If you're building an income portfolio but don't have sufficient funds to maintain a truly diverse portfolio, then exchange traded funds (ETFs) could be the answer.
That's because there are a number of ETFs that have been set up to give investors exposure to a collection of dividend shares.
Two that could be worth considering are listed below:
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Vanguard Australian Shares High Yield ETF (ASX: VHY)
The first ASX ETF for income investors to consider is the Vanguard Australian Shares High Yield ETF.
This rules-based ETF provides investors with low-cost exposure to a diverse group of 70+ ASX shares that have higher forecast dividends relative to the market average.
In respect to rules, Vanguard restricts the proportion invested in any one industry to 40% and 10% for any one company. Furthermore, Australian Real Estate Investment Trusts (A-REITS) are excluded from the index.
This ultimately means you'll be buying companies as large as BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA), and as small as Dicker Data Ltd (ASX: DDR) and Elders Ltd (ASX: ELD).
The ETF currently trades with an estimated forward dividend yield of 5.5%.
BetaShares S&P 500 Yield Maximiser (ASX: UMAX)
Another ASX ETF that could be a great option for income investors is the BetaShares S&P 500 Yield Maximiser.
This ETF has been designed to give investors access to the top 500 companies listed on Wall Street.
However, thanks to its covered call strategy, the actively managed fund is expected to earn quarterly income that is significantly greater than the dividend yield of the underlying share portfolio over the medium term.
Among the companies included in the fund are giants such as Apple, Exxon Mobil, Johnson & Johnson, Microsoft, and Walmart.
As of 31 March, its units were providing investors with a trailing 7.4% distribution yield.
