Investors that are seeking out passive income on the stock market tend to go to dividend shares like Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) as their first port of call. However, using ASX dividend exchange-traded funds (ETFs) for income is a viable alternative.
In fact, ASX dividend ETFs might even be a better option for many income investors. Income-focused funds can provide many advantages for any investor, including inherent diversification, protection against a single stock cutting its dividend, and exposure to a mix of high-yield shares and dividend growth stocks, all in one ticker code.
There are more than a few ASX dividend ETFs. So which to choose? Well, here are two quality options that I would consider buying for income today. One offers a high yield upfront, while the other prioritizes dividend growth.
Image source: Getty Images
2 ASX ETFs to buy for passive income today
Vanguard Australian Shares High Yield ETF (ASX: VHY)
First up, we have the Vanguard Australian Shares High Yield ETF. This Vanguard fund gives investors access to a portfolio of around 70 ASX dividend shares, all selected for their current yields, as well as their perceived ability to fund growing dividends into the future.
Some of VHY's current top holdings include CBA, BHP, the other three major banks, Macquarie Group Ltd (ASX: MQG) and Woodside Energy Group Ltd (ASX: WDS).
This ASX dividend ETF typically pays out four dividend distributions every year, which usually come with plenty of franking credits attached as well. At current prices, VHY is trading on a trailing dividend yield of 5.17%.
VanEck Morningstar Australian Moat Income ETF (ASX: DVDY)
Our second ASX dividend ETF is an offering from VanEck. DVDY functions a little differently from VHY. Instead of around 70 shares, this ASX dividend ETF holds just 25.
These 25 stocks are first assessed for the presence of an economic moat, a Warren Buffett concept that means an intrinsic competitive advantage a company possesses over its competition. They are also assessed for their past, present, and future dividend payment performance.
The provider argues that the presence of this moat should mean that the company will outperform the market over long periods of time.
Some of this ASX dividend ETF's top positions include Macquarie Group, Brambles Ltd (ASX: BXB), Ansell Ltd (ASX: ANN), Charter Hall Group (ASX: CHC) and Computershare Ltd (ASX: CPU).
DVDY units also pay out quarterly dividend distributions. This fund is currently trading on a trailing dividend yield of 3.26%.
