When it comes to exchange-traded funds (ETFs) on the ASX, the iShares S&P 500 ETF (ASX: IVV) is certainly a heavy hitter. It's not quite the most popular ETF on the ASX. That honour goes to the Vanguard Australian Shares Index ETF (ASX: VAS).
But the iShares S&P 500 ETF is the most popular ETF on the ASX that covers international shares. It even beats out the Vanguard MSCI International Shares Index ETF (ASX: VGS).
There's little doubt that, apart from some good old-fashioned home bias, investors that prefer ASX share-based ETFs enjoy the higher dividends, and franking, that come with them. But what of the S&P 500 ETF?
Well, investors in this ETF also enjoy dividend returns. For an index ETF to be able to pay out dividends, the underlying shares that the ETF owns must also pay out dividends.
The iShares S&P 500 ETF covers the largest 500 companies listed on the United States markets. And many of these companies (though not all) do pay out dividends to their investors. As such, so does the ETF that tracks them.
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Which US shares in the S&P 500 ETF pay dividends?
Let's check out some of this fund's top holdings to illustrate. On the latest figures, the S&P 500 ETF's top 10 holdings are:
- Apple Inc (NASDAQ: AAPL)
- Microsoft Corporation (NASDAQ: MSFT)
- Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)
- Amazon.com Inc (NASDAQ: AMZN)
- Tesla Inc (NASDAQ: TSLA)
- Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B)
- UnitedHealth Group Inc (NYSE: UNH)
- Johnson & Johnson (NYSE: JNJ)
- Exxon Mobil Corp (NYSE: XOM)
- Meta Platforms Inc (NASDAQ: META).
Now, several of these shares do not pay dividends. Those are Alphabet, Meta, Amazon, Tesla, and (famously) Berkshire Hathaway.
But Apple, Microsoft, UnitedHealth, Johnson & Johnson, and Exxon, do. As do many other stalwarts of the S&P 500, such as Coca-Cola Co, Procter & Gamble Co, Visa Inc, and McDonald's Corp.
So yes, since the S&P 500 ETF receives these dividends from holding these stocks, it passes them on in the form of dividend distributions.
So what are these dividend distributions worth? Well, this ETF pays out its income every three months. Its last four dividend distributions, covering the previous 12 months, came to a total of $7.43 per unit.
On the current unit price of $580.57 for the iShares S&P 500 ETF, it has a trailing distribution yield of 1.28%.
That might not be as high as the Vanguard Australian Shares ETF. But it certainly does qualify the iShares S&P 500 ETF as a dividend-paying fund.
The iShares S&P 500 ETF charges a management fee of 0.04% per annum.
