Here's the current ASX dividend yield on the Vanguard Australian Shares ETF (VAS)

How much passive income can one expect from this popular index fund?

| More on:
Man holding out Australian dollar notes, symbolising dividends.

Image source: Getty Images

Investors love the Vanguard Australian Shares Index ETF (ASX: VAS) for a number of reasons. After all, it's not usually just one perk that leads an index fund like VAS to the top of the ASX pile in terms of funds under management.

The Vanguard Australian Shares ETF offers investors many advantages, including instant diversification, exposure to a broad range of quality businesses and historically decent capital growth. But one of the largest perks is arguably this index fund's dividend potential.

The VAS exchange-traded fund (ETF) tracks the S&P/ASX 300 Index (ASX: XKO), which means it invests in the largest 300 shares on the ASX by market capitalisation (size). That's everything from Rio Tinto Ltd (ASX: RIO) and ANZ Group Holdings Ltd (ASX: ANZ) to Telstra Group Ltd (ASX: TLS) and Harvey Norman Holdings Limited (ASX: HVN).

The top echelons of the ASX are jam-packed with dividend payers, as you can see above.

This means that the VAS ETF is also jam-packed with those same income-spewing stocks.

In addition to the companies listed above, the VAS ETF also holds and receives dividends from Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Woolworths Group Ltd (ASX: WOW) and Fortescue Ltd (ASX: FMG).

But let's get to the crux of the matter, and work out exactly how much in dividends investors enjoy from the Vanguard Australian Shares ETF.

What is the current ASX dividend yield for the VAS ETF?

As an ETF, VAS can only pay out what it receives in dividend payments from its underlying holdings. As such, the quarterly dividend distributions from the fund tend to fluctuate, depending on what kinds of dividends its constituents are paying out.

So over the past 12 months, VAS has forked out four ASX dividend distributions. The distribution for the March quarter (paid out on 17 April) was worth 84.79 cents per unit. The December quarter payment preceding it was worth 71.62 cents per unit. The September quarter payment came in at $1.29 per unit, while the June quarter's distribution was worth 88.9 cents per unit.

That works out to be a trailing annual total of $3.74 per unit.

At the current VAS unit price of $95.59 (at the time of writing), this gives the ASX ETF a trailing dividend distribution of 3.91%.

Since many of VAS' underlying ASX holdings pay out franked dividends, VAS' own distributions usually come partially franked as well. This also tends to fluctuate from quarter to quarter. But the most recent payment came partially franked at 78.2%.

So that's the kind of dividend yield investors have enjoyed on their Vanguard Australian Shares ETF units over the past 12 months. Not a bad yield for a diversified index fund, one could argue. Let's see what kind of income investors enjoy over the coming 12 months.

Motley Fool contributor Sebastian Bowen has positions in Telstra Group and Vanguard Australian Shares Index ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

A young well-dressed couple at a luxury resort celebrate successful life choices.
ETFs

Buy and hold these fantastic ASX ETFs until 2035

Let's see why these funds could be long term wealth generators.

Read more »

ETF in written in different colours with different colour arrows pointing to it.
ETFs

Invest $1,000 into these world-class ASX ETFs

What makes these funds top options? Let's find out.

Read more »

ETF written on cubes sitting on piles of coins.
ETFs

$10,000 invested in ASIA ETF a year ago is now worth…

Betashares Asia Technology Tigers ETF provides appealing geographic diversification beyond the US.

Read more »

Concept image of a finger hovering in front of a buy and sell button in front og a stockmarket graphic.
ETFs

Show no fear: ASX investors increasingly 'focused on opportunities' amid sharemarket volatility

Nabtrade's director of investor behaviour says there has been a change in mindset among Aussie investors.

Read more »

Father and daughter with hands on a small plant.
ETFs

Focused on growth? Here are 3 ASX ETFs to consider

Growth investors must ignore the current market noise about tariffs and focus on the long-term horizon.

Read more »

Happy young couple saving money in piggy bank.
ETFs

Buy these top ASX ETFs for a passive income boost

These funds could be worth a closer look if you are hunting income from the share market.

Read more »

A couple sitting in their living room and checking their finances.
ETFs

Where to invest your first $1,000 – reliable ASX ETFs

Here are some long term options for first time investors 

Read more »

Man holding a calculator with Australian dollar notes, symbolising dividends.
ETFs

$10,000 invested in CRYP ETF a year ago is now worth…

This exchange-traded fund allows investors to gain exposure to cryptocurrency in a different way.

Read more »