ASX exchange-traded funds (ETFs) are favored by investors as they provide a straightforward and cost-effective method to gain exposure to diverse assets without purchasing individual stocks.

These ETFs deliver instant diversification, typically feature low fees, and, since they generally track an index, tend to grow steadily over time.

Importantly, ASX ETFs are an excellent source of passive income through dividend payments. Unlike individual stocks that pay dividends directly to shareholders, ASX ETFs hold a portfolio of dividend-paying shares; the fund collects these dividends and distributes them to investors.

Similar to ASX dividend stocks, payments are usually made quarterly or annually. However, a select few ASX ETFs distribute income to investors on a monthly basis.

One monthly-paying ASX ETF currently drawing attention is the Betashares Dividend Harvester Active ETF (ASX: HVST).

Here is an overview of its strategy and distributions.

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What is the fund's investment strategy?

The Betashares HVST is an ASX-listed ETF that invests in 40 to 60 dividend-paying companies.

These companies are chosen from the top 100 listed on the ASX, based on dividend forecasts, franking credits, and anticipated gross dividend payments.

The fund does not follow an index; instead, it focuses on high-dividend stocks.

It is structured to hold a dividend-paying share until it goes ex-dividend. At that point, the fund sells the shares and reinvests the proceeds into the next opportunity.

What does the HVST ETF pay investors?

The HVST ETF provides investors with a regular, partially-franked dividend income every month.

Its annual dividend yield is approximately double the broader ASX's annual income yield.

As of February 27, 2026, the HVST ETF offers a 12-month gross distribution yield of 7% and a net yield of 5.5%. It has a franking level of 64.7% and an annual management fee of 0.72%.

Its most recent dividend payment was in mid-March, distributing 6 cents per share. The fund also paid $0.06 per share in late February and January.

HVST shares have underperformed the S&P/ASX 200 Index (ASX: XJO) over the past year. At the time of writing, the ETF's share price increased 1.4% over 12 months, compared to the ASX 200's 9.3% gain.