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The BetaShares Australian Dividend Harvester Fund (ASX:HVST) is a popular high-yield ASX exchange-traded fund (ETF) sought after by investors aiming for substantial dividend yields. Unlike some ETFs that hold businesses for the long term, the HVST ETF adopts a different approach known as dividend harvesting.
The primary objective of this ASX ETF is to provide investors with franked income that surpasses the net income yield of the broader Australian share market on an annual basis, while also offering exposure to a diversified portfolio of Australian shares. One of its unique features is that it pays out dividend income to investors on a monthly basis, making it attractive to self-managed super funds (SMSFs) and retiree investors who prioritize regular income.
To achieve its goal, the HVST ETF periodically rebalances its portfolio every three months. During each rebalancing, the fund adjusts its exposure to those ASX shares that are expected to yield dividends in the upcoming period. This strategy involves changing the portfolio holdings to capture the next dividend payments.
It's worth noting that the ASX ETF carries an annual management fee of 0.72%, which may be higher compared to other ETFs like the Vanguard Australian Shares Index ETF (ASX:VAS) with a fee of 0.07%.
As for the current dividend yield of the HVST ETF, BetaShares calculates it to be 7.2% based on the 12-month distribution yield as of 30 June 2023. The grossed-up distribution yield, which includes franking credits, stands at 9.8%. However, investors should be cautious about relying solely on past performance to predict future outcomes, as yields may fluctuate.
The ETF's portfolio holdings are subject to regular changes, but the top 10 positions as of 31 March 2023 include well-known ASX dividend stocks such as BHP Group Ltd (ASX: BHP), CSL Limited (ASX:CSL), National Australia Bank Ltd (ASX:NAB), and others.
While the HVST ETF has been effective at harvesting dividends and franking credits over time, it's essential to consider its overall performance. Since the implementation of the current investment strategy in June 2022, the ETF has delivered a total return of 3.1%, encompassing both the dividend and capital return. It's worth noting that the unit price of the HVST ETF has experienced a decline of 23% over the past five years and has decreased around 50% since November 2014.
As with any investment decision, individuals should conduct thorough research, assess their risk tolerance, and consider their investment objectives before investing in the ASX Dividend stocks, including the HVST ETF.
