Vanguard Australian Shares High Yield ETF (ASX:VHY) $83.28

The Vanguard Australian Shares High Yield ETF is the homegrown equivalent of its popular US counterparts, a simple, low-cost fund that gives investors exposure to some of Australia’s strongest dividend-paying companies, all without the currency risk that comes with investing offshore. It tracks a specially constructed index of ASX-listed companies forecast to pay above-average dividends, currently holding 87 stocks across sectors like banking, mining, and energy. Well-known names like Commonwealth Bank (ASX: CBA), BHP (ASX: BHP), and Woodside Energy (ASX: WDS) are regular features. The yield is one of VHY’s standout qualities, historically higher than its US equivalents, plus importantly, Australian investors benefit from franking credits on top of that, which can significantly boost the after-tax return for those eligible.

The annual fee is a modest 0.25%, higher than VYM or SCHD but very reasonable for an actively screened Australian income fund. For local investors, VHY ticks a lot of boxes, but the main risk to be aware of is around concentration: Australian dividend stocks are heavily skewed toward banks and resources, so VHY carries more sector risk than a broadly diversified global fund – this is evident at the moment as the banking sector comes under pressure. We remain net bullish through FY26, making this ETF a solid investment. It pays a dividend quarterly and is forecast to yield  ~3.8%, part franked over the next 12-months.

• We like the VHY for yield and potential market outperformance in the coming months/year, but in the short term, weakness towards  $80 feels like a 50-50 possibility.