ASX investors who prioritise steady, predictable dividend income often turn to utility shares or exchange-traded funds (ETFs) that contain them.
After all, utilities are businesses that tend to provide goods and services that we all use on a regular basis. This could be electricity, gas, water, telecommunications, or transport services. As such, their cash flows, and thus dividends, are typically some of the most defensive and dependable you can find on the market.
This makes utility shares very desirable for retirees and other investors who prioritise stability and income from their stock market portfolios rather than high rates of growth or market outperformance.
Whilst the ASX doesn't have any ETFs that are explicitly dedicated to utility stocks, it does have two exchange-traded funds that heavily employ their services to deliver reliable dividend income. Let's dive in.
This ASX ETF from provider BetaShares invests in a portfolio of global shares that are selected for their attractive and sustainable dividend income potential. Some of the utility shares it holds include AT&T, Verizon, Duke Energy, and American Electric Power Co.
Some of its other non-utility holdings are names you may know, too, such as Kraft Heinz, Chevron, JM Smucker Co, and IBM.
This ETF pays out a dividend distribution every three months, which may please some ASX income investors. Over the past 12 months, INCM's four quarterly dividends amounted to 79.2 cents per unit, which gives this ASX ETF a trailing dividend distribution yield of 4.09% at current pricing.
Next up, we have this ASX ETF from State Street Global Advisors. This exchange-traded fund functions similarly to INCM, holding over 100 dividend shares. These hail from multiple countries across the globe. This ETF's stocks are also selected for their dividend sustainability, as well as strong cash flows and defensive nature.
It also holds utility shares like AT&T, Saudi Electric Co, China Railway Group, Canadian Utilities, and our very own APA Group (ASX: APA). In addition, WDIV offers other defensive stocks too, such as Altria, Pfizer, and Amcor.
As is typical on the ASX, WDIV follows a six-month dividend distribution schedule. Over the past 12 months, this ASX ETF's dividend distributions have totaled 88 cents per share. That gives this ETF a trailing dividend distribution yield of 4.39% at current pricing.
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