Global X S&P/ASX 200 High Dividend ETF
Invest in a selection of quality dividend-paying companies.
The Global X S&P/ASX 200 High Dividend ETF (ASX: ZYAU) invests in 50 high-dividend stocks from the S&P/ASX 200 Index.
ZYAU invests in 50 high dividend-paying companies from the S&P/ASX 200 Index, excluding REITs. ZYAU aims to track, before fees and expenses, the performance of the S&P/ASX 200 High Dividend Index.
- Distributions from ZYAU are paid quarterly and all franking credits received by the fund are passed onto fund investors.
- $97.7 billion dividends were paid out to Australian investors in 2022.1
1 Money Management. (March 2023). Australian dividends hit record high in 2022. Available here: https://www.moneymanagement.com.au/news/funds-management/australian-dividends-hit-record-high-2022
Dividends are arguably the most well-known way to generate a passive income from investing – particularly in Australia. Generally, a company will calculate how much it will pay to shareholders in dividends by the amount of profit they make and then how much they need to retain to keep the business growing. The remainder can be paid out as a dividend. Dividends are generated on a per share basis, meaning the more shares in a company you hold, the more dividends you get.
To generate portfolio income from dividends, it is important to choose companies that are likely to pay up. However, the probability of producing adequate income by picking individual stocks is slim compared to investing in a high dividend ETF. In this way, ZYAU uses strict rules to identify companies in the S&P/ASX 200 Index which are forecast to deliver high dividend yields and then tilts its weightings towards these companies with the highest yields. By extension, these stocks often experience lower volatility. Stocks included in ZYAU may vastly differ from the S&P/ASX 200 Index because many companies in the broader index will not meet the forecast dividend yield requirements. Therefore, ZYAU can offer an element of diversification and enhance a portfolio’s income potential.
The S&P/ASX 200 High Dividend Index is designed to provide investors with a return of 50 high dividend-yielding companies from the S&P/ASX 200 Index based on consensus 12-month forecast dividend yield. To qualify for the index, companies cannot be classified as REITs (according to the GICS sector classification) or rank in the bottom 10% by momentum value.
The index constituents are weighted according to forecast dividend yield multiplied by float market cap, and the number of stocks from each GICS sector capped at 15. The index is only comprised of a maximum of 50 securities, so there is a risk that ZYAU could have a high concentration in a particular security.
- A core exposure to high dividend-yielding Australian equities.
- As a tactical tilt towards dividend yield stocks or towards quality stocks.
- To complement an existing exposure to broad-based Australian equities.
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The issuer of units in Global X S&P/ASX 200 High Dividend ETF (ZYAU) ARSN: 605 617 693 is the responsible entity of the Fund, being Global X Management (AUS) Limited (AFSL 466778) (“Global X”). The product disclosure statement (PDS) for the Fund contains all of the details of the offer of units in the Fund. Copies of the PDS are available from Global X Management (AUS) Limited or at www.globalxetfs.com.au. In respect of each retail product, Global X has prepared a target market determination (TMD) which describes the type of customers who the relevant retail product is likely to be appropriate for. The TMD specifies distribution conditions and restrictions that will help ensure the relevant product is likely to reach customers in the target market. Each TMD is available at www.globalxetfs.com.au. The information provided in this document is general in nature only and does not take into account your personal objectives, financial situations or needs. Before acting on any information in this document, you should consider the appropriateness of the information having regard to your objectives, financial situation or needs and consider seeking independent financial, legal, tax and other relevant advice having regard to your particular circumstances. Any investment decision should only be made after obtaining and considering the relevant PDS and TMD. Investments in any product issued by Global X are subject to investment risk, including possible delays in repayment and loss of income and principal invested. None of Global X, the group of companies which Mirae Asset Global Investments Co., Ltd is the parent, or their respective directors, employees, or agents guarantees the performance of any products issued by Global X or the repayment of capital or any particular rate of return therefrom. The value or return of an investment will fluctuate, and an investor may lose some or all of their investment. Past performance is not a reliable indicator of future performance. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s (“S&P”), a division of the McGraw Hill Companies, Inc. “S&P”, has licensed the use of its trademarks and service marks by Global X. Global X funds are not sponsored, endorsed, sold or promoted by S&P, and S&P does not make any representation regarding the advisability of investing in Global X funds.
Global X ETFs is a leading global ETF provider with a growing range of cost-effective and innovation-led products which are built to help investors and their advisers achieve better investment outcomes. While we are distinguished for our Thematic Growth, Income, and International Access ETFs, we also offer Core, Commodity, and Digital Assets funds to suit a wide range of investment objectives. Explore our ETFs, research, and insights, and more at www.globalxetfs.com.au.
Global X is a member of Mirae Asset Financial Group, a global leader in financial services, with more than US$528 billion in assets under management worldwide.¹ Mirae Asset has an extensive global ETF platform ranging across the US, Australia, Brazil, Canada, Colombia, Europe, Hong Kong, India, Japan, Korea, and Vietnam with almost $100 billion in assets under management.²
¹ Assets under management as at March 2023, Mirae Asset Global Investments
² Assets under management as at June 2023, Mirae Asset Global Investments
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Global X S&P/ASX 200 High Dividend ETF (ASX: ZYAU) pays quarterly distributions at the end of March, June, September, and December. After fees and expenses, the fund receives net income from its underlying investments, which is passed through to investors.
Global X S&P/ASX 200 High Dividend ETF (ASX: ZYAU) can be used as a core exposure to high-yielding Australian equities. The fund can also be used to achieve a tactical tilt towards yield stocks or quality stocks.
Investors can use Global X S&P/ASX 200 High Dividend ETF (ASX: ZYAU) as a core Australian equity instead of a broad market index in portfolios with a yield focus.
Alternatively, the fund can be used in combination with a broad market index. A holding in Global X S&P/ASX 200 High Dividend ETF (ASX: ZYAU) can complement a holding in a fund tracking an index such as the S&P/ASX 200 Index because it has historically had a portfolio with quite different characteristics to the S&P/ASX 200. A blended holding can provide investors with additional diversification benefits while providing yield and quality tilts.
Dividend forecast data is provided by S&P Global Market Intelligence. Forecasts are based on proprietary bottom-up fundamental research from S&P’s analysts.
A "dividend trap" is a stock with a high dividend yield that may appear attractive at first but often will not offer sustainable dividends or can only generate one-off dividend payments due to extenuating circumstances, such as when a stock’s high yield is due to its share price falling, rather than its dividends rising. This happens because dividend yield is calculated as dividends per share divided by the share price – a higher notional yield can be achieved through a lower share price. Meaning, a high yield can reflect the market’s attempt to price-in future dividend cuts.
ZYAU attempts to mitigate this by removing stocks with dividends per share forecast to fall 5% or more. As an additional measure, the index removes stocks with momentum scores falling within the lowest 10% of the S&P/ASX 200—indicating a selloff.
A common concern when buying high yielding stocks is that they may be "yield traps”, or “dividend traps”. This can occur when a notionally high yield owes to the market frontrunning – or anticipating – potential declines in dividend payouts. The role of the momentum filter is to remove companies whose share prices have fallen sharply and suddenly (i.e. with low momentum scores) and thereby make index entry for potential dividend traps more difficult.
Unlike most S&P/ASX 200 Index companies, Australian REITs are legally structured as trusts rather than ordinary shares. This means they are less eligible for franking credits, which are often a consideration for investors buying dividend-focused ETFs like Global X S&P/ASX 200 High Dividend ETF (ASX: ZYAU).
Weighting stocks by dividend yield enables the fund to buy more higher yielding stocks, thereby increasing overall yield potential. Blending this with market capitalisation weighting ensures the fund does not drift too far from the S&P/ASX 200 Index, in turn mitigating the risk of major deviation from the benchmark.
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