What are the best Australian high dividend ETFs of 2022?

We road test 6 of Australia’s best high dividend ETFs, comparing them across 5 factors to reveal our top pick.

A client recently asked us if Stockspot would consider adding a pure ‘dividend themed’ ETF to our portfolios. We thought it was a great question so decided to share our analysis of the best high dividend and income ETFs on the ASX.

What are the best dividend ETFs?

Each year we compare all 250+ ETFs in our Australian ETF Report. Here we road test the best Australian dividend ETFs and global dividend ETFs listed on the ASX. 

We compare them across 5 factors: Size, costs and slippage, liquidity, returns and dividend yield, and track record.

All data in this blog is as of 30 June 2022.

Best Australian high dividend ETFs

  • iShares S&P/ASX High Dividend Yield ETF (IHD)
  • Russell High Dividend Australian Shares ETF (RDV)
  • SPDR MSCI Australia Select High Dividend Yield Fund (SYI)
  • Vanguard Australian Shares High Yield ETF (VHY)
  • ETFS S&P/ASX 300 High Yield Plus ETF (ZYAU)
  • VanEck Morningstar Australian Moat Income ETF (DVDY)

UBS IQ Morningstar Australia Dividend Yield ETF (DIV) was not included as it was removed from the ASX after UBS advised it would be shutting down their ETF offering.

VHY is by far the biggest dividend ETF in the Australian market with ~$2.2b under management. The next largest ETF is a seventh of the size, with IHD managing $276m.

Costs and slippage

VHY is the lowest cost ETF in the category with an annual fee of 0.25%. VHY again comes out on top with the lowest slippage (buy/sell spreads) of 0.05% against its peer group (which averages 0.12%). ZYAU and DVDY have the highest spreads charging 0.16%.


VHY has the most liquidity with $7.3m trading per day. The remaining ETFs are not as liquid given their limited trading activity with SYI trading $1.3m per day while IHD and DVDY both trade almost $300,000 a day.

Returns and dividend yield

Performance is a total return figure which incorporates both the capital return (i.e. the growth) and income return (i.e. dividends). We recently wrote a blog post proposing that a Total Return approach is more appropriate than just focusing on high dividend yield returns.

All dividend paying ETFs fell during the coronavirus market sell off, but the income from the ETFs helped cushion some of the fall.

VHY was the best performer over the last year, returning 19.23% over the year, followed by SYI who has the highest dividend yield. ZYAU was the worst performer down almost 13%.

The dispersion of performance between the high dividend yield ETFs shows the differences in products due to ETF methodology which can ultimately result in holding different stocks and sectors. 2020 was a year when many companies deferred or halted their dividend payments, meaning there was a high level of turnover in the underlying holdings of dividend ETFs.

1 Year Total Return3 Year Total Return (P.A.)5 Year Total Return (P.A.)Dividend Yield
Dividend yield is the trailing (prior) 12 month dividend yield based on ETF price as of 30 June 2022 (not including franking credits). DVDY does not have a 3 and 5 year track record due to being listed in September 2020. Source: ETF Providers and ASX

Track record and holdings

The majority of the dividend ETFs were launched in 2010 and 2011 but all track different indexes. RDV was the first dividend ETF to launch out of the group, and focuses on companies with high expected dividend yield while also having a consistency of earnings and dividend growth.

ZYAU is most recent launch, turning 6 years old. VHY is the most diversified with the largest number of holdings at 64.

IndexIndex history (inception date)
ETF history (inception date)
Number of holdings
IHDS&P ASX Australia Dividend Opportunities Accumulation IndexSeptember 2010December 201049
RDVRussell Australia HighDividend IndexMay 2010

May 201052
SYIMSCI Australia Select HighDividend Yield IndexMay 2010September 201030
VHYFTSE Australia High Dividend Yield IndexApril 2011May 201170
ZYAUS&P/ASX 300 Shareholder Yield IndexDecember 2014June 201541
DVDYMorningstar Australia Dividend Yield Focus IndexJune 2015September 202024

Our latest video reviewing best high dividend ETFs

Stockspot’s verdict

The key difference between the 6 Australian share dividend ETFs is the methodology they use to come up with their underlying holdings. Each one has its own unique definition of what constitutes ‘high dividends’.

For example, ZYAU only allows companies that have enough cash in the business to pay dividends and companies cannot have negative share price growth.

SYI ensures all the companies in the ETF pay higher dividends and franking credits than the broader market. Our chosen ETF, VHY, focuses on companies with higher forecasted yields. 

Given the methodology differences, all these ETFs will have different holdings as shown by the different sector allocations.

VHY is our preferred Australian dividend ETF given its larger size, lower cost, tighter spreads and broader number of holdings. VHY is offered as part of our Stockspot Themes range for clients who are looking to enhance their income and dividends.

Whether you’re saving up for a home, growing your wealth as a couple, investing as a family or with your business partner, Stockspot’s joint accounts can help you get where you want to be.

What are the top active dividend ETFs?

There are 6 active ETFs that focus on dividends and income for Australian shares:

  • BetaShares Australian Dividend Harvester Fund (managed fund) (HVST)
  • BetaShares Legg Mason Equity Income Fund (managed fund) (EINC) and BetaShares Legg Mason Real Income Fund (managed fund) (RINC) 
  • BetaShares Australian Top 20 Equity Yield Maximiser Fund (managed fund) (YMAX)
  • eInvest Income Generator Fund (Managed Fund) (EIGA)
  • InvestSMART Australian Equity Income Fund (Managed Fund) (INIF)
  • Switzer Dividend Growth Fund (Managed Fund) (SWTZ)

Due to their higher fees, active dividend ETFs have underperformed vanilla market tracking index ETF such as the Vanguard Australian Shares Index ETF (VAS) and only marginally outperformed our preferred dividend ETF, VHY.


VASVHYActive income ETFs (avg)
Management Fee0.10%0.25%0.86%
Total Cost of Ownership0.13%0.30%1.34%


VASVHYActive income ETFs (avg)
1 Year Dividend Return6.23%6.07%4.94%
1 Year Capital Return-12.94%-8.14%-9.18%
1 Year Total Return-6.71%-2.07%-4.24%

What are the top global dividend ETFs?

There are far fewer global share dividend focused ETFs. Australian companies are more likely than their global peers to pay out their earnings as dividends to shareholders. 

There are two dividend focused ETFs for global shares:

  • BetaShares Global Income Leaders ETF (INCM)
  • SPDR S&P Global Dividend Fund (WDIV)

Below is a useful comparison of the two:

1 Year Return8.71%2.67%
3 Year Return (p.a.)1.75%2.50%
5 Year Return (p.a.)N/A*5.12%
Dividend yield3.7%5.3%
Number of holdings10094
*INCM was listed in October 2018, so does not have a 5 year return track record.

Should you invest in a dividend harvester ETF ?

Dividend harvesting is a strategy that involves buying shares just before they pay dividends and selling them just after dividends have been paid. At face value this sounds like a very sensible way to collect dividends without having to hang onto shares for too long.

However, like any investment strategy that involves timing your entry and exit points, dividend harvesting has risks. The biggest risk with dividend harvesting is shares tend to fall in price on the day they pay their dividend. Therefore any amount you gain in the dividend is likely to be lost on capital returns.

What one hand giveth the other taketh away

This is precisely what tends to happen with ‘dividend investing’ ETFs – they do well capturing dividends but badly at capturing the gradual increase in share prices over time, which is known as capital returns.

An example: The Betashares Dividend Harvester (HVST)

The Betashares Dividend Harvester (HVST) is an ETF that adopts a ‘dividend harvesting’ strategy. It invests in large ASX shares that are about to pay dividends. Before changing it’s underlying strategy in May 2022, it also sold futures contracts which is a form of hedging to reduce risk.

Over the last 5 years HVST generated a dividend return of around 8% compared to the Australian share market (ASX 300) which returned dividends of ~4%. Sounds too good to be true, right? How does HVST earn much more in dividends?

Dividend harvesting strategies like HVST involve borrowing from future capital returns in order to increase dividends. There is no free lunch, just a different equation.

It would be like if a bank increased the interest rate on your account from 2% to 5% but paid the 3% difference out of the amount you deposited – reducing your initial deposit from $100 to $97.

As you can see, dividend harvesting returns are made-up from capital you invested in the first place.

Are there other income focused ETFs?

There are other ways to focus into dividend shares which don’t involve regularly buying and selling like HVST. There are a range of high yielding ETFs on the ASX that provide higher income and dividends that we have discussed earlier in this article.

For example, VHY doesn’t regularly buy and sell to harvest dividends, it just buys and holds. VHY costs 0.25% in fees compared to HVST which charges 0.72% (down from 0.90% prior to May 2022). That extra 0.47% per year in lower costs is going to boost your returns over many years.

Over the past 5 years, HVST generated income of 8.0% p.a. and a capital loss of -8.5% p.a. so total return of -0.5% p.a.. Over the same period, the Vanguard High Yield ETF (VHY) generated income of 6.0% p.a. and a capital gain of 0.2% p.a. so total return of 6.2% p.a.. In other words, VHY has outperformed HVST by almost 7% p.a.

Vanguard Australian Shares Index ETF (VAS)4.6%2.3%6.9%
Vanguard Australian Shares High Yield ETF (VHY)6.0%0.2%6.2%
Betashares Australian Dividend Harvester Fund (HVST)8.0%-8.5%-0.5%

It’s a good demonstration of how the higher dividend of HVST limits your ability to earn capital returns – an important component of investing in shares.

While most of the ETFs we invest in generate some income via distributions, we don’t offer the specific ‘yield harvesting’ ETF (HVST) mainly because it does lots of buying and selling and has a relatively high fee. Those extra costs are going to drag down returns over the long run compared to lower-cost ETFs with a buy and hold strategy.

We think the Vanguard High Yield ETF (VHY) can help boost dividend returns without giving away the potential for capital returns. This is why we offer VHY as a Stockspot Theme choice for our clients.

Picking the best ETFs doesn’t need to be difficult or time consuming. We build you a smart, personalised ETF portfolio using proven investment strategies to grow your wealth. See our custom portfolio options.

Founder and CEO

Chris has been vocal in calling out the industry 'Fat Cats' and is known for telling it as it is. He was an inaugural member of two Advisory Committees for the industry regulator ASIC, and was previously a fund manager at UBS. He holds a Bachelor of Commerce (Co-op Scholarship) from UNSW.

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