This ASX ETF gives exposure to 300 of the largest businesses on the ASX.

For investors specifically targeting passive income, Vanguard Australian Shares High Yield ETF (ASX: VHY) focuses on larger high-yielding ASX shares.

Other popular options for passive dividend income include Australian Foundation Investment Co Ltd (ASX: AFI) and Argo Investments Ltd (ASX: ARG), two of the largest and oldest listed investment companies (LICs).

The benefit of the four options I mentioned above is that they offer fairly diversified portfolios, with significant exposure to stable, ASX blue-chip shares and sizeable dividend yields.

I think they're all solid options to consider for dividend yields of around 5%. I'd also highlight a couple of real estate investment trusts (REITs), such as Rural Funds Group (ASX: RFF) and Centuria Industrial REIT (ASX: CIP), that have reliable payout records, organic revenue growth, distribution yields of just over 5% and trade at appealing prices.  

But, there are a few stocks that I believe could be compelling options to buy for a dividend yield of approximately 6.7%, while also providing payout consistency (and potentially growth).

Some of the ideas that come to mind include the LICs Future Generation Australia Ltd (ASX: FGX), Future Generation Global Ltd (ASX: FGG) and WCM Global Growth Ltd (ASX: WQG), as well as the REITs Charter Hall Long WALE REIT (ASX: CLW) and Dexus Industria REIT (ASX: DXI).

Some operating Australian companies, such as Telstra Group Ltd (ASX: TLS), are also options to consider for passive income.

The post How much do I need to retire on $100,000 a year at 60? appeared first on The Motley Fool Australia.

The best part is that you don't need to be rich to get started. A little money, plenty of time and some financial education could potentially give your children a serious advantage.

Start early for serious compounding

The first money move is also the simplest: start early.

Compound returns can be a remarkably powerful force when given enough time. For example, investing $200 a month from a child's birth and earning an average annual return of 8% could produce roughly $95,000 by age 18.

That's despite total contributions of less than $47,000. The difference comes from compounding.

Parents looking for a simple approach could consider low-cost ETFs such as the Vanguard MSCI Index International Shares ETF (ASX: VGS) or Vanguard Australian Shares High Yield ETF (ASX: VHY). These can provide exposure to a range of companies without requiring parents or children to identify the next hot stock.

Of course, investing on behalf of a child comes with tax and ownership considerations, so it's worth understanding the rules before getting started.

The bigger lesson? Time in the market could matter far more than trying to pick tomorrow's superstar stock.

Teach them to invest

Saving is great. But if you're teaching your kids about money, stopping at the piggy bank is leaving out half the lesson.

As children get older, explain why businesses make money, what shares actually represent, why prices move and how dividends work.

Even better, let them follow ASX companies they know. If they use a particular product or service, ask them whether they'd want to own part of the business.

The goal isn't to turn an eight-year-old into Warren Buffett. It's to make investing feel understandable rather than intimidating.

A child who learns the basics of long-term investing early could carry those habits into adulthood, potentially becoming a much more confident investor.

Invest in their earning power

Here's the plot twist: the best investment for your child might not be an ASX portfolio at all.

Education, skills and experience can potentially generate returns for decades.

That could mean tutoring, coding lessons, music classes or helping fund university. Developing skills that increase future earning potential could ultimately give your child more money to save and invest themselves.

And that's a pretty powerful compounding loop.

Foolish takeaway

Parents don't need a fortune to give their kids a financial head start.

Starting an ASX portfolio early, teaching children how investing works and helping them build valuable skills could potentially be far more powerful than simply giving them money.

The greatest inheritance might not be a share and ETF portfolio. It could be teaching them how to build one.

The post Your kids could become millionaires: 3 ASX moves to start now appeared first on The Motley Fool Australia.

While many investors target high dividends through investing in individual stocks, there are several reasons ETFs can be a better choice. 

Why target ASX ETFs for passive income?

Dividend ETFs can provide diversification, regular distributions and a relatively hands-off approach to generating income. 

For investors focused on passive income, they can be an attractive alternative to picking individual dividend stocks – particularly when the goal is to build a portfolio designed to produce income over the long term.

An individual company can suddenly cut or suspend its dividend due to falling profits or financial pressures. 

Meanwhile, an ETF spreads your investment across multiple dividend-paying companies, reducing the impact of any one company cutting its payout.

Additionally, some income ETFs pay distributions monthly, providing a more consistent payout. 

With that in mind, here are three great options to consider. 

BetaShares Australian Top 20 Equities Yield Maximiser Complex ETF (ASX: YMAX)

YMAX ETF aims to generate attractive monthly income and reduce the volatility of portfolio returns by implementing an equity income investment strategy over a portfolio of the 20 largest blue-chip shares listed on the ASX. 

YMAX does not aim to track an index.

Its 12-month distribution yield currently sits at 7.3%. 

This means a $10,000 investment would provide passive income of $730 in annual income, or about $61 per month, assuming the yield remains unchanged.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

VHY ETF offers low-cost exposure to a diversified portfolio of ASX-listed companies with higher expected dividend yields. It aims to provide long-term capital growth alongside income, while limiting concentration risk by capping exposure to individual companies and industries.

The current trailing distribution yield is 3.6%, which means a $10,000 investment would generate approximately $360 per year in passive income. 

It is also worth noting this ASX ETF has generated significant capital gains as well. 

The fund has climbed 13% in the last 12 months, and risen by an average of 10.5% per annum over 10 years.

It pays distributions quarterly. 

Betashares Australian Dividend Harvester Fund (ASX: HVST)

Another great option for income investors is this fund from Betashares. 

It aims to provide franked income that exceeds the net income yield of the broad Australian sharemarket on an annual basis, along with exposure to a diversified portfolio of Australian shares.

The fund also offers monthly distributions, creating a more consistent income stream than individual stocks. 

It currently offers an annual distribution return of 5.58%, which would mean an annual income of $558 – or $46.5 per month. 

The post $10,000 invested in these dividend ETFs will bring how much passive income? appeared first on The Motley Fool Australia.

Not "what is the number", but "will this actually last?".

Stopping work at 55 could mean funding 35 years without a pay cheque, which is longer than many people spend working full-time.

However, retiring early remains a core goal for many Australians.

The superannuation number everyone quotes

The figure you will see repeated everywhere is the ASFA Retirement Standard.

Moneysmart puts the lump sum for a comfortable lifestyle at $630,000 for a single person and $730,000 for a couple.

However, that benchmark assumes you finish work at 67 and collect a part Age Pension along the way.

Retire at 55 and you are covering an extra 12 years entirely on your own, with 12 fewer years of contributions and compounding behind you.

So treat the headline figure as a starting point rather than a finish line.

Why your superannuation is only half the plan

Here is the practical wrinkle that catches people out.

Super is preserved until 60 for anyone born from mid-1964 onwards. Your first five years of retirement therefore cannot be funded from your super at all.

Money you plan to spend between 55 and 60 has to sit somewhere you can actually reach.

Which means a second portfolio, in your own name, doing a different job.

Building the bridge

The bridge portfolio has one requirement above all the others, and that is producing cash without forcing you to sell in a bad year.

Selling shares to cover the grocery bill during a market slump is how early retirements sometimes come undone.

Reliable income does the work that forced selling would otherwise have to do, which is why the composition of this portfolio matters as much as its size.

A broad index fund makes a sensible foundation for the years leading up to 55.

The Vanguard Australian Shares Index ETF (ASX: VAS) spreads your money across Australia's largest 300 companies and delivered a gross return of 6.19% in FY26.

For income specifically, the Vanguard Australian Shares High Yield ETF (ASX: VHY) leans towards Australia's larger dividend payers and distributes quarterly.

Then there is the timing of the cash itself, which matters more than most people expect.

To illustrate this point, take Argo Investments Ltd (ASX: ARG). The company recently declared a record fully franked annual dividend of 38.5 cents per share for FY26.

From January 2027, the company moves to four quarterly payments of 10 cents each.

Now that may sound like a minor administrative change, but for somebody living off their portfolio, it is not.

Quarterly income lines up with how households spend, rather than two large payments and a long wait in between.

Argo has paid a dividend every year since 1946, through recessions and crashes alike, which is a track record worth something in itself.

Foolish takeaway

Retiring at 55 needs two pools of money doing two different jobs.

One is super, left alone to compound until you can legally touch it. The other is a portfolio you can draw on from day one.

The post How much superannuation do you need to retire at 55? appeared first on The Motley Fool Australia.

It is not something most investors can create quickly from scratch.

But with time, discipline, and regular investing, it is possible.

Start with the end number

If an investor eventually wants $100,000 a year in passive income and their ASX portfolio yields 5%, the required portfolio size would be $2 million.

But the biggest mistake would be trying to build this portfolio by chasing high dividend yields from day one.

Early in the journey, the priority should usually be capital growth. A portfolio needs to become large before it can produce a large income stream.

That means investors may want to focus first on ASX shares that can compound over time.

These could include global growth shares such as Xero Ltd (ASX: XRO), Pro Medicus Ltd (ASX: PME), Goodman Group (ASX: GMG), REA Group Ltd (ASX: REA), and ResMed Inc (ASX: RMD).

These companies are not necessarily the highest-yielding shares on the ASX. Xero doesn't even pay a dividend. But they have the potential to grow earnings, expand markets, and increase shareholder value over many years.

If the portfolio can generate an average annual return of 10%, which is not guaranteed but a fair target historically, investing $1,000 a month could grow to $2 million in about 30 years.

Alternatively, at $2,000 a month, the timeframe falls to around 23 years. At $3,000 a month, it could be closer to 19 and a half years.

The shift toward passive income

Once the portfolio becomes larger, the focus can gradually move toward dividends.

That does not necessarily mean selling every growth share. It means reshaping the portfolio so that income becomes more important as retirement or financial independence gets closer.

A 5% dividend yield across the portfolio could be achieved through a blend of income-focused investments.

If it were today, it might include a dividend ETF such as the Vanguard Australian Shares High Yield ETF (ASX: VHY), alongside individual ASX dividend shares such as APA Group (ASX: APA), Charter Hall Long WALE REIT (ASX: CLW), Transurban Group (ASX: TCL), Woolworths Group Ltd (ASX: WOW), and Harvey Norman Holdings Ltd (ASX: HVN).

The aim is not to own only the highest-yielding shares. It is to build an income stream supported by different sectors, business models, and cash flow sources.

The real plan

A $100,000 passive income from ASX shares requires a large portfolio, but it is possible.

It can start with regular investing into quality compounders and patience.

Then, as the portfolio grows, investors can slowly shift toward higher-yielding ASX shares and ETFs.

The post How to build a $100,000 passive income with ASX shares appeared first on The Motley Fool Australia.

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.

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.

The post 4 best ASX dividend ETFs of FY26 appeared first on The Motley Fool Australia.

The measures were announced on 12 May 2026 as part of the 2026-27 Federal Budget, and they cleared the Senate in late June.

The changes do not bite until 1 July 2027, which gives investors close to a year to think about what it means.

What the new tax rules actually do

The 50% capital gains tax discount for individuals, trusts and partnerships is being replaced.

In its place comes cost base indexation, plus a minimum 30% tax rate on net capital gains.

Indexation means gains are adjusted for inflation before tax applies, which is broadly how the system worked before 1999.

Critically, this is not a property-only measure.

The rules apply to all CGT assets held by individuals, trusts and partnerships, and that includes ASX shares.

Transitional arrangements limit the damage, since only gains arising on or after 1 July 2027 fall under the new regime.

The separate negative gearing changes are confined to established residential property and do not touch shares.

Why the tax change tilts the scales towards yield

Here is the important part for ASX investors.

Capital gains are getting a less generous treatment. Franked dividends are not.

Franking credits still offset tax at your marginal rate, and the imputation system has not been altered.

For an investor on a marginal rate above 30%, a fully franked dividend now looks relatively more attractive against a long-held capital gain.

The gap is not enormous, but it is there, and it changes the after-tax ranking of growth versus income strategies.

Superannuation is worth a mention too, because the CGT discount for super funds is not currently expected to change.

That widens the after-tax case for holding growth assets inside super rather than in your own name. Here are a few examples of high yield shares or ETFs investors can consider.

Telstra as a franked income holding

Telstra Group Ltd (ASX: TLS) is a natural beneficiary of any rotation towards yield.

The telco lifted its interim dividend 10.5% to 10.5 cents per share, franked at 90.5%.

That came alongside EBITDAaL growth of 4.9% to $4.2 billion and an 8.1% lift in net profit to $1.2 billion. The company's on-market buy-back was also expanded to up to $1.25 billion during the half.

Analysts expect a 21-cent annual dividend for FY26, a yield of around 4.1% at recent prices. Telstra's full-year result is due in August.

Defensive earnings, a growing payout and near-full franking is a combination that suits the new settings well.

VHY for a yield tilt in one trade

Vanguard Australian Shares High Yield ETF (ASX: VHY) offers the same tilt without the single-stock risk.

The fund tracks the FTSE Australia High Dividend Yield Index and charges a management fee of 0.25% per year.

Distributions are paid quarterly.

The ETF's June quarter gross distribution was 56.55 cents per unit, comprising 40.65 cents of cash plus 15.90 cents of franking and foreign tax credits.

The trade-off is concentration, since the index leans heavily on banks, miners and other large dividend payers.

That is a risk if the resources cycle turns.

Foolish takeaway

Tax should never be the only reason to buy or sell a share.

But it is a cost, and a change of this size deserves consideration.

The practical takeaway is not to abandon growth investing. It is to be more deliberate about which assets you hold in which structure.

Growth assets may be better placed inside superannuation, while franked income can do more work in your own name.

The post Growth or yield? These tax rules are reshaping ASX portfolios appeared first on The Motley Fool Australia.

ETFs offer simplicity, passivity, and diversification, which is a hard trio for many to turn down. ETF provider Vanguard is often the first port of call for investors seeking out ETFs or index funds for their retirement. This popular index fund pioneer is famously not-for-profit, and is thus trusted to offer what is usually some of the most competitive pricing in the ETF landscape.

So today, let's talk about how I would build the ultimate retirement portfolio using just three Vanguard ETFs.

A three-ETF Vanguard retirement portfolio

Starting off, we can take a look at the Vanguard Australian Shares High Yield ETF (ASX: VHY). This ETF holds a basket of around 60 of the ASX's best dividend stocks. These stocks are selected based on a few criteria, including their dividend history, franking credit potential, and future income expectations. Some current holdings include Commonwealth Bank, Rio Tinto Ltd (ASX: RIO), Telstra, and Macquarie Group Ltd (ASX: MQG).

This ETF pays out quarterly dividend distributions. These will fluctuate from year to year, but should always be competitive with any ASX income-focused portfolio. Right now, VHY units are trading with a trailing dividend distribution yield of just under 3.5%.

Next, we can throw in the Vanguard International Shares High Yield ETF (ASX: VIHY). This Vanguard ETF is similar in nature to VHY. However, instead of investing in ASX shares, this fund focuses on finding high-yield stocks from other markets around the world. The US contributes a large chunk of these, but other countries like Japan, the UK, Canada, and Taiwan are also represented.

Some of VIHY's individual holdings include Johnson & Johnson, ExxonMobil, Procter & Gamble, and Bank of America.

This ASX ETF also pays quarterly dividend distributions. VIHY hasn't been around for very long, so we only have one payout to analyse. However, if we annualise that payout, we get an indicative yield of 3.58% at current prices.

Don't forget about the bonds

Our final Vanguard ETF to include in our retirement portfolio doesn't track stocks, ASX or international. Instead, the Vanguard Australian Fixed Interest ETF (ASX: VAF) is a fund that tracks a large basket of Australian government bonds. Bonds, also known as fixed-interest investments, are popular amongst retirees thanks to their low-risk nature and guaranteed returns.

Thanks to the interest rate hikes we have seen this year, this ETF is looking unusually attractive. If rates stay high or go up even more, investors might see some payout increases from this Vanguard ETF going forward. I think this fund offers a nice defensive counterweight to the other ETFs in our ultimate retirement portfolio. Like the other funds, VAF pays out quarterly as well, and is currently trading with a trailing yield of 3.24%.

The post Building the ultimate Vanguard ETF retirement portfolio appeared first on The Motley Fool Australia.

However instead of targeting individual stocks, some investors may choose to target income focussed ASX ETFs. 

Why target dividend ETFs?

ASX ETFs that focus on high-dividend shares can be an attractive investment for retirees seeking a reliable source of passive income. 

These specific ETFs typically invest in established Australian companies with a history of paying regular dividends, such as banks, mining companies, and other blue-chip businesses. 

Many of these dividends are also fully or partially franked, which can improve after-tax income for Australian investors. 

By holding a diversified portfolio of income-producing shares, high-yield ETFs can provide retirees with regular cash distributions while reducing the risk associated with relying on a single company for income.

Diversification and lower risk 

Compared with investing in individual dividend-paying shares, high-yield ETFs offer greater diversification and lower investment risk. 

Instead of depending on the financial performance of one or two companies, investors gain exposure to dozens of businesses across different sectors. 

This helps reduce the impact if a company cuts or suspends its dividend, as income from other holdings can help offset the reduction. 

ETFs also require less research and ongoing management than selecting individual shares, making them a more convenient option for retirees who want consistent income without actively monitoring their investments.

If dividend focussed ETFs align with your goals, here are three great options to consider. 

BetaShares Australian Top 20 Equities Yield Maximiser Complex ETF (ASX: YMAX)

This fund aims to generate attractive monthly income and reduce the volatility of portfolio returns by implementing an equity income investment strategy over a portfolio of the 20 largest blue-chip shares listed on the ASX. 

One clear advantage of this fund is its monthly distribution frequency, which is great for those looking for frequent passive income. 

It has consistently offered yields over 9%. 

Vanguard Australian Shares High Yield ETF (ASX: VHY)

This popular fund from Vanguard offers exposure to companies listed on the ASX that have higher forecast dividends relative to other companies.

It includes historically strong dividend-paying companies like banks and miners, which have helped it consistently pay dividends to shareholders. 

It currently offers a yield over 5%. 

BetaShares S&P/ASX 200 Financials Sector ETF (ASX: QFN)

While this ASX ETF is not specifically income focussed, it generates a healthy yield due to its exposure to the financial sector. 

It includes the largest ASX-listed companies in the financial sector, including the 'Big 4' banks and insurance companies but excluding Real Estate Investment Trusts.

These companies have traditionally paid strong yields. 

It currently offers a 12 month gross distribution yield of almost 4%. 

Foolish takeaway 

It's important investors are aware these three ETFs do not necessarily need to be purchased together, as there is significant overlap in their underlying holdings, particularly among large Australian companies and major dividend-paying sectors. 

Instead, these should be viewed as individual options that investors can consider separately depending on their preferred balance of diversification, income generation, and exposure to specific strategies.

The post Why these dividend ETFs are perfect for retirees  appeared first on The Motley Fool Australia.

But, unfortunately, it doesn't happen by accident.

To generate that level of income, investors need the right portfolio size and a mix of holdings that can support payments through different market conditions.

How to build a $50,000 passive income

If you are lucky enough to have $1 million already, then to generate $50,000 in passive income all you would need to do is target a 5% average dividend yield across a portfolio.

But not everyone is so lucky. If you don't have these funds at your disposal, then you will have to play the long game and build up your portfolio.

That could mean investing $1,000 a month into ASX shares and targeting a 10% per annum average return. Doing so would grow a portfolio to $1 million in around 23 years.

What sort of portfolio should you build once you have the funds? Let's dig deeper into things.

Start with a diversified income base

One way to begin is with the Vanguard Australian Shares High Yield ETF (ASX: VHY).

This exchange traded fund (ETF) gives investors exposure to a basket of higher-yielding Australian shares.

The advantage is diversification. Instead of trying to pick every dividend payer individually, investors can use the fund to spread money across a group of income-focused companies.

That can make it a handy foundation for a passive income portfolio.

However, I would not rely on a single ETF alone. A better approach could be to use a high-yield ETF as the base, then add selected ASX dividend shares around it.

Add different sources of income

APA Group (ASX: APA) could be one option.

The company owns energy infrastructure, including gas pipelines, storage, processing assets, and electricity transmission interests. These assets help move energy around the country and can generate cash flows that support distributions.

Charter Hall Long WALE REIT (ASX: CLW) could bring property income into the mix.

Its portfolio is built around long leases to tenants across areas such as government, corporate property, convenience retail, industrial assets, and social infrastructure. Long leases can give investors better visibility over future rent, although interest rates and property valuations remain key risks.

Harvey Norman Holdings Ltd (ASX: HVN) offers a different income angle.

The retailer is exposed to household spending, appliances, furniture, electronics, and the housing cycle. It also owns a significant property portfolio, which gives the business asset backing that many retailers do not have.

Universal Store Holdings Ltd (ASX: UNI) is also cyclical, but it can provide attractive fully franked dividends when trading conditions are supportive.

Its youth fashion focus means the income may not be as defensive as infrastructure or property, but it adds growth potential and a different earnings driver.

Foolish takeaway

I think this shows that a $50,000 annual passive income stream from the ASX is achievable.

It just requires a combination of patience, capital, and discipline. But if you have all three, there's no reason you couldn't generate a meaningful income from the share market.

The post How to build a $50,000 passive income from the ASX appeared first on The Motley Fool Australia.

I think the best place to start is with what an investor wants the fund to achieve.

The three Vanguard ETFs below could each be strong buys for different reasons.

Vanguard Diversified High Growth Index ETF (ASX: VDHG)

Some investors want broad exposure without having to assemble and maintain a collection of shares or funds.

That is where this Vanguard ETF stands out. The VDHG ETF combines Australian shares, international shares, emerging markets, and a smaller allocation to defensive assets inside one investment. Vanguard also handles the rebalancing, so the portfolio does not gradually drift away from its intended structure.

I think that simplicity can be strong over a long holding period.

Investors can keep adding money without having to decide which country or asset class to allocate to next. They also avoid the temptation to keep changing the portfolio whenever one market becomes popular.

The fund still has a growth-focused structure, so its value can fall during weak share market periods. But for someone looking for an all-in-one investment that can sit at the centre of a long-term strategy, I think this ETF is a strong option.

Vanguard MSCI International Small Companies Index ETF (ASX: VISM)

Many global ETFs are dominated by businesses that investors already know.

The VISM ETF looks further down the market. It gives investors exposure to smaller companies across developed markets outside Australia. These businesses operate across a wide range of industries and can include companies serving local markets, specialist niches, and emerging areas of demand.

I like this approach because the world economy extends far beyond the largest technology companies and consumer brands.

Smaller businesses can have more room to expand from their current size, particularly when they find a strong position in a growing market. A broad ETF spreads the investment across many companies rather than relying on one small-cap idea working out.

The trade-off is greater volatility. Smaller companies can be more sensitive to borrowing costs, economic conditions, and changes in investor confidence.

I would consider the VISM ETF as a long-term addition alongside a broader international ETF, especially for investors whose global exposure is concentrated in the market's biggest names.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

The third ETF is aimed more directly at income.

This Vanguard ETF invests in Australian companies selected for their higher dividend yields. That can appeal to retirees and other investors who want their portfolio to produce regular distributions.

Australian companies also have the potential to attach franking credits to their dividends, which may improve the after-tax outcome for eligible investors.

I think the appeal here goes beyond the headline payout. A well-built income strategy can reduce the need to sell shares whenever cash is required.

Investors should still pay attention to where the income comes from. The Australian market has a strong presence from banks and resources companies, and their dividends can rise or fall with profits and economic conditions.

The VHY ETF could therefore suit investors who want higher income and understand that distributions will not remain identical every year.

Foolish takeaway

I think the strongest ETF decisions begin with giving each fund a clear purpose.

One investor may value the convenience of having an entire portfolio managed inside a single ETF. Another may want to widen global exposure beyond the familiar market leaders, while an income investor may place greater weight on distributions.

These Vanguard ETFs cover each of those goals. The right choice will depend on the rest of the portfolio, the investor's time horizon, and how much volatility they are prepared to accept. For long-term investors who understand what they are buying, I think these three ETFs could all be strong choices.

The post Why these Vanguard ETFs could be strong buys appeared first on The Motley Fool Australia.

Here is a summary of the final distributions that investors will receive on Thursday.

The Vanguard Australian Shares Index ETF (ASX: VAS) will pay a dividend of 48.83 cents per unit.

Vanguard Australian Shares High Yield ETF (ASX: VHY) will pay 40.65 cents per unit.

The Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO) will pay 219.69 cents per unit.

Vanguard Australian Fixed Interest Index ETF (ASX: VAF) will pay a dividend of 53.37 cents per unit.

The Vanguard Australian Property Securities Index ETF (ASX: VAP) will pay 147.02 cents per unit.

Vanguard Ethically Conscious Australian Shares ETF (ASX: VETH) will pay 34.38 cents per unit.

Vanguard MSCI Australian Large Companies Index ETF (ASX: VLC) will pay a dividend of 26.66 cents per unit.

What about ETFs holding international shares?

Vanguard MSCI Index International Shares ETF (ASX: VGS) will pay 81.54 cents per unit in dividends.

The currency-hedged version of VGS, Vanguard MSCI Index International Shares (Hedged) ETF (ASX: VGAD), will pay 293.51 cents per unit.

The Vanguard MSCI International Small Companies Index ETF (ASX: VISM) will pay 322.63 cents per unit.

Vanguard S&P 500 US Shares Index ETF (ASX: V500) will pay 11.45 cents per unit.

Vanguard FTSE Europe Shares ETF (ASX: VEQ) will pay 97.49 cents per unit.

The Vanguard Diversified High Growth Index ETF (ASX: VDHG) will pay 121.56 cents per unit.

Vanguard Ethically Conscious International Shares Index ETF (ASX: VESG) will pay 64.40 cents per unit.

Mega dividends

The two biggest payers on Vanguard's mid-year schedule of dividends are as follows.

Vanguard Global Minimum Volatility Active ETF (ASX: VMIN) is an actively managed ETF invested in about 200 international shares.

The ETF aims to deliver lower volatility than the FTSE Global All Cap Index (AUD Hedged), before fees.

VMIN ETF will pay a monster dividend of 377.42 cents per unit.

This is a quarterly distribution.

When Vanguard announced its estimated distributions on 26 June, VMIN closed at $64.32 per unit.

So, this mega dividend amounts to an impressive 5.9% dividend yield for the quarter.

VMIN's unit price has since dropped by the dividend amount, as usual, after going ex-dividend on 1 July.

Vanguard Global Value Equity Active ETF (ASX: VVLU) is also actively managed.

VVLU targets global value stocks drawn mainly from the FTSE Developed All Cap Index and the Russell 3000 Index.

VVLU ETF will pay the largest dollar-amount dividend on Vanguard's schedule at 619.93 cents per unit.

This is also a quarterly distribution.

On 26 June, VVLU ETF closed at $83.19 per unit.

That means today's distribution provides an even more impressive dividend yield of 7.5%.

The post Own Vanguard ASX ETFs? It's dividend payday! appeared first on The Motley Fool Australia.