The ASX 200 is down 5% since February. Time to pounce for passive income?

The S&P/ASX 200 Index (ASX: XJO) started the week on a strong note, closing Monday up 0.5%.

Still, the benchmark index remains down 4.6% since the closing bell on 3 February.

Which begs the question, is now the time to invest in ASX 200 shares for their passive income?

ASX 200 shares offer attractive passive income potential

ASX 200 dividend shares can set investors up with some handy passive income streams.

Particularly those that provide franking credits, which credit investors with the taxes the companies have already paid on the profits they’re sharing out.

Getting the most passive income from your ASX 200 share requires buying the stock at the lowest possible price.

Now, timing the market with any kind of precision is all but impossible to do. Especially with consistency.

And, of course, you don’t want to invest in a company that’s losing share value because of operational or other sector-specific issues that are likely to see management cut future dividend payments.

But today we see many companies trading below their February levels simply due to broader macroeconomic factors, like global banking concerns and stubbornly high inflation.

Those macro issues will resolve themselves in due time. And high-quality ASX 200 companies should see their share prices rebound accordingly.

If their dividends remain on track, that means investors buying at today’s more subdued prices will realise higher yields come payout time.

So, is now a good time to hunt for blue-chip bargains to build up some handy passive income?

In my opinion, that’s a clear yes.

But do bear in mind that macro forces may not be done pressuring shares yet before they post a sustained recovery.

One way to tackle that concern is by dollar cost averaging your investments into any promising ASX 200 dividend shares. That can help smooth your returns and reduce the risk of going all in right before the broader market posts a sharp correction.

With history as our guide, we know there’ll be plenty of ups and downs yet from today’s levels.

We also know that in time the ASX 200 will almost certainly blow past February’s recent highs, offering some outsized passive income potential to investors who begin to dollar cost average today.

The post The ASX 200 is down 5% since February. Time to pounce for passive income? appeared first on The Motley Fool Australia.

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More reading

• Why did the Fortescue share price smash the ASX 200 in March?
• 5 things to watch on the ASX 200 on Tuesday
• Here are the 3 most heavily traded ASX 200 shares on Monday
• 7 ASX 200 stocks smashing new 52-week highs on Monday
• Why did the Telstra share price beat the ASX 200 in March?

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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