While the changes from the budget aren't here yet, I'm interested in where people are considering shifting their focus. I feel like there has been a dichotomy between people in the post retirement stage looking for franked income, versus the CGT discount that was more widely available.
I get the default financial adviser spiel has been "put it in bank stocks" but interested in a bit more nuance and thoughtfulness.
Best Income ETFs or Franked Investment Vehicles
mskeggs on 29/05/2026 - 23:29
Comments
Dunno, sounds pretty on brand for Ozbargain advise
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VHY stands for Vehicle High Yield. It's basically an investment vehicle with a high yield and fully franked dividends, although unlike an $80k Mercedes it won't help your career prospects.
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Ah ok, I thought you were recommending PPC (public park cooking), that usually comes with SNP dividends (stealing neighbours power).
I guess it doesn’t carry those 420.69% returns though
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VHY is regarded as the segment leader for an ETF with this focus.
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You don't need to add a disclaimer
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Thanks for the advise.
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Not financial advice. I don't know what I'm doing
If you are under 53 and already have ETFs, stay the course.
If you are under 53 and don't have any ETFs, consider VHY.
If you are between 53-60 and already have ETFs outside of super, consider buying them via ChoicePlus or Member direct using both concessional and non-concessional contributions.
If you are between 53-60 and don't have ETFs, invest in super.
If you are over 60, stay the course.The thinking behind 53 is that ETFs should be invested for at least 7 years.
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The third line about Choiceplus ..I take it you are still triggering a CGT event though right (albeit under the existing rules) .. i.e. you can't just transfer them in to ChoicePlus via, say, CHESS and avoid CGT event?
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Sorry, I wasn't clear. Keep the existing ETFs outside of super (they are grandfathered to the 50% CGT discount) and buy new units through ChoicePlus. Sell your ETFs (outside super) after retirement.
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ah yep .. the only thing is that with the existing ETFs, only the capital gain portion pre-1/7/27 will be grandfathered. Gains on those ETFs made from 1/7/27 will be taxed under the new system.
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I'm still waiting for the final budget to be approved before making any changes.
Otherwise, I'll keep the same ETF portfolio, but likely raise my AU allocation higher for higher dividend income/franked dividends. Likely something simple like VAS/A200. Likely only max 30-40% though, nothing too high.
I'm not sure if it's worth moving entirely to a dividend based ETF at this stage, would need to run the numbers.
Might be worth reading this as well which suggest not changing anything at all:
https://www.betashares.com.au/insights/fed-budget-investment…- 6
No you must panic, sell everything, and then blame the government for making you panic sell
- -1
Ppl in retirement are usually trying to de-risk their investments by chasing yield (dividends or coupons) instead of growth, as they don’t necessarily have the time horizons where a correction (ie growth = risk) can really hurt them rather than being a proverbial blip in the road.
The other factor with franking is its for Australian derived income only (eg. ANZ can only pay franking on returns made in Australia. Not overseas), and it also acts as a huge incentive for Australian companies to pay dividends with an attached franking coupon rather than reinvest in the company (which gives you growth), as it gives their shareholders a higher dividend without the associated profit growth.
The last bit is if you want to go with ETFs and chase growth you’re often betting on entire economies/countries, meaning you’ll likely want to look elsewhere as Australian economic growth isn’t great, and franking means we reward paying out profits, rather than reinvesting them like say the Americans who despite their questionable leadership are still outgrowing the rest of us, and have system that rewards growth (e.g. they’ll more likely do buy-backs with their profits to raise share prices than pay a dividend).
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I hear China has the best growth. Nigeria is country to look at for the next half century.
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Franked Investment Vehicles
Is that like an $80K high yield investment vehicle?
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A franked dividend is like a deal where the company already paid part of your tax at checkout. If your personal tax rate is lower than the company tax paid, ATO may give you the difference back. If your tax rate is higher, you top it up. not a freebie. The dividend still counts as income.
Franked investment = cashback on tax already paid.
Example:
* Company pays you $70 dividend
* It also gives $30 franking credit
* Tax office treats you as earning $100 income
* But you already have $30 tax credit- 5
Now we're talking.
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I will do what I've been doing for the last 88 years, which is investing in good quality businesses.
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I will do what I've been doing for the last 88 years, which is investing in good quality businesses
At what age was your first investment in good quality businesses?
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at 87
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If the budget goes ahead as anticipated, I'll be putting more money into Australian income/dividend ETF and global high growth stocks
At the same time I'll reducing my non-income investments in Australia, especially small caps, exploratory miners, IT/software, and other high growth stocks.
Obligatory not financial advice message.
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more money into.. global high growth stocks…
…at the same time I'll reducing my non-income investments in AustraliaWhy increasing global growth stocks and reducing local growth stocks?
You will be taxed the same on both unless you're hiding overseas capital gains from the ATO.
Or do you expect the spread between Australian growth stocks performance and global growth stocks to worsen? Or something else?- 1
My situation might be somewhat different to a lot of people. I'm unable to work at the moment due to illness and caring for a family member. I'm way under the income tax threshold, and not receiving a pension, I'm surviving mostly on a mixture of savings, dividends, and selling off some growth stocks. The 30% CGT minimum will hit me relatively hard.
As for investment strategies, I think Australian growth stocks might be less popular compared to dividend stocks, since the risk-reward looks worse now. People might be wondering why bet on small local companies when the government takes 30% minimum. If less investors buy them, the lower the share price might be. US growth shares just seem to grow much faster too, so if you're going to take risk, they might be the better bet. If this budget goes ahead, I'm planning to sell my local growth stocks with unrealised gains before July 2027, hold the ones with losses for now, and buy more local dividend stocks plus global growth shares
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"The 30% CGT minimum will hit me relatively hard."
Struggling to understand this.
Working through an example -
First let's assume that dividends, bank interest and other income use up the $18k tax threshold and that therefore your marginal tax applying to your capital gains is 14c in the dollar
Second, let's assume in this example that you are declaring capital gains of $10000 because you bought shares on 1 July 2027 for $25000 and sold them for $35000 on 30 June 2032.
Third, you are declaring the gains in 2033-34 and the gains were all made in the 5 years 2027-28 to 2031-32 and we assume that inflation over those 5 years is year is a total of 20%.
(We are ignoring anything up to 1 July 2027 as there is no change until then).
Under the existing system, you would pay 14% tax on $10000 x 0.5 = $700.
Under the new system, you pay 30% tax on the inflation adjusted gain ($35000 - $25000 x 1.2 =$5000) = $1500.
So the difference between old and new in tax on this example is $800.
If you instead assume $20000 in gains (no change to other assumptions), the difference is $1600.
If you. assume $100000 in gains you are well into the 30c in the dollar tax bracket anyway - so no difference above the $45k threshhold.
Yes, vary the inflation and timing and return assumptions and you get better or worse results.
But unless you make heaps of gains in a very short period, the extra tax (if any) does not seem a lot.
And remember that if you assume high capital returns instead of the 8 per cent or so assumed in this example you are into the territory of risky investments and the chances are that some of your capital gains from your good bets will be offset by capital losses from your less successful bets.
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Under the existing system, you would pay 14% tax on $10000 x 0.5 = $700.
Under the new system, you pay 30% tax on the inflation adjusted gain ($35000 - $25000 x 1.2 =$5000) = $1500.
Paying over twice as much tax because they can't control their spending is garbage.
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If you. assume $100000 in gains you are well into the 30c in the dollar tax bracket anyway - so no difference above the $45k threshhold.
Paying tax on 100k under the proposed CGT system is more than what you will pay for 100k under a marginal tax system (and that's without even factoring in the 50% discount).
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@noz: "Paying tax on 100k under the proposed CGT system is more than what you will pay for 100k under a marginal tax system (and that's without even factoring in the 50% discount)."
Interested to see your calculations.
And capital gains have always been taxed "under a marginal tax system".
For a start, any part of the $100k that takes your taxable income above the $45k tax bracket is taxed at 30c in the dollar or more anyway.
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@Ponsonby: Take 100K, ignoring all other deductibles etc:
- with a 30% tax floor, how much tax is someone paying?
- without such a tax floor, how much tax is someone paying?You may also wish to factor in your convenient "18k of dividends, bank interest, and other income" to suit your narrative (even though they may instead have growth stocks with lower dividends, they haven't mentioned how much bank interest they receive, and they haven't mentioned earning any other income).
And capital gains have always been taxed "under a marginal tax system"
You realise we're talking about the future, where a 30% tax floor has been proposed for CG?
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Given the changes to CGT discount the best place to be going forward is join the boomers and go for banks/colesworth/Hellstra. High fully franked divs with low capital growth that will mostly be tax free from inflation.
This is a pretty damn good pro boomer policy masquerading as inter-generational equality.
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Anything in the British Virgin Islands…
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are non British virgins ok?
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no
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British virgins in very scarce supply?
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So are you saying that because the government changed the goalpost, then the game will change?
Funny that!
It may even make the change of goalpost backfire spectacularly in some unintended and unexpected ways!- 1
I mean, yes? Do you think people would be bidding up the price of houses to loss making territory if they didn't hope to make a capital gain? Changing the goalposts then caused the half of the housing appreciation.
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If it was about housing, the CGT discount changes would only apply to housing. It's just a cash grab because they seem unable to control spending other people's money, that's why they've applied it to everything (except foreign investment in renewables, because F Australians).
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If you take $500 from a hard worker and give $100 each to 5 lazy people, you lose 1 vote but gain 5.
Labor in a nutshell.- 0
Poor renters.
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Renters? How so?
I own IP - are you saying I can simply raise rent if my costs go up even if the market prices don't support it?
Or you mean they have to deal with Real Estate agents when they're looking to buy an affordable house? That is annoying, I do agree.
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@DingoBilly: Rents are already going up. Just because of the budget announcements and just because…they can. The budget announcement actually gave them a perfect excuse.
A bit like petrol and diesel going up the minute the americans attacked Iran.
Not because there was a shortage. Just because they could.
Same with rents.- 1
@DingoBilly: The market will support it. There's a shortage of houses for the number of family units in the country already. And most people don't want to join the ranks of the growing homeless class. Even if your current tenants decline and try their luck finding another place, you will have new tenants in lickety-split.
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What about all the capital now looking for more comfortable places overseas? You should see the number of enquiries about that. Enquiries at this stage to work out what to do as soon as the whole thing is actually made real.
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Who is this source of capital that was getting a CGT discount and is now investing elsewhere? I think you might be confused how the CGT discount worked.
Even for local individuals, they can offset inflation.
I don't think we should formulate national tax policy solely to minimise tax for the tiny number of tech bros and crypto shills who need to bail because their investment won't be worth a much long term.- 0
@mskeggs: A lot of small business that can work online without needing a physical presence here are looking at that. Many will not eventually act, but many will.
Others are actively looking at shifting profits overseas. What was the realm of the big sharks is now becoming worth for the smaller players.
The same way you look at shifting your small individual investments to give you income rather than capital to minimise the government tax grab, business have much more at play and are not going to donate to the bottomless waste pit that the government is without exploring every other option. And there are plenty of smart advisors out there to outsmart the government greedy manouvres. That being valid for CGT or trust tax or any other way to change the game.- 1
@Mad Max: You're making a lot of statements about what people are doing and will do, and how all of this is going to circumvent the tax system - and you haven't demonstrated even the smallest piece of tax knowledge about any of this.
Is this knowledge gained and disseminated purely though mates at BBQs and what someone at the pub said?
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I agree housing will be and rightly be hit by these CGT changes.
But can’t say the same for productive, pie growing investments.
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No mate. That's just advertising. Much worse…
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AFI offers fully franked dividends and a DSSP, which works similarly to a DRP but issues shares without an immediate tax liability at acquisition.
It’s also currently trading at a discount to NTA. My view is that AFI could get a bit more attention if the proposed budget changes go through, particularly from investors looking for franked income and tax-efficient reinvestment options.
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Rather than growth vs yield, consider Top 20 and Ex-20 and their divergence, if any, over time; also how much of the index the Top 20 makes over time.
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Full port TQQQ
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Go to a casino and put it all on red.
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my 2cents and this is in no way financial advice VHY is probably the best way to go esp if the f—kwit in power gets his way
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and if they change the franking credit to non-refundable?
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Companies will just stop paying the 'tax' and give a bigger credit leaving you to get a bigger dividend and pay more tax
they dont have to give 'franked' credits, its called unfranked credits.
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Personally- if the changes go ahead as they are, I'll be switching to VHY. I currently hold IVV and VAS and will continue to hold, but all future purchases will be VHY.
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Look at PL8 (active ETF), it pays out monthly fully franked.
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what's the rationale of dividend ETFs when your marginal rate is >30%? you're still paying tax with each distribution. are people doing it for the franking? historically australian dividend plays haven't had great returns. the only advantage I can think of would be if you debt recycle with dividends accelerating your investment
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I think the idea is smaller predictable returns are better for tax than going for growth stocks and selling a big whack at once every few years and getting pushed into a higher tax bracket.
And franked dividends already have half the tax paid
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Even if your marginal rate is over 30% it’s still better to get franking credits than no credits at all like bank interest.
You are right that historically high div stocks are low capital return, but now with the first 2-3% tax free (inflation adjustment), those low returns are now seen as tax free returns plus high full franked dividends.
That sounds a whole lot better than a brand new high growth bet that’s fully taxed (minus measly 2-3%) with a min of 30% regardless of income.
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what's the rationale of dividend ETFs when your marginal rate is >30%? you're still paying tax with each distribution. are people doing it for the franking? historically australian dividend plays haven't had great returns. the only advantage I can think of would be if you debt recycle with dividends accelerating your investment
might want to look at the nuclear bomb the changes to CTG will have on anyones growth stocks/ETF returns
not giving financial advise but the f—kwit PM essentially killed the ability to build wealth in investing in growth
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Just remember that high dividends and high yields stocks are not one of the factors that drive long-term stock outperformance.
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I hear ASX: SOL is a good div stock.
- -1
WLE.
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Dividends are not free money
What most people miss is usually an etf like VTS outperforms most dividend paying trash, you can sell down as much as you like whenever you like.
Dividends are a trap
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You may be missing the point. Under the proposed changes, capital gains will be taxed at 30% minimum, regardless of marginal tax bracket. Whereas dividends will have no such minimum.
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You are 100% correct, suffice to say their username checks out ;-)
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this is a bit like negative gearing though where you lose $1 to save 50c if no capital gain. don't chase the dividends alone, if there is no growth, it's a bit like saying I'm not paying tax (yay) because there is no gain (nay) while the dividends continue to get taxed at 47% if you're on top tax bracket
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Nowhere did I say that one should or shouldn't chase dividends alone. I just stated facts, not strategies. Have a look at the comment I replied to .. he/she said "you can sell down as much as you like whenever you like", as if there was no consequence in doing so.
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@noz: I know. I'm not replying to your comment so much as warning the less experienced investors who may overly fixate on dividends when choosing the ETF, which for high income earners may not be the best strategy.
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"Under the proposed changes, capital gains will be taxed at 30% minimum, regardless of marginal tax bracket. Whereas dividends will have no such minimum."
Comments about changing the growth vs dividend preference only have relevance for people with a marginal tax rate below 30% (taxable incomes of $45k or less). Why should the preference of other investors for growth vs dividends be affected by this change?
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Where did I preference anything? I am simply stating a fact, without any preference. If you agree with the person who I replied to that said "you can sell down as much as you like whenever you like" without consequence then you need to go do some research.
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Yes, purely looking for dividends has traditionally been a trap. Now less, so, since the govt is taking away the incentive to chase growth stocks. Worse, your capitals gains are indexed, but not your capital losses!
I will not be investing in any AU growth businesses any more. All the successfully ones will spin of their 'good' bits into a overseas company I expect. Might pick and choose some specific overseas growth stocks (AI), but it will be much more limited given the CGT rules.
I feel these changes will have the opposite effect of what is being targetted:
- little incentive for the young (or anyone) to start their own business in Australia, CGT rules and incentives are much more generous in other countries. Less companies equals less jobs for the young (to buy their own homes).
- less opportunity to use shares to grow wealth to afford to get into the housing market. Personally, when I was in my 20's I bought shares in packets. When it came time to put down a house deposit I could get the get 50% CGT discount. It was a good way to reach a goal faster than a bank account (it was my decission to take the risk)I am actually OK with the most of the housing changes but involving other assets like shares, will have some far-reaching consequences.
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what if you add negative gearing/debt recycling to the picture as well?
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Fully Franked Securities
This is not a financial advise. DYOR. Past performers may not indicate future performers.
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🖍️🧃 Congratulations on paying attention. Here's your award 🏅
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If you already made enough, I would say look for low risk options and more travelling.
As for me, I still have another 15 years to retire. So, I am putting my whole nest egg into Bitcoin again on Oct 12-14/15.
If I was close to retirement or have retired, I would chase low risk options that gives some dividends or interest
- -4
AI YouTube news videos.
AI Scrap news sites
AI script the video
AI generate the video content from real photos or b roll
AI process it into a complete video
AI upload to YouTube
Get paid from ads.- -7
I hear you loud and clear - we should Vibe code AI
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YouTube plans to label all AI videos.
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Thank profanity for that! Let's hope they also gives us the ability to block AI slop from our feeds.
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I'm sure the YouTube alternative apps will make this possible. Would love to block anything with AI video, voice etc.
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They won't. People are loving the AI slop.
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Till then $$$$$$
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Vanguard VHY or State Street SYI. Australian high dividend ETFs with franking credits.
Disclaimer: not financial advise, contact a licensed financial advicesor.