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Does the iShares S&P 500 ETF (IVV) pay dividends?

Here are the dividends investors can expect from the iShares S&P 500 ETF.

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Sebastian Bowen
Sebastian Bowen has been a Motley Fool contributor since late 2018. Sebastian found his passion for writing and educating others about shares and all things finance after completing his studies in political, economic and social science and enjoys bringing this passion to life at the Fool. His investment philosophy is a simple one – buying high-quality companies at prices that make sense. When he’s not researching his next investment at all hours of the morning, Sebastian enjoys classic movies and likes to unwind with a good book, newspaper or record.
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When it comes to exchange-traded funds (ETFs) on the ASX, the iShares S&P 500 ETF (ASX: IVV) is certainly a heavy hitter. It's not quite the most popular ETF on the ASX. That honour goes to the Vanguard Australian Shares Index ETF (ASX: VAS).

But the iShares S&P 500 ETF is the most popular ETF on the ASX that covers international shares. It even beats out the Vanguard MSCI International Shares Index ETF (ASX: VGS).

There's little doubt that, apart from some good old-fashioned home bias, investors that prefer ASX share-based ETFs enjoy the higher dividends, and franking, that come with them. But what of the S&P 500 ETF?

Well, investors in this ETF also enjoy dividend returns. For an index ETF to be able to pay out dividends, the underlying shares that the ETF owns must also pay out dividends.

The iShares S&P 500 ETF covers the largest 500 companies listed on the United States markets. And many of these companies (though not all) do pay out dividends to their investors. As such, so does the ETF that tracks them.

A trendy woman wearing sunglasses splashes cash notes from her hands.

Image source: Getty Images

Which US shares in the S&P 500 ETF pay dividends?

Let's check out some of this fund's top holdings to illustrate. On the latest figures, the S&P 500 ETF's top 10 holdings are:

  1. Apple Inc (NASDAQ: AAPL)
  2. Microsoft Corporation (NASDAQ: MSFT)
  3. Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)
  4. Amazon.com Inc (NASDAQ: AMZN)
  5. Tesla Inc (NASDAQ: TSLA)
  6. Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B)
  7. UnitedHealth Group Inc (NYSE: UNH)
  8. Johnson & Johnson (NYSE: JNJ)
  9. Exxon Mobil Corp (NYSE: XOM)
  10. Meta Platforms Inc (NASDAQ: META).

Now, several of these shares do not pay dividends. Those are Alphabet, Meta, Amazon, Tesla, and (famously) Berkshire Hathaway.

But Apple, Microsoft, UnitedHealth, Johnson & Johnson, and Exxon, do. As do many other stalwarts of the S&P 500, such as Coca-Cola Co, Procter & Gamble Co, Visa Inc, and McDonald's Corp.

So yes, since the S&P 500 ETF receives these dividends from holding these stocks, it passes them on in the form of dividend distributions.

So what are these dividend distributions worth? Well, this ETF pays out its income every three months. Its last four dividend distributions, covering the previous 12 months, came to a total of $7.43 per unit.

On the current unit price of $580.57 for the iShares S&P 500 ETF, it has a trailing distribution yield of 1.28%.

That might not be as high as the Vanguard Australian Shares ETF. But it certainly does qualify the iShares S&P 500 ETF as a dividend-paying fund.

The iShares S&P 500 ETF charges a management fee of 0.04% per annum.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen has positions in Alphabet (A shares), Apple, Coca-Cola, Johnson & Johnson, McDonald's, Meta Platforms, Inc., Microsoft, Procter & Gamble, Tesla, and Visa. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Apple, Meta Platforms, Inc., Microsoft, Tesla, Vanguard MSCI Index International Shares ETF, and Visa. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and UnitedHealth Group and has recommended the following options: long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Apple, Meta Platforms, Inc., Vanguard MSCI Index International Shares ETF, and iShares Trust - iShares Core S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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