Top 8 ASX Dividend ETFs Compared: Complete Guide for Income Investors
- Anita Arnold
- Jan 8
- 9 min read
For Australian investors seeking regular income from their portfolios, dividend ETFs offer a straightforward way to access multiple high-yielding companies through a single investment. The ASX hosts numerous dividend-focused ETFs, each with different strategies, fee structures, and franking credit levels.
This educational comparison examines eight popular dividend ETFs available on the ASX, highlighting key differences to help investors understand their options based on individual research and circumstances.
Quick Comparison Table
ETF | Fee | Holdings | Div Yield | Franking | Distribution | Strategy |
VHY | 0.25% | 75 | ~7.9% | 87% | Quarterly | High yield focus |
ZYAU | 0.35% | 50 | ~4.6% | 88% | Quarterly | Forecast yield |
IHD | 0.30% | 50 | ~4.6% | 84% | Quarterly | ESG screened |
RDV | 0.34% | ~50 | ~5.5% | High | Quarterly | High dividend |
SYI | 0.35% | ~50 | ~4.4% | 79% | Quarterly | Select high yield |
HYLD | 0.25% | 50 | ~6.5% | High | Quarterly | Dividend screen |
EINC | 0.85% | 25-50 | Variable | High | Quarterly | Active income |
YMAX | 0.76% | 20 | ~7.6% | 45% | Quarterly | Yield maximiser |
Data as of January 2026. Yields and franking levels vary quarterly.
Understanding Franking Credits
Before examining individual ETFs, investors should understand franking credits—a uniquely Australian tax feature that significantly affects after-tax dividend income.
Franking credits (also called imputation credits) represent tax already paid by Australian companies on profits distributed as dividends. When companies pay corporate tax at 30% and then distribute dividends, Australian resident shareholders receive a credit for the tax already paid.
Example: A company earns $100 profit, pays $30 corporate tax, and distributes $70 as dividends. Shareholders receive:
$70 cash dividend
$30 franking credit (if 100% franked)
Total pre-tax income: $100
For investors, franking credits can be used to reduce personal tax liability or, for those below the tax-free threshold or in super pension phase, refunded as cash. This makes franked dividends significantly more valuable than unfranked income for Australian investors.
The franking percentage shown for each ETF indicates how much of the distributed income includes these tax credits. Higher franking percentages mean greater after-tax value for Australian resident investors.
VHY: Vanguard Australian Shares High Yield ETF
Overview
VHY tracks the FTSE Australia High Dividend Yield Index, focusing on companies forecast to pay higher dividends relative to other ASX-listed companies. As one of the largest and most established dividend ETFs on the ASX, VHY holds approximately 75 companies.
Key Characteristics
Management Fee: 0.25% per annum (among the lowest)
Dividend Yield: Approximately 7.9% (note: 2025 saw exceptional distributions due to portfolio rebalancing)
Franking Level: 87.56% (very high)
Holdings: 75 companies including Commonwealth Bank, Westpac, BHP, and Telstra
Distribution Frequency: Quarterly
What Investors Should Know
VHY experienced unusually high distributions in 2025 (approximately $6.57 per unit) compared to historical patterns ($3.43-$3.98 in previous years). This spike resulted from portfolio rebalancing to maintain index rules limiting industry concentration. Investors should view normalised yields (4-5%) as more sustainable long-term expectations rather than the exceptional 2025 results.
The ETF's 75-stock portfolio provides broader diversification than more concentrated alternatives while maintaining focus on dividend-paying companies across multiple sectors.
ZYAU: Global X S&P/ASX 200 High Dividend ETF
Overview
ZYAU invests in 50 high-dividend stocks from the S&P/ASX 200 Index based on consensus 12-month forecast dividend yield. The fund employs screening to avoid potential dividend traps by removing stocks with forecast dividend declines exceeding 5% and those with low momentum scores.
Key Characteristics
Management Fee: 0.35% per annum
Dividend Yield: Approximately 4.6-5.5%
Franking Level: 82-88%
Holdings: 50 companies including NAB, Westpac, ANZ, and BHP
Distribution Frequency: Quarterly
What Investors Should Know
ZYAU's methodology attempts to identify sustainable dividend payers rather than simply chasing the highest yields. The momentum filter removes companies experiencing sharp price declines, potentially indicating dividend sustainability concerns. This approach may help avoid "yield traps" where high nominal yields result from falling share prices ahead of dividend cuts.
The fund weights holdings by forecast dividend yield multiplied by market capitalisation, creating concentration toward highest-yielding names. Sector limits prevent excessive exposure to any single industry.
IHD: iShares S&P/ASX Dividend Opportunities ETF
Overview
IHD tracks the S&P/ASX Dividend Opportunities Index, which selects 50 ASX-listed stocks offering high dividend yields while meeting diversification, profitability, and tradability requirements. The fund includes ESG screening to avoid companies involved in serious ESG controversies.
Key Characteristics
Management Fee: 0.30% per annum
Dividend Yield: Approximately 4.6-5.4%
Franking Level: 84.55%
Holdings: 50-54 companies with top positions in Westpac, NAB, ANZ, BHP, and Transurban
Distribution Frequency: Quarterly
What Investors Should Know
IHD incorporates ESG considerations alongside dividend focus, screening out companies with significant ESG controversies. This approach may appeal to investors seeking income with ethical considerations, though it potentially excludes some high-yielding sectors.
The fund rebalances semi-annually, adjusting holdings to maintain index composition and sustainability criteria.
RDV: Russell High Dividend Australian Shares ETF
Overview
RDV provides exposure to Australian blue-chip companies with a bias toward high expected dividend yield, tracking the Russell Australia High Dividend Index.
Key Characteristics
Management Fee: 0.34% per annum
Holdings: Approximately 50 Australian companies
Distribution Frequency: Quarterly
Franking Level: Generally high (specific current data varies)
What Investors Should Know
RDV focuses on established large-cap Australian companies with demonstrated dividend-paying capacity. The Russell methodology emphasises dividend sustainability alongside yield, selecting companies with financial strength to maintain payouts.
SYI: SPDR MSCI Australia Select High Dividend Yield Fund
Overview
SYI seeks to provide higher-than-average dividend yield relative to the ASX average by tracking the MSCI Australia Select High Dividend Yield Index.
Key Characteristics
Management Fee: 0.35% per annum
Dividend Yield: Approximately 4.4%
Franking Level: Approximately 79%
Holdings: Approximately 50 companies
Distribution Frequency: Quarterly
What Investors Should Know
SYI employs MSCI's dividend yield methodology, which considers factors beyond simple yield including dividend sustainability and company quality. The moderate franking level (79%) compared to some alternatives (87%+) suggests the portfolio includes some companies with lower franking capacity, potentially REITs or companies with different tax structures.
HYLD: BetaShares S&P Australian Shares High Yield ETF
Overview
HYLD provides exposure to 50 Australian companies with high forecast dividend yields while screening out potential dividend traps through quality and sustainability filters.
Key Characteristics
Management Fee: 0.25% per annum (lowest alongside VHY)
Dividend Yield: Approximately 6.5%
Franking Level: Generally high
Holdings: 50 companies selected from S&P/ASX 200
Distribution Frequency: Quarterly
What Investors Should Know
HYLD employs screening methodology designed to identify high-yield companies while avoiding those at risk of dividend cuts. The fund excludes companies with deteriorating fundamentals or unsustainable payout ratios, attempting to balance yield with quality.
At 0.25%, HYLD matches VHY as the lowest-cost option among dedicated dividend ETFs, making it attractive for cost-conscious investors.
EINC: BetaShares Legg Mason Equity Income Fund
Overview
EINC is an actively managed fund aiming to provide an income stream from high-yielding Australian shares through a concentrated portfolio of 25-50 companies.
Key Characteristics
Management Fee: 0.85% per annum (highest in this comparison)
Holdings: 25-50 companies (actively selected)
Distribution Frequency: Quarterly
Strategy: Active management focused on income generation
What Investors Should Know
As an actively managed fund, EINC carries significantly higher fees (0.85%) compared to passive alternatives (0.25-0.35%). The higher cost reflects active stock selection by portfolio managers attempting to identify attractive income opportunities.
Active management may outperform passive alternatives during certain market conditions, but the higher fee creates a performance hurdle. Investors should evaluate whether active management justifies the additional cost based on historical results and investment philosophy preferences.
YMAX: BetaShares Australian Top 20 Equity Yield Maximiser Fund
Overview
YMAX employs a "covered call" strategy over the 20 largest ASX stocks (S&P/ASX 20) to generate income exceeding the underlying portfolio's dividend yield while potentially reducing volatility.
Key Characteristics
Management Fee: 0.76% per annum
Dividend Yield: Approximately 7.6%
Franking Level: 45-52% (lower due to options income)
Holdings: 20 companies (S&P/ASX 20 constituents)
Distribution Frequency: Quarterly
Strategy: Covered call options strategy
What Investors Should Know
YMAX uses a fundamentally different approach from traditional dividend ETFs. The fund holds the ASX's 20 largest companies and sells call options against these holdings, generating premium income distributed to investors.
This strategy can provide higher income than dividends alone but with important trade-offs:
Potential Benefits:
Enhanced income generation (target exceeds underlying dividend yield)
Potentially lower volatility during sideways or declining markets
Exposure to blue-chip Australian companies
Considerations:
Lower franking (45-52%) because options income isn't franked
Capped upside participation during strong bull markets
Higher management fee (0.76%) reflects strategy complexity
May underperform during sustained market rallies
YMAX suits investors prioritising income over capital growth and comfortable with limited upside participation during strong market advances.
Comparing Fees and Long-Term Costs
Management fees compound over time, significantly impacting long-term wealth accumulation. Here's how costs compare:
Lowest Fees (0.25%): VHY, HYLD
20-year cost on $10,000: ~$550
Mid-Range Fees (0.30-0.35%): IHD, RDV, SYI, ZYAU
20-year cost on $10,000: ~$660-$770
Higher Fees (0.76-0.85%): YMAX, EINC
20-year cost on $10,000: ~$1,650-$1,850
Calculations assume no portfolio growth for comparison purposes.
Lower fees don't guarantee superior returns, but they provide a higher starting point. Actively managed or strategy-based funds (EINC, YMAX) must outperform sufficiently to justify higher costs.
Franking Credits: Impact on After-Tax Returns
Franking levels significantly affect after-tax income for Australian investors. Here's how franking changes effective yields:
High Franking (84-88%): VHY, ZYAU, IHD
$1,000 distribution includes ~$840-$880 franking credits
Gross distribution: ~$1,840-$1,880
Moderate Franking (79%): SYI
$1,000 distribution includes ~$790 franking credits
Gross distribution: ~$1,790
Lower Franking (45-52%): YMAX
$1,000 distribution includes ~$450-$520 franking credits
Gross distribution: ~$1,450-$1,520
For investors in low tax brackets or super pension phase, high franking levels can result in cash refunds, materially boosting after-tax returns. Conversely, YMAX's lower franking (due to unfranked options income) provides less tax benefit despite higher headline yield.
Yield Sustainability Considerations
Dividend yields fluctuate based on:
Company dividend policies: Business performance affects payout capacity
ETF price movements: Yields rise as prices fall, decline as prices rise
Portfolio composition: Index rebalancing changes holdings
Economic conditions: Recessions pressure dividend sustainability
Investors should distinguish between:
Sustainable yields: Supported by company earnings and cash flow
Elevated yields: Resulting from temporary portfolio adjustments or price declines
Yield traps: High yields from falling prices ahead of dividend cuts
VHY's 2025 experience (7.9% yield driven by rebalancing) demonstrates how exceptional circumstances create temporarily elevated distributions. Historical normalised yields (4-5%) provide more realistic expectations.
Distribution Frequency and Reinvestment
All eight ETFs distribute quarterly, providing regular income streams. Investors can typically choose between:
Cash distributions: Receive income directly to bank account Distribution Reinvestment Plans (DRPs): Automatically reinvest distributions to purchase additional units
DRPs compound returns over time through automatic reinvestment but may create tax record-keeping complexity. Cash distributions provide immediate access to income but require manual reinvestment for growth.
Sector Concentrations
Australian dividend ETFs typically concentrate in sectors with strong dividend-paying traditions:
Common High Weightings:
Financials (40-50%): Banks dominate dividend portfolios
Materials (15-25%): Resource companies (BHP, Rio Tinto)
Utilities (5-10%): Infrastructure and energy companies
Telecommunications: Traditional dividend payers
This concentration creates sector-specific risks. Banking sector stress, commodity price declines, or regulatory changes affecting utilities can significantly impact dividend ETF performance.
Investors with existing exposure to banks or resources should consider total portfolio concentration when adding dividend ETFs.
Tax Considerations for Different Investors
Individual Investors (Marginal Tax Rates):
Fully benefit from franking credits
Credits reduce tax payable or generate refunds if below tax-free threshold
Distributions taxed at marginal rates
Superannuation (Accumulation Phase, 15% tax):
Franking credits reduce tax to zero on fully franked income
Excess credits refunded
Highly tax-efficient for super holdings
Superannuation (Pension Phase, 0% tax):
All franking credits refunded as cash
Maximum benefit from franking
Ideal structure for dividend ETF holdings
Foreign Investors:
Generally cannot claim Australian franking credits
Dividend yields less attractive compared to unfranked alternatives
Should consider unhedged international dividend ETFs instead
Portfolio Construction Strategies
Strategy 1: Core Dividend Position
Hold single broad dividend ETF (VHY, ZYAU, or IHD) as core income exposure, complemented by growth-focused holdings.
Strategy 2: Blended Approach
Combine low-cost passive ETF (VHY or HYLD) with income-enhancement strategy (YMAX) for balanced yield and growth participation.
Strategy 3: Quality Focus
Select ETFs with sustainability screens (IHD, ZYAU) to prioritise dividend quality over maximum yield.
Strategy 4: Income Maximisation
Concentrate in highest-yielding options (YMAX, VHY) accepting higher volatility and sector concentration for maximum cash flow.
Summary: Choosing the Right Dividend ETF
No single dividend ETF suits all investors. Selection depends on:
For Cost-Conscious Investors: VHY or HYLD (0.25% fees)
For ESG Considerations: IHD (ESG screening)
For Maximum Franking: VHY, ZYAU (87-88% franking)
For Income Enhancement: YMAX (covered call strategy)
For Active Management: EINC (manager selection)
For Yield Trap Avoidance: ZYAU (momentum screening)
For Broad Diversification: VHY (75 holdings)
For Concentrated Blue-Chip: YMAX (20 largest companies)
Key decision factors include management fees, franking levels, yield sustainability, sector concentration, and alignment with income versus growth objectives.
Educational Disclaimer
This article provides educational information only and does not constitute financial advice, recommendations, or endorsements. It does not consider individual circumstances, objectives, or financial situations.
Dividend ETFs involve risks including market volatility, sector concentration, dividend sustainability risk, and company-specific risks. Past distributions and yields do not indicate future results. Investors may lose capital.
Tax treatment depends on individual circumstances and may change. Franking credit benefits apply only to Australian resident investors. Seek personal tax advice regarding franking credit eligibility and treatment.
Before investing, carefully consider investment objectives, risk tolerance, income needs, and tax position. Always read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) before investing. Consider seeking advice from a licensed financial adviser. Disclaimer: Finer Market Points Pty Ltd, CAR 1304002, AFSL 526688, ABN 87 645 284 680. This general information is educational only and not financial advice, recommendation, forecast or solicitation. Consider your objectives, financial situation and needs before acting. Seek appropriate professional advice. We accept no liability for any loss or damages arising from use.
Data Sources: Vanguard Australia, BetaShares, BlackRock Australia, Global X, SPDR, Russell Investments, ASX data (January 2026)