Targeting high dividends and low costs


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A reliable dividend payment is attractive in these volatile times. For most investors it comes from investing directly in shares or indirectly via managed funds.

There's another sort of investment that pays dividends: an exchange-traded fund (ETF). With the somewhat cumbersome moniker SPDR MSCI Australia Select High Dividend Yield ETF, it specifically tracks Australian shares that pay higher than average dividends.

It was launched by State Street Global Advisors, the group behind the first ETFs on the Australian sharemarket almost 10 years ago. SSgA's original three ETFs command 80% of the Australian ETF market by value.

Its new ETF has plenty of attractive features. It uses an MSCI Index to track down high dividend-paying Australian companies and pays a reliable income quarterly. It currently holds 38 companies.

The top 10 are ANZ, Commonwealth Bank, Westpac, NAB, Amcor, Foster's, Telstra, AMP, Brambles and QBE Insurance.

If the market rises, there is also the potential for capital growth. ETFs have low turnover which means lower realised capital gains. ETFs are low-cost and SSgA ETFs offer some of the best value.

Rob Goodlad, SSgA senior managing director in Australia, says the Select High Dividend ETF should appeal to people nearing retirement or anyone looking for a high and reliable income stream because it targets shares that pay higher dividends.

ETFs obviously attract investors as they're one of the fastest-growing retail investment products in Australia with $3.5 billion under management. SSgA is one of the biggest ETF providers in the world with more then $US200 billion in ETF assets.


This High Dividend ETF from experienced group SSgA provides regular income from a broad group of Australian dividend-paying shares. It is a great addition to an investment portfolio if you want income. If the market goes up, the value of your investment will rise.

The costs are a low 0.35%pa. This is significantly less than the average of 0.98%pa for a wholesale share managed fund or 1.86%pa for a retail share managed fund.

You must also pay brokerage - use a low-cost broker. It is a liquid investment, easy to buy and sell.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.