2020 has brought some of the most painful times to ASX investors in a long time. Although the S&P/ASX 200 Index (ASX: XJO) has recovered substantially from the lows we saw in March, the markets are still down heavily for the year and we are by no means out of the woods yet.
Unfortunately for many conservative investors and retirees, 2020 also looks set to be defined by the reduction or even absence of dividend payments.
We already know that investors should not be expecting too much in the way of dividend cheques from the likes of Qantas Airways Limited (ASX: QAN). Just this morning, Sydney Airport Holdings Pty Ltd (ASX: SYD) announced its interim dividend for 2020 will be cancelled.
And investors have already been warned by the Australian Prudential Regulatory Authority (APRA) that the big ASX banks like Commonwealth Bank of Australia (ASX: CBA) won't be shelling out nearly as much cash in dividends as investors are used to.
Needless to say, income investors are facing a whole new ballgame than they were just 3 months ago.
So where does one invest for income in 2020 then? There's not a lot of certainty in the markets right now – Sydney Airport was supposed to be one of the 'safest' dividend shares on the markets, after all.
All for one and one for all
I think one of the best bets for ASX dividend income in 2020 isn't one share – it's every ASX share! More specifically, it's an exchange-traded fund (ETF) that holds 300 of the largest ASX companies.
The Vanguard Australian Shares Index ETF (ASX: VAS) is that fund. VAS holds every dividend-paying blue-chip on the ASX in a manner that's proportional to each company's size.
So you are getting everything from CSL Limited (ASX: CSL) to Westpac Banking Corp (ASX: WBC) and Rio Tinto Limited (ASX: RIO). Woolworths Group Ltd (ASX: WOW) to Telstra Corporation Ltd (ASX: TLS).
Not only that, but you are also buying up-and-comers like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) that might be the dividend blue-chips of tomorrow.
ETFs are required to pass on all dividend payments their holdings payout to its own unitholders. That means that you are also getting a weighted average of every dividend payment that any top 300 company pays.
We don't yet know how many ASX shares will pay dividends in 2020. But if you hold a market-wide ETF life VAS, you will get whatever is on offer! That's why I think VAS (or any other ASX-tracking ETF) is a great option for dividend income in these uncertain times.
