When it comes to receiving income from the share market, most investors think of individual ASX shares like Commonwealth Bank of Australia (ASX: CBA) or BHP Group Ltd (ASX: BHP). But exchange-traded funds (ETFs) can also be a good source of dividends for investors.
We already know that investing in ETFs can bring a bevvy of benefits, such as easy diversification. But there are many ETFs on the ASX that have the potential to shower investors with dividend income as well. Let's check out three.
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3 ASX ETFs that will pay you nice dividend income
Vanguard Australian Shares High Yield ETF (ASX: VHY)
This ETF from Vanguard specialises in providing high levels of dividend income to its investors. Rather than tracking an entire market-wide index, this ETF holds a concentrated portfolio of around 70 ASX shares. These shares are selected for having "higher forecast dividends relative to other ASX-listed companies".
At present, these include names like CBA, National Australia Bank Ltd (ASX: NAB), Woodside Energy Group Ltd (ASX: WDS) and Transurban Group (ASX: TCL).
The Vanguard High Yield ETF has paid out $4.15 in dividend distributions per share over the past 12 months. On current pricing, that gives this ETF a trailing yield of 6.37%.
BetaShares Nasdaq 100 ETF (ASX: NDQ)
This US-focused ETF is not normally a name that comes up in a discussion about dividend income. But that doesn't mean it's not worth considering. This ETF is an index fund that tracks the American NASDAQ-100 Index (NASDAQ: NDX).
The NASDAQ is one of the two major stock exchanges in the United States and is known for housing most of the US's largest tech companies. As such, you'll find the likes of Microsoft, Apple, Amazon, Tesla, Alphabet, NVIDIA and Netflix amongst this ETF's top holdings.
Many of these shares pay their investors dividends. As such, this ETF receives these dividends and passes them on to its investors in turn. Over the past 12 months, investors have enjoyed distributions totalling 87.26 cents per unit. That gives this ETF a trailing yield of 2.93% on current prices.
Considering this, and the average performance of 15.56% per annum that this ETF has delivered over the past five years, we have an ETF that has the potential for both growth and dividend income.
iShares Global Consumer Staples ETF (ASX: IXI)
Finally, this consumer staples ETF from iShares is worth a look. Consumer staples shares are the companies that produce, manufacture or sell food, drinks, and other household essentials. Vices like alcohol and tobacco also fall within this sector.
This ETF holds a collection of the globe's largest consumer staples shares. In this ETF you'll find names like Nestle, Pepsico, Coca-Cola, L'Oreal, Walmart and Philip Morris International.
These kinds of companies are some of the world's best dividend payers. For example, Coca-Cola is a rare 'dividend king', having not cut its annual dividend for over 50 years. Given the strength of some of these companies, I think this ETF is worth a look for strong and steady income, despite its current trailing yield of 1.76%.
