The three ASX dividend shares I’m going to cover look like passive income beasts to me.

When I think about the types of investments I’d want to own in retirement, I would choose ones with strong dividend track records that could keep paying good dividends even during a downturn.

Dividends are not guaranteed. Dividend payouts can be reduced or cut altogether.

But, I think the businesses that have built a track record of growth – and seem like they can keep increasing the payment – makes me more interested in those names.

APA Group (ASX: APA)

APA is an energy infrastructure business that owns thousands of kilometres of natural gas pipelines around Australia. It delivers half of the nation’s natural gas usage. The business also owns or has stakes in, gas storage, gas processing and a gas power plant.

This ASX dividend share is also getting involved with the renewable energy transition. It owns solar and wind-generating assets, as well as electricity transmission assets.

Why should it be considered a passive income beast? It has increased the distribution to investors each year for over a decade and a half. That’s one of the longest currently-running dividend growth streaks on the ASX.

I think energy will continue to be in demand for beyond the foreseeable future, and APA will be involved with that. It will be particularly useful if APA is successful at being able to start transporting hydrogen in its pipelines, which could lengthen the useful life of its assets and make it even greener-focused.

The estimated distribution for FY23 of 55 cents per security, translates into a forward yield of 5.5%.

Rural Funds Group (ASX: RFF)

Rural Funds is probably my favourite real estate investment trust (REIT) on the ASX.

This ASX dividend share owns a diversified portfolio of farming properties that it leases out to large, quality tenants like Treasury Wine Estates Ltd (ASX: TWE), Select Harvests Limited (ASX: SHV) and Australian Agricultural Company Ltd (ASX: AAC).

A lot of its rental income grows through either a fixed 2.5% annual increase, or it’s linked to CPI inflation, with some contracts having an occasional market review. This organic rental growth each year helps Rural Funds grow its distribution by the targeted 4% per year.

The farms are spread across different states and climate conditions to lower risks. But, the passive income beast does own a lot of water entitlements for tenants to use.

I like that the tenants take on the operational risk of the farms, and Rural Funds can benefit from the ultra-long-term growth in the value of farmland and rent.

The business is expected to pay a total distribution of 12.2 cents per share in FY23, which translates into a yield of 6%. However, higher interest rates are a shorter-term headwind for its profit and farm valuations.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

For me, Soul Pattinson could be the best passive income beast in terms of its dividend growth – it has increased its annual ordinary dividend every year since 2000. That’s the longest growth streak on the ASX.

It operates as an investment conglomerate, which means its job is to invest in other businesses and assets. This includes ASX blue chips, ASX small-cap shares, private equity, and structured debt.

Some of its biggest investments include Brickworks Limited (ASX: BKW), TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), Tuas Ltd (ASX: TUA), Pengana Capital Ltd (ASX: PCG) and Aeris Resources Ltd (ASX: AIS). It also has large stakes in names like Macquarie Group Ltd (ASX: MQG), BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL) and Wesfarmers Ltd (ASX: WES).

It continues to invest in agriculture. The latest investment includes $118 million spent on citrus farms. The private investment Ampcontrol (an electrical parts business) and swimming school business called Aquatic Achievers are assessing acquisition opportunities.

In the FY23 half-year result, it increased its dividend by 24% to 36 cents per share. That makes the current ordinary grossed-up dividend yield around 4%.

The post Passive income beasts: 3 ASX dividend shares I’d buy for retirement appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Brickworks, Rural Funds Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, CSL, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Apa Group, Brickworks, Macquarie Group, Rural Funds Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has recommended Tpg Telecom and Treasury Wine Estates. 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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The lithium industry has taken a beating recently. While this is disappointing, it could prove to be a great buying opportunity for investors.

For example, three ASX lithium shares that analysts have recently named as buys with major upside potential are listed below.

Here’s what you need to know about them:

Allkem Ltd (ASX: AKE)

Despite being very bearish on lithium prices, Goldman Sachs remains bullish on Allkem. This is because the broker believes it is well-placed to offset weaker prices with its production growth. In addition, Goldman sees opportunities for the company to benefit from value-added downstream activities.

Goldman Sachs currently has a buy rating and $15.40 price target on its shares. Based on the latest Allkem share price of $10.17, this suggests potential upside of 51%.

Latin Resources Ltd (ASX: LRS)

Latin Resources could be another ASX lithium share to buy. It is focused on lithium exploration and project development across tenements in the state of Minas Gerais, Brazil. This includes the 100%-owned Salinas project, which has an initial mineral resource estimate (MRE) of 13.3Mt @ 1.2% Li2O.

However, Bell Potter doesn’t expect the MRE to stop there. Last week, it highlighted that drilling at Colina West will potentially add significant scale to the Salinas MRE.

In light of this, the broker has reiterated its speculative buy rating with a 22 cents price target. This is more than double the current Latin Resources share price of 10 cents.

Pilbara Minerals Ltd (ASX: PLS)

Finally, Pilbara Minerals’ shares could also have material upside potential according to analysts. It is the owner of the Pilgangoora Project. This is one of the largest hard rock lithium deposits in the world and considered strategically important within the global lithium supply chain.

Macquarie appears to believe recent weakness in the Pilbara Minerals share price has created an incredible buying opportunity. Last week, it retained its outperform rating with a $7.50 price target. Based on the current Pilbara Minerals share price of $3.56, this implies potential upside of 110%. Macquarie is also forecasting a massive dividend yield of 11.5% in FY 2023.

The post Analysts say 2 of these ASX lithium shares can double in value appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Allkem. 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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Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares offer investors not only the chance for share price appreciation but also provide a handy passive income stream.

ANZ shares edged lower over the course of the past week.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock were swapping hands for $22.52 at market close on Friday.

At that price, ANZ shares trade at a fully franked trailing dividend yield of 6.5%.

Here’s how I’d aim to garner $250 of passive income each month by investing in the bank’s stock.

Aiming for $250 per month in passive income from ANZ shares

Over the past 12 months, the ANZ board declared a 72 cents per share interim dividend (paid on 1 July 2022) and a 74 cents per share final dividend (paid on 15 December).

That works out to a full-year dividend of $1.46 per share, fully franked.

So, to build my $250 of monthly passive income – or a handy $3,000 per year – I’d need to buy 2,055 ANZ shares. Which would give me an extra 30 cents.

Now there are two things to keep in mind.

First, with ANZ shares trading for $22.52 apiece, I likely won’t be able to build my $250 in monthly passive income all in one shot.

But that’s okay.

Investing is a long-term game.

If I can’t buy them all in one go, I’d set up a budget and allot enough to buy maybe 20 shares a month. Eventually, I’ll get to my goal.

The second thing to keep in mind is that we’re talking about a trailing yield, which by definition is backwards looking. There are no guarantees ANZ shares will pay similar dividends in the future. Those may be higher or lower.

On that front, however, it’s worth noting that the bank’s full-year 2022 dividend payout was 4 cents per share higher than in 2021.

And there are reasons to believe it can continue to deliver a healthy yield.

Citi’s analysts recently noted that “ANZ remains our top pick in the sector.” The broker is forecasting growing dividends from the big four bank.

Its analysts expect ANZ shares will deliver $1.66 of fully franked dividends apiece in FY 2023. And Citi believes this will increase to $1.76 per share in FY 2024.

At the current share price that works out to a yield of 7.4% in FY23 and 7.8% in FY24.

Happy income investing!

The post How I’d aim for $250 in monthly passive income from ANZ shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben 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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A popular expression in investment communities is “buy low and sell high.”

While this can work out well for investors, it does mean you could miss out on the power of compounding.

This is when you earn interest on interest or, in the case of ASX shares, returns on returns.

It is for this reason that I would prefer to do things the Warren Buffett way by buying low and holding for the long term.

This doesn’t necessarily mean set and forget, though. It just means that as long as the investment thesis remains intact, I would hold onto these ASX shares and let compounding work its magic.

This is how the Oracle of Omaha has generated staggering returns over multiples decades.

And when I say staggering, I mean it. The most recent Berkshire Hathaway (NYSE: BRK.B) annual letter reveals that the book value of its shares has increased by an average of 19.8% per annum between 1965 and 2022. This is exactly double the return of the S&P 500 index over the same period.

And what a difference that extra 9.9% per annum has made.

Berkshire Hathaway’s return of 19.8% per annum has led to a total return of 3,787,464% for investors. To put that into context, a single dollar investment would have turned into over $3.75 million today.

As a comparison, a single dollar invested in the S&P 500 index would have turned into almost $25,000. While that’s nothing to turn your nose up to, I know which return I would prefer!

What’s the secret?

Warren Buffett revealed his secret in his latest letter to shareholders. Interestingly, the legendary investors quipped that most of his “capital-allocation decisions have been no better than so-so.”

The secret has been finding a few winners over the years and letting them run. He adds:

Our satisfactory results have been the product of about a dozen truly good decisions – that would be about one every five years – and a sometimes-forgotten advantage that favors long-term investors such as Berkshire.

The lesson for investors: The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders. And, yes, it helps to start early and live into your 90s as well.

What to look for with ASX shares

To follow in Buffett’s footsteps, I would look for ASX shares that are good value, have high quality business models, sustainable competitive advantages, and positive outlooks.

These qualities combined arguably put investors in a great position to generate market-beating returns over the long term.

The post I’m listening to Warren Buffett and loading up on cheap ASX shares appeared first on The Motley Fool Australia.

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• Forget day trading! I’d use Warren Buffett’s ‘secret sauce’ to build wealth
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