Dividend investing has long been a popular and proven strategy for building wealth over the long term.

If you invest in ASX shares that pay regular dividends, you can generate a steady stream of passive income while also benefiting from potential capital appreciation.

But how can you achieve this? Let’s find out.

The power of dividends

One of the keys to successful dividend investing with ASX shares is to take advantage of the power of compounding. Instead of spending your dividends, you can choose to reinvest them back into your portfolio to generate even more income.

Over the long term, this can have a snowball effect, as your portfolio grows exponentially and generates an ever-increasing income stream.

Other benefits of dividend investing

In addition to the above, there are other benefits to consider. One is that dividend-paying ASX shares are generally more stable than their non-dividend-paying counterparts. This is because companies that consistently pay dividends are usually more mature and have a proven track record of profitability.

This means they can offer some level of protection during periods of market turbulence, which could make them an attractive option for risk-averse investors.

But which ASX shares should you buy for dividends?

The good news is that investors are spoilt for choice when it comes to ASX dividend shares.

But five in particular that analysts think could be worth considering ahead of others are named below.

Aurizon Holdings Ltd (ASX: AZJ)

Aurizon is Australia’s largest rail freight operator. It connects miners, primary producers, and industry with international and domestic markets through its extensive national rail and road network. Morgans is positive on the company and has an add rating and $3.81 price target on its shares. It expects a partially franked dividends of 17 cents per share in FY 2023, which equates to a 4.9% yield.

Coles Group Ltd (ASX: COL)

Morgans also recommends this supermarket operator as an ASX dividend share to buy. It has an add rating and $19.60 price target on its shares. As for dividends, the broker is forecasting a fully franked 66 cents per share dividend in both FY 2023 and FY 2024. This will mean yields of 3.6% in both years.

Rural Funds Group (ASX: RFF)

Bell Potter is positive on this agricultural property company and has a buy rating and $2.65 price target on its shares. It expects a generous yield again this year and is forecasting an 11.7 cents per share dividend in FY 2023. This represents a 6% yield at current levels.

Telstra Group Ltd (ASX: TLS)

This telco giant could be an ASX dividend share to buy according to Goldman Sachs. Its analysts have a buy rating and $4.60 price target on its shares. They also expect a 17 cents per share dividend in FY 2023, which equates to a fully franked 4% yield.

Westpac Banking Corp (ASX: WBC)

Finally, Goldman Sachs is also bullish on this banking giant and has a conviction buy rating and $26.64 price target on its shares. The broker also expects a big dividend yield and is forecasting fully franked dividends of $1.44 per share in FY 2023. This will mean a 6.5% yield for investors.

The post Building wealth through dividend investing: 5 ASX shares to boost your income appeared first on The Motley Fool Australia.

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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 positions in and has recommended Coles Group, Rural Funds Group, and Telstra Group. The Motley Fool Australia has recommended Aurizon 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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