Exchange Traded Funds (ETFs) offer an easy way to build a diversified dividend portfolio with a single investment. This guide covers dividend-focused ETFs available to New Zealand investors.
Focus: High-yielding NZ stocks
Typical Yield: 5-7%
Management Fee: ~0.50% p.a.
Holdings: 10-15 NZX-listed companies
Best for: Kiwi investors seeking high dividend income from NZ companies with full imputation credits
Focus: Global dividend stocks
Typical Yield: 2-4%
Management Fee: ~0.40% p.a.
Holdings: 8,000+ global companies
Best for: Diversified global exposure with some dividend income
Focus: Top 50 Australian stocks
Typical Yield: 4-6%
Management Fee: ~0.50% p.a.
Holdings: 50 ASX-listed companies
Best for: Accessing high-yielding Australian dividend stocks with franking credits
Focus: Global stocks excluding certain sectors
Typical Yield: 1-3%
Management Fee: ~0.18% p.a.
Holdings: 1,500+ international companies
Best for: Low-cost global diversification with some dividend income
NZ investors can access international dividend ETFs through platforms like Hatch, Sharesies, and Stake. Popular options include:
| ETF | Ticker | Focus | Yield | Fee |
|---|---|---|---|---|
| Vanguard High Dividend Yield | VYM | US large-cap dividends | ~3% | 0.06% |
| SPDR S&P Dividend ETF | SDY | US dividend aristocrats | ~2.5% | 0.35% |
| iShares Select Dividend ETF | DVY | US high-yield stocks | ~3.5% | 0.38% |
| Vanguard International High Dividend Yield | VYMI | International ex-US | ~4% | 0.22% |
| Schwab US Dividend Equity ETF | SCHD | Quality US dividends | ~3.5% | 0.06% |
Higher yields (5%+) often mean more income but potentially higher risk. Sustainable yields of 3-5% balance income and growth.
Management fees reduce your returns. Look for ETFs with expense ratios under 0.50%. International ETFs often have lower fees than NZ-domiciled funds.
ETFs with 50+ holdings provide better diversification. Consider geographic diversity (NZ, Australia, US, global) for risk management.
NZ ETFs offer imputation credits. Australian ETFs have franking credits. US ETFs face foreign dividend withholding tax (15-30%).
Look for ETFs tracking dividend growth stocks, not just high current yield. Companies that increase dividends annually provide inflation protection.
Choose ETFs with daily trading volume and tight bid-ask spreads. This makes buying and selling easier without significant price impact.
Target Yield: 4.5-5.5% | Risk: Low-Medium
Target Yield: 3-4% | Risk: Medium
Target Yield: 4.5-6% | Risk: Medium-High
While ETFs provide diversification, individual dividend stocks can offer higher yields and full control. Explore our database of NZ dividend stocks.
Official site for NZX-listed ETFs including DIV (NZ Dividend ETF)
Browse all NZX-listed ETFs and their current prices
Learn the fundamentals before choosing between ETFs and individual stocks
Understand tax implications of ETF dividends vs direct shareholding
NZ-domiciled ETFs (like Smartshares) distribute dividends with imputation credits attached, similar to direct shareholding. International ETFs may have foreign withholding tax deducted before you receive dividends.
Most dividend ETFs pay quarterly distributions (every 3 months). Some US ETFs pay monthly. Check the specific ETF's distribution schedule before investing.
Reinvesting dividends (DRIP - Dividend Reinvestment Plan) compounds your returns over time. Most NZ brokers allow automatic reinvestment. This is ideal for long-term wealth building versus taking income now.
On NZX, you can buy a single ETF unit (often $20-50). Platforms like Sharesies and Hatch allow fractional investing, meaning you can start with as little as $5-10.
ETFs provide instant diversification, reducing company-specific risk. However, they still carry market risk. A diversified ETF is generally safer than holding 1-2 individual stocks, but less risky than a concentrated portfolio of 20+ well-researched stocks.