If you are an income investor but not a fan of stock picking, then exchange-traded funds (ETFs) could be for you.
That's because they provide investors with access to large numbers of ASX shares through a single click of the button. This allows you to diversify a portfolio with relative ease.
And the good news for income investors is that there are plenty of options out there for them.
For example, three ASX ETFs that provide investors with a source of income are listed below. Here's what you need to know about them:
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Betashares Australian Top 20 Equity Yield Maximiser Fund (ASX: YMAX)
The Betashares Australian Top 20 Equity Yield Maximiser Fund could be a great option for income investors.
It aims to generate attractive quarterly income and reduce the volatility of portfolio returns. This is achieved by implementing a clever covered call strategy over a portfolio of the 20 largest blue-chip shares listed on the Australian share market.
Betashares recently recommended the ETF as a top option to counter falling dividend yields. Commenting on the covered call strategy, the fund manager noted that "performs well in a neutral or gradually rising market, allowing call options to generate income without stocks being called away too often, as has been seen in recent months."
At present, it trades with a trailing 12-month dividend yield of 7.8%.
BetaShares S&P 500 Yield Maximiser (ASX: UMAX)
If you like the sound of this covered call strategy, then the BetaShares S&P 500 Yield Maximiser could also be worth a closer look.
As with YMAX, this ETF has been designed to squeeze out as much income as possible from the top 500 companies listed on Wall Street using the same covered call strategy. Among its holdings are giants such as Apple, Johnson & Johnson, Microsoft, and Walmart.
At present, this ASX ETF's units are trading with a 12-month trailing 4.5% distribution yield.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
A third ASX ETF for income investors to look at is the Vanguard Australian Shares High Yield ETF.
This ETF doesn't use any clever strategies. Instead, it leverages broker research to find around 70 ASX shares that are forecast to have bigger dividend yields compared to the market average.
But rather than just loading up purely on banks and mining giants, the fund has diversity in mind and its holdings come from all corners of the market.
For example, at present its holdings include BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Dicker Data Ltd (ASX: DDR), and Lottery Corporation Ltd (ASX: TLC).
The Vanguard Australian Shares High Yield ETF currently trades with a dividend yield of 5%.
