Divide the income you want by the yield. At the Australian market's long-run yield of about 3.5%, $60,000 a year takes roughly $1.71 million. With broad ASX ETFs like VAS and A200 yielding about 3.2% today, it's closer to $1.9 million. Global ETFs such as VGS yield around 1%, so you'd need about $5 million. Higher-yield ETFs cut the number, but a high yield isn't the same as a high return, and you don't have to live on distributions alone.
Living off dividends is the goal for a lot of retirees: groceries, power bills and holidays paid by your investments without touching the capital. In his latest video, financial adviser Joshua Stega works through how much that really takes. Here we've run the same maths using the actual distribution yields of popular ASX ETFs.
The simple formula
Work out the income you need each year, including irregular costs like a new car or home repairs, less any other income such as the Age Pension. Then divide by the yield:
Amount needed = annual income ÷ distribution yield
A 3.5% yield means you need about 28.6 times your income. A 2% yield means 50 times. S&P Dow Jones Indices research found Australian shares averaged a yield of about 4.1% from March 2003 to December 2024, against 2.3% for global shares and 1.9% for US shares. The Australian market was yielding 3.5% at the end of 2024.
What each popular ETF would need
Using each ETF's trailing 12-month cash distributions, here's what $60,000 a year from distributions alone would take:
How much you would need invested, by ETF
| ETF | Type | 12-month yield | Franking | Incl. franking | For $40k | For $60k | For $80k |
|---|---|---|---|---|---|---|---|
| YMAX | Covered call | 8.02% | 50% | 9.74% | $499k | $748k | $998k |
| AYLD | Covered call | 7.50% | 40% | 8.79% | $533k | $800k | $1.07m |
| HVST | Active dividend harvester | 5.68% | 70% | 7.38% | $704k | $1.06m | $1.41m |
| ZYAU | Income ETF | 4.72% | 75% | 6.24% | $847k | $1.27m | $1.69m |
| IHD | Income ETF | 4.23% | 75% | 5.59% | $946k | $1.42m | $1.89m |
| RDV | Income ETF | 4.09% | 80% | 5.49% | $978k | $1.47m | $1.96m |
| VHY | Income ETF | 3.52% | 85% | 4.80% | $1.14m | $1.70m | $2.27m |
| IOZ | Broad Australian shares | 3.32% | 75% | 4.39% | $1.20m | $1.81m | $2.41m |
| STW | Broad Australian shares | 3.29% | 75% | 4.35% | $1.22m | $1.82m | $2.43m |
| A200 | Broad Australian shares | 3.17% | 75% | 4.19% | $1.26m | $1.89m | $2.52m |
| VAS | Broad Australian shares | 3.16% | 75% | 4.18% | $1.27m | $1.90m | $2.53m |
| VGS | Global shares | 1.21% | 0% | 1.21% | $3.31m | $4.96m | $6.61m |
| BGBL | Global shares | 1.16% | 0% | 1.16% | $3.45m | $5.17m | $6.90m |
| IVV | Global shares | 1.02% | 0% | 1.02% | $3.92m | $5.88m | $7.84m |
Trailing 12-month cash distribution yields as at 9 November 2026. Before personal tax. Franking levels are approximate. Past distributions are not a reliable indicator of future distributions.
The gap is huge. The same $60,000 needs about $748k in YMAX, $1.70m in VHY, $1.90m in VAS and $5.88m in IVV. That's why so many income investors lean towards Australian shares and high-yield ETFs. But the smaller numbers at the top of that chart come with trade-offs.
Why the highest yield isn't automatically the best
A yield can rise because the payout grows, or because the price falls. A $10 share paying 35 cents yields 3.5%. If the price halves to $5 and the dividend stays at 35 cents, the yield shows 7%, but you haven't received a cent more, and if the business is struggling that dividend may not last. Telstra, for example, cut its dividend from 31 cents a share for the 2017 financial year to 22 cents the following year, including specials.
ETFs have their own version of this. The two highest yields in our table come from covered call ETFs, YMAX and AYLD. They sell options on their shares to boost income, which caps how much they can rise in strong markets. AYLD doesn't have a five-year record yet, but YMAX and the active dividend harvester HVST do, and both have trailed a plain ASX ETF like VAS over five years despite their much higher yields:
5-year total return vs today’s yield
Notice it cuts both ways. VHY has a higher yield than VAS and has also returned more over five years. Global ETFs like IVV and VGS pay little income but have delivered the highest total returns. The lesson isn't "high yield bad". It's that yield tells you how a return is paid, not how big it is. Our guide to the hidden cost of covered call ETFs goes deeper.
Total return: the part a dividends-only plan ignores
Your return is income plus or minus the change in value. Collect $5,000 in distributions while your units fall $5,000, and you've made nothing. Vanguard's 2026 index chart shows Australian shares returned about 9% a year over the 30 years to June 2026, turning $10,000 into about $133,000 with income reinvested, while international shares returned about 8.6% a year.
That doesn't mean you can withdraw 9% a year. Markets don't deliver their average neatly each year. But it does show how much of the return a dividends-only rule leaves on the table, especially for global shares, which pay out less because many companies reinvest profits or buy back shares.
A lower target: dividends plus planned sales
The assumption that makes the number so big is that every dollar you spend must arrive as a distribution. Joshua's alternative is to mix distributions with planned sales of units.
Say you have $1.5 million and withdraw $60,000 in the first year, a 4% starting rate. At a 3.5% yield the portfolio pays $52,500 and you sell $7,500 of units. That's about $210,000 less than the roughly $1.71 million needed to fund the lot from dividends.
Portfolio needed: dividends only vs dividends plus planned sales
The risk is selling in a falling market, when you have to give up more units to raise the same cash, and poor returns early in retirement hurt most. A cash buffer, a flexible budget and a realistic withdrawal rate all help. Our pension-phase guide covers how to set this up.
Don't forget franking credits
Australian share ETFs pass on franking credits, which eligible investors can use to reduce tax or, in some cases, receive as a refund. That can lift the effective yield meaningfully:
Cash yield vs yield including franking
But the benefit depends on your tax position, so $60,000 in cash distributions isn't automatically $60,000 to spend, and grossed-up figures shouldn't be added blindly to every ETF. See ETF tax and franking credits explained.
Work out your own number
- ETF income calculator: enter your ETFs and amounts to see estimated income and when it's paid.
- Retirement income calculator: test how long a balance could last at different withdrawal rates.
- ETF dividend calendar: see which months each ETF pays.
- High dividend ETFs: compare every income ETF on the ASX.
Common questions
How much do I need to live off ETF dividends in Australia?
Divide the income you need by the yield. For $60,000 a year at the Australian market's long-run yield of about 3.5%, that's about $1.71 million. Broad ASX ETFs like VAS and A200 yield about 3.2% now, which takes about $1.9 million, before personal tax and excluding franking.
Which ASX ETF pays the highest dividend?
Among the ETFs we compared, covered call ETFs YMAX and AYLD had the highest trailing yields, around 7.5% to 8%. They generate part of that income by selling options, which limits their upside, and their 5-year total returns have trailed broad Australian share ETFs.
Is it better to live off dividends or sell ETF units?
Many retirees use both. Taking a mix of distributions and planned sales lets capital growth contribute, so you may need a smaller balance. The trade-off is that selling in a falling market means giving up more units, so a cash buffer and flexible spending help.
Why do global ETFs pay such low dividends?
Many large global companies, especially in the US, reinvest profits or buy back shares instead of paying big dividends. That's why VGS and IVV yield around 1%, even though their total returns have been strong.
Do franking credits count as income?
For eligible Australian investors, franking credits can reduce tax payable or be refunded, which raises your effective after-tax income. The benefit depends on your tax rate and circumstances, so calculate it rather than assuming a fixed boost.
General information only, not personal advice. Sources: ReviewETF distribution data (trailing 12 months to 9 November 2026); TMX Australia funds report (returns to 30 September 2026); S&P Dow Jones Indices dividend yield research; Vanguard 2026 index chart; Telstra annual reports. Watch Joshua's full video and try his calculator on ETF Adviser.
Joshua Stega is a financial adviser with 20 years' experience and the founder of ETF Adviser. He built ReviewETF to make every Australian ETF easy to find and compare.
General information only. It does not take into account your objectives, financial situation or needs. Consider the PDS and TMD before investing. Past performance is not a reliable indicator of future performance. Data as at 30 September 2026.