Best Dividend ETFs for 2027

Here’s our look at some of the best dividend ETFs available to Australian investors heading into 2027. For investors seeking regular income, dividend ETFs can provide exposure to a diversified group of companies that return a portion of their profits to shareholders.

For Australian investors, dividend ETFs can be particularly attractive because Australian company dividends may also include franking credits, potentially increasing the after-tax value of the income received.

What Is a Dividend ETF?

A dividend ETF is an Exchange Traded Fund that invests primarily in companies with a history of paying dividends or that are expected to provide higher levels of income.

Rather than buying individual dividend-paying companies, an investor can use one ETF to gain exposure to a diversified portfolio.

Dividend ETFs can be useful for investors seeking:

  • Regular investment income
  • Potential franking credits
  • Exposure to mature and profitable companies
  • Diversification across multiple businesses
  • A simpler alternative to selecting individual dividend shares

What Makes a Good Dividend ETF?

A high yield alone does not necessarily make a good investment.

Investors should also consider:

  • Sustainability of dividends
  • Quality of the underlying companies
  • Diversification
  • Management fees
  • Sector concentration
  • Historical distributions
  • Liquidity
  • Potential franking credits
  • Long-term capital growth

A very high dividend yield can sometimes indicate financial stress, so it is important to look beyond the headline number.

Vanguard Australian Shares High Yield ETF (VHY.ASX)

  • Indicative yield: ~5–6%
  • Fee: 0.25%
  • Distributions: Quarterly
  • Focus: Australian high-dividend shares

 

VHY is one of Australia’s largest and most established dividend-focused ETFs.

It invests in Australian companies with higher forecast dividend yields and typically has significant exposure to sectors such as banking, resources, telecommunications and industrials. The fund also places limits on individual company and sector exposure to help improve diversification. For Australian investors, one of the major attractions is the potential to receive franking credits alongside cash distributions.

Best for: Investors seeking Australian dividend income, potential franking credits and a relatively simple core income holding.

State Street SPDR MSCI Australia Select High Dividend ETF (SYI.ASX)

  • Management cost: 0.20%
  • Distributions: Quarterly
  • Focus: High-yield Australian companies with quality characteristics

 

SYI takes a slightly different approach to simply selecting the highest-yielding companies.

Its underlying index screens Australian companies for relatively high dividends while also considering the sustainability of those dividend payments. This is important because some companies can appear attractive due to a very high yield shortly before reducing their dividend. SYI provides exposure across a range of Australian companies and can be used as either a core income holding or alongside another Australian dividend ETF.

Best for: Investors who want strong dividend income but also place an emphasis on dividend sustainability and company quality.

International Dividend ETFs

Australian dividend investing has historically been heavily influenced by banks and resource companies. Adding an international dividend ETF can help broaden exposure across different industries, countries and currencies. Global dividend ETFs may provide access to sectors that are less prominent in Australia, including:

  • Healthcare
  • Consumer brands
  • Industrials
  • Technology
  • Global financial companies

 

International dividends generally do not provide Australian franking credits, but the additional diversification may still make them useful as part of a broader income portfolio.

Best for: Investors wanting to diversify their income beyond Australian banks and resources.

How to Build a Dividend ETF Portfolio

Many investors combine different dividend ETFs rather than relying on a single fund. A portfolio can include:

Core Australian income

  • Vanguard Australian Shares High Yield ETF VHY.ASX
  • State Street SPDR MSCI Australia Select High Dividend Yield ETF SYI.ASX

    Global diversification

    Add an international dividend ETF to reduce reliance on the Australian market.

Investing for income and impact

When you trade ETFs through Trade for Good, 50% of the brokerage after ASX and clearing costs is donated to charity.

You choose the charity you want to support.

That means your investment activity can help:

  • Generate investment income
  • Build long-term wealth
  • Diversify your portfolio
  • Support causes that matter to you

Your investments remain yours. We simply believe some of the revenue generated from investing can also be used to create positive social impact.

Dividend ETF Risks

Dividend ETFs still carry investment risk.

Investors should consider:

  • Dividends can be reduced or suspended
  • Share prices can fall
  • High dividend yields can sometimes indicate company stress
  • Australian dividend ETFs can have high exposure to banks and resources
  • Commodity cycles can affect resource company dividends
  • Interest-rate changes can affect income-focused investments
  • Past distributions are not guaranteed to continue

Diversification can reduce some risks, but it cannot eliminate market risk.

The Bottom Line

For Australian investors seeking income heading into 2027, VHY and SYI remain two of the strongest dividend ETF options to consider.

VHY.ASX provides straightforward exposure to higher-yielding Australian companies and the potential benefit of franking credits.

SYI.ASX adds an additional emphasis on dividend quality and sustainability.

For investors wanting broader diversification, adding an international dividend ETF can reduce reliance on Australia’s banking and resources sectors. Rather than simply looking for the ETF with the highest yield, investors should focus on whether that income is sustainable.

Important disclaimer: The ETFs discussed above are examples only and are not investment recommendations. Information is general in nature and does not take into account your personal financial circumstances, objectives or needs. ETF yields, fees, holdings and performance can change over time. Always conduct your own research and consider seeking professional financial advice before investing.

*Indicative yields are historical or approximate and can change. Past performance is not a reliable indicator of future performance.

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