DIVIDENDS AND TAX
High dividend etfs?
Hi everyone I’m curious for some opinions from the community about high dividend yield etfs? Anyone have any thoughts/suggestions? Kind regards Nunz
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Hey Nunz.
There are quite a few of these around these days, and I’ve invested in one myself a while back. After a while, I decided it made more sense for me to not continue down this path and go with other ETFs instead (simple index funds). Here’s why…
- High dividend ETFs come with higher management fees.
- They come with a much smaller number of stocks in the portfolio (far less diversified than a typical index fund like VAS for example).
- They are also more concentrated in terms of sectors because of the above.
- Aussie shares already provide a very healthy level of income.
- Performance is often less than the index given the smaller portfolio of stocks. So in addition to the above, there is sometimes a performance drag too.
After thinking about the trade-offs a bit more, I decided against the high yield ETF route. Even though I do like receiving a good level of dividend income from my investments that is. Having said that there are probably one or two that are decent options, though I wouldn’t make it a big part of a portfolio given the reduced diversification. Others may see it differently.
Hope that helps, and all the best.
Dave
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