Dividend yields in Australia have taken a noticeable dip, raising concerns among investors seeking stable income. Recent estimates from Betashares indicate that the average dividend yield of the S&P/ASX 200 Index (ASX: XJO) now stands at just over 3.3% per annum, significantly below its long-term average of 4% to 4.5%. This decline is primarily attributed to reduced dividend payments from major sectors such as banking and mining.
According to Cameron Gleeson, senior investment strategist at Betashares, Australia’s reputation as a high-dividend market heavily depends on the performance of its largest banks and mining companies. As these sectors face challenges, the sustainability of overall market dividend yields is increasingly at risk. Over the last two years, dividends at an index level have decreased, coinciding with a decline in earnings yield.
For those seeking reliable dividend income in this shifting landscape, there are options beyond individual stocks. Exchange-traded funds (ETFs) focused on high dividend yields may present an attractive alternative. Below are two ASX-listed ETFs that stand out for their robust dividend yields.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
The Vanguard Australian Shares High Yield ETF (ASX: VHY) is currently the largest dividend-focused ETF in Australia, managing assets worth $56.3 billion. In the 2025 financial year, VHY delivered a total return of 14.88%, surpassing the total return of the ASX 200, which was 13.81%.
VHY aims to replicate the performance of the FTSE Australia High Dividend Yield Index before fees. This index comprises 75 companies, with approximately 70% of its holdings consisting of large-cap stocks from the ASX 200. Notably, real estate investment trusts (REITs) are excluded from this ETF.
The current top holdings include BHP Group Ltd (ASX: BHP) at 10%, Commonwealth Bank of Australia (ASX: CBA) at 9%, Westpac Banking Corp (ASX: WBC) at 7%, and National Australia Bank Ltd (ASX: NAB) at 7%. The ETF also invests 6% in Telstra Group Ltd (ASX: TLS) and 5% each in ANZ Group Holdings Ltd (ASX: ANZ) and Woodside Energy Group Ltd (ASX: WDS).
Vanguard emphasizes that this ETF provides low-cost exposure to companies on the Australian Securities Exchange (ASX) that are expected to offer higher dividends compared to their peers. Investment diversification is maintained by capping the maximum investment in any single industry at 40% and 10% for individual companies. Over the past five years, VHY has achieved an average annual total return of 15.74% before fees and 15.45% after fees. The ten-year average annual total return stands at 9.89% before fees and 9.61% after fees, with an annual management fee of 0.25%.
Betashares S&P Australian Shares High Yield ETF (ASX: HYLD)
Launched recently, the Betashares S&P Australian Shares High Yield ETF (ASX: HYLD) is another appealing option for income-focused investors. Currently, it has net assets totaling $37.5 million. The HYLD ETF aims to track the returns of the S&P/ASX 200 High Yield Select Index before costs, which includes 50 companies.
The top holdings in this ETF feature Westpac and National Australia Bank at 11% each, followed by ANZ Group at 10%, BHP at 9%, and Wesfarmers Ltd (ASX: WES) at 6%. Other notable investments include Macquarie Group Ltd (ASX: MQG) and Telstra, each at 5%.
Betashares highlights that the HYLD ETF distinguishes itself by screening out potential ‘dividend traps’, which are companies expected to pay unsustainably high dividends due to falling stock prices. This strategy aims to enhance the reliability of dividend income for investors. While it is too early to provide long-term performance data for HYLD given its recent launch, the index it tracks has historically achieved an average annual total return of 16.17% over the past five years and 10.1% over the last decade. The management fee for this ETF is also set at 0.25%.
As the landscape for dividend investing evolves, these ETFs present viable options for investors seeking to maintain strong income streams in a fluctuating market.
