The Vanguard Australian Shares Index ETF (ASX: VAS) is a popular way to invest in ASX shares. But, is it an appealing buy for passive income?
It’s able to give investors exposure to the S&P/ASX 300 Index (ASX: XKO), a list of 300 of the biggest businesses on the ASX.
You probably know plenty of businesses inside the VAS ETF’s portfolio like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL), Telstra Group Ltd (ASX: TLS) and many more.
Investors may know that many of the biggest businesses on the ASX are also generous dividend payers, providing shareholders with a nice level of dividends. So, let’s take a look at whether the VAS ETF itself is a good option for dividends.
VAS ETF dividend income
The way an exchange-traded fund (ETF) works is that it passes through the dividends that it receives from its holdings. So, every quarter, the VAS ETF sends the dividends and distributions it has received to investors in the fund.
Vanguard reported that it has a dividend yield of 3.4% as of 30 April 2025 (which doesn’t include the bonus of franking credits).
That yield is decided by the dividend yield of each of the holdings, in respect of their allocation size in the portfolio. In Vanguard’s words, the VAS ETF’s yield is the weighted average equity yield of the shares it holds.
That’s a solid yield for an ETF and is better than what you can get from a typical international shares-based ETF.
Is it a buy?
It doesn’t offer the biggest dividend yield out there, with some real estate investment trusts (REITs) and companies that have higher dividend yields, such as Charter Hall Long WALE REIT (ASX: CLW), Centuria Industrial REIT (ASX: CIP), Dexus Industria REIT (ASX: DXI) and APA Group (ASX: APA).
But, the VAS ETF offers much more diversification than an individual business and it has a great way for Aussies to invest in the ASX share market.
While it hasn’t delivered huge capital growth, it has achieved a bit of growth over time as companies grow their earnings.
For dividend income, the VAS ETF is a good option, though listed investment companies (LICs) can also be effective.
