If you want to retire rich, you have a few options at your disposal. You can save, you can invest, or you can try and win the lottery.

While the latter would be nice, the odds are stacked firmly against you. So, it would probably be advisable to not bet your whole retirement on winning the Powerball at some point between now and then.

Of the two remaining options, investing has historically provided investors with much stronger returns.

For example, ASX shares have provided investors with an average total return of 9.6% per annum over the last 30 years. This is vastly superior to the average interest rate you would have received from a savings account over the same period.

Retire rich with ASX dividend shares

If I wanted to retire rich, I would focus on making long-term investments in ASX shares that pay dividends.

And while you could cash out your dividends when they are paid, I think it would be better to reinvest them each year in order to take full advantage of compounding.

Moving on. There’s no guarantee that ASX shares will continue to generate 9.6% annual returns over the next 30 years, but we’re going to assume this will be the case and base our calculations on this historical return.

If you were able to invest $20,000 each year into a high-quality group of ASX shares, such as CSL Limited (ASX: CSL) or TechnologyOne Ltd (ASX: TNE), and earned the market return, your portfolio would grow to be worth $1 million at the end of the third decade.

Alternatively, if you don’t have as much capital to invest but have time on your side, you could invest $10,000 per year for 43 years to arrive at the same figure.

Turn your portfolio into a passive income machine

Now we have a million-dollar portfolio, it’s time to start thinking about generating an income.

At present, there are plenty of ASX dividend shares that offer potential yields of 6% or above. This includes Rio Tinto Ltd (ASX: RIO) and Westpac Banking Corp (ASX: WBC) in FY 2024, according to Goldman Sachs.

If this continues to be the case in 30 years (or 43 years) then you could aim to build a balanced income portfolio filled with ASX dividend shares offering 6% yields.

Doing so would result in an annual paycheck of $60,000, with the potential to grow each year thereafter. That’s a good retirement if you ask me!

The post How I’d aim to retire rich enough to live on passive income from my ASX dividend shares appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in CSL and Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended Technology One and Westpac Banking. 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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There are plenty of ASX 200 dividend shares to choose from on the Australian share market.

To narrow things down, I have picked out two that have been named as buys by brokers recently. Here’s what they are saying about them:

Harvey Norman Holdings Limited (ASX: HVN)

The first ASX 200 dividend share to consider buying is retail giant Harvey Norman.

Its shares have been hammered recently amid concerns over the impact of the cost of living crisis and housing market weakness on its sales.

One broker that believes the selling has been overdone is Goldman Sachs. In fact, the broker highlights that its shares look dirt cheap in comparison to rival JB Hi-Fi Limited (ASX: JBH) when you adjust for its property portfolio. It explained:

[P]roperty valuation of A$3.3 (avg. of book value and 6.0% cap-rate) represents ~70% of market cap. Ex-prop HVN trades at 6.0x FY24 P/E vs JBH at 14.5x, which faces similar consumer softening risk.

Goldman currently has a buy rating and $4.70 price target on the retailer’s shares.

As for dividends, the broker is expecting fully franked dividends per share of 36 cents in FY 2023 and then 30 cents in FY 2024. Based on the current Harvey Norman share price of $3.77, this will mean yields of 9.5% and 8%, respectively.

Macquarie Group Ltd (ASX: MQG)

Another ASX 200 dividend share that could be a buy next week is investment bank Macquarie.

Morgans is a fan of the company and believes it is well-placed to benefit from market volatility. It also sees structural growth opportunities for the bank. It commented:

We continue to like MQG’s exposure to long-term structural growth areas such as infrastructure and renewables. The company also stands to benefit from recent market volatility through its trading businesses, while it continues to gain market share in Australian mortgages.

The broker has an add rating and $222.80 price target on the company’s shares.

In respect to dividends, Morgans is expecting partially franked dividends of $8.28 per share in FY 2023 and $7.64 per share in FY 2024. Based on the current Macquarie share price of $175.79, this will mean yields of 4.7% and 4.35%, respectively.

The post Buy Macquarie and this high yield ASX dividend share: brokers appeared first on The Motley Fool Australia.

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More reading

• Warren Buffett rakes in $9 billion in annual dividend income. Should I buy ASX dividend shares right now?
• Macquarie share price slides amid banking rout, broker tips 24% upside
• Buy Macquarie and this ASX 200 passive income share: analysts
• 5 things to watch on the ASX 200 on Tuesday
• Experts say these fantastic blue chip ASX 200 shares are buys

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Harvey Norman. The Motley Fool Australia has positions in and has recommended Harvey Norman and Macquarie Group. 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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It certainly was a tough week for the banking sector. Due to the collapse of Silicon Valley Bank and the almost-collapse of Credit Suisse, investors were selling down ASX 200 bank shares.

While this is disappointing, if you have confidence in the state of the Australian banking sector, then this could be a great opportunity to pick up shares at a decent discount to recent prices.

Which ASX 200 bank shares should you buy?

There are two ASX 200 bank shares that brokers appear to rate higher than most at current prices. The first is ANZ Group Holdings Ltd (ASX: ANZ).

The team at Citi is particularly bullish on the investment opportunity here and have a buy rating and $29.25 price target on ANZ’s shares. Based on the current ANZ share price of $22.81, this suggests potential upside of 28% for investors over the next 12 months.

And with Citi forecasting a $1.66 per share fully franked dividend in FY 2023, this equates to a 7.3% dividend yield.

Why is it bullish?

Citi likes ANZ due to its exposure to institutional lending. It commented:

ANZ remains our top pick in the sector, and we expect the lending momentum, particularly in institutional, to continue to differentiate vs peers.

The broker also highlights that ANZ’s first-quarter update appears to indicate that it is performing ahead of expectations in FY 2023. It adds:

ANZ’s 1Q23 disclosures exhibited strong trends in both lending growth and asset quality. No earnings disclosure was provided, but we think that after backing out RWA movements from capital, it comfortably implies above market earnings.

Another ASX 200 bank share to buy

The other ASX 200 bank share to buy could be Westpac Banking Corp (ASX: WBC).

Among the most bullish brokers is Goldman Sachs, which has a conviction buy rating and $27.74 price target on the shares of Australia’s oldest bank. Based on the current Westpac share price of $21.24, this implies potential upside of almost 31% for investors.

In addition, Goldman is expecting a $1.47 per share fully franked dividend in FY 2023. This equates to a 6.9% yield.

The broker explained that Westpac is its top pick in the banking sector. It said:

We are Buy-rated (on CL) and continue to see WBC as our preferred exposure to the A&NZ Financials reflecting: i) its strong leverage to rising rates, ii) despite WBC revising its FY24E cost target to A$8.6 bn (from A$8.0 bn), the bank’s performance on cost management remains strong in this inflationary environment with a 9% step down in costs expected over the next two years, iii) the business is still investing effectively in its franchise, and iv) we note the stock is trading at a notable discount to peers, versus the historical average discount of 2%.

The post 2 ASX 200 bank shares to buy after the selloff: experts appeared first on The Motley Fool Australia.

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More reading

• ASX 200 bank stocks lift after Credit Suisse share price soars 19%
• ASX 200 bank shares are deep in the red on Thursday. Here’s why
• Is now the time to be bold and snap up cheap ASX 200 dividend shares?
• Here’s how to value the Westpac share price
• Here’s why this top broker is tipping 27% upside for ANZ shares

Motley Fool contributor James Mickleboro has positions in Westpac Banking. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking. 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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When you first start out investing, you may not have lots of spare capital to put into ASX 200 shares.

And while only investing $100 a month through platforms such as Pocket by Commonwealth Bank of Australia (ASX: CBA) may seem like it isn’t going to make you rich, it is well worth sticking with it.

That’s because of the power of compounding. This is where you earn interest on top of interest, or returns on top of returns when it comes to ASX 200 shares.

By making regular investments over a long period of time and letting compounding work its magic, investors can build up a sizeable investment portfolio.

Investing $100 a month into ASX 200 shares

According to Fidelity, over the last three decades, the Australian share market has provided investors with a total return of approximately 9.6% per annum.

While there is certainly no guarantee that the same will happen over the next 30 years, it is worth noting that these returns are largely in line with historical share market returns on Wall Street. So, it certainly is plausible that the same could happen again over the three decades to come.

If this does indeed happen and you invest a modest $100 per month into ASX 200 shares and earn the market return, your investments would grow to be worth $100,000 after 23 years.

And if you keep going through to the 30-year mark, you will have almost doubled the value of your investment portfolio to just over $192,000.

The latter really demonstrates the power of compounding. It took 23 years to get to $100,000 but just 7.4 additional years to make your second $100,000.

And, in case you’re wondering, a further 4.2 years would be enough time for your portfolio to increase a further $100,000, ceteris paribus.

All in all, this goes to show that making even modest investments in ASX 200 shares today could snowball into something significant in time.

The post ASX 200 investors: Don’t give up! How even $100 per month can grow into a $100,000 portfolio appeared first on The Motley Fool Australia.

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More reading

• ASX 200 bank stocks lift after Credit Suisse share price soars 19%
• The CBA share price is on a rollercoaster today. Is Credit Suisse to blame?
• ASX 200 bank shares are deep in the red on Thursday. Here’s why
• What are the risks of investing in term deposits instead of ASX shares?
• Down 14% in a month, should I buy the dip on CBA shares?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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