The 5 Best High Dividend ETFs in Australia: A Full Comparison

For many Australian investors, generating a reliable, passive income stream is a top priority. High dividend ETFs are a popular solution, offering a diversified portfolio of companies that pay higher-than-average income.

But with so many options on the ASX, how do you choose the right one?

In this guide, we break down five of Australia's most popular high-dividend ETFs: VHY, SYI, IHD, RDV, and YMAX. We'll compare their fees, investment strategies, and historical performance to help you decide which one aligns with your income goals.

At a Glance: The 5 Contenders

A high-dividend ETF's name often reveals its primary goal: generating higher income than the broad share market. All five ETFs in this analysis are well-established, pay quarterly distributions, and are widely used by Australian investors.

As you can see, four are passively managed index-trackers with low fees. YMAX is the only active fund, with a higher fee to cover its unique options strategy. VHY is by far the largest, with over $5.7 billion in assets.

The Strategies: How Do They Generate Income?

While all five aim for higher income, their methods differ significantly.

1. VHY: The "Forward-Looking" Approach

Strategy: Tracks the FTSE Australia High Dividend Yield Index. It starts with the ASX Top 200, ranks them by forecasted yield, and selects the top 75.

Verdict: A straightforward, transparent strategy that avoids REITs and applies caps to ensure diversification.

2. SYI: The "Quality & Sustainability" Focus

Strategy: Tracks the MSCI Australia Select High Dividend Yield Index. It uses a blend of historical and forecasted yield, plus "quality screens" to filter out dividend traps (companies with unsustainable yields).

Verdict: Good for investors who want a filter for dividend quality.

3. IHD: The "ESG-Conscious" Choice

Strategy: Follows a similar path but adds an ESG screen to exclude companies involved in severe controversies or specific industries.

Verdict: The best option for alignment with basic ESG principles.

4. RDV: The "Multi-Factor" Model

Strategy: Uses a "Composite Yield Score" based on five qualitative factors. Uniquely, RDV does not exclude REITs.

Verdict: A more qualitative approach that offers a different sector mix.

5. YMAX: The "Covered Call" Income Booster

Strategy: The outlier. It holds the ASX Top 20 and sells call options to collect premiums. This boosts income and lowers volatility in flat markets but sacrifices capital growth in bull markets.

Verdict: An income-maximising strategy that works best in flat markets.

The $100K Performance Test (5-Year Case Study)

To compare performance, we used Sharesight to model a real-world scenario: $100,000 invested in each ETF exactly five years ago, with all distributions taken as cash.

Income Performance (Total Dividends Paid)

• SYI: Generated the highest total income.
• YMAX: A strong second place for income.
• VHY: Came in third.

All high-yield funds beat the broad market (VAS) on pure cash flow.

Total Return Performance (Income + Capital Growth)

This includes both the dividends paid AND the growth of the share price. The ranking changed significantly:

• 1st Place: VHY (Vanguard)
• 2nd Place: IHD (iShares)
• 3rd Place: RDV (Russell)

Key Takeaway on YMAX: As expected, YMAX delivered impressive income but its capital gains were significantly lower, dragging down its total return. It could not fully participate in the market's upside.

Conclusion: Which ETF is Right for You?

• For Maximum Total Return: VHY delivered the best balance of income and growth.
• For Maximum Pure Income: SYI and YMAX generated the most cash (but watch YMAX's lower growth).
• For ESG Investors: IHD provides a high-yield option with an ethical screen.

Remember, don't count out a standard index fund like VAS. While not "high yield," its total return was competitive and it offers broader diversification.