If youâre wanting a source of passive income, then youâre not alone! The good news is that it is possible to achieve this with ASX dividend stocks.
However, thereâs a fair bit to consider before buying any old stock. Investors might want to look for one that offers an attractive yield and has room to grow.
One ASX dividend stock that might tick a lot of boxes here is Accent Group Ltd (ASX: AX1).
Why is Accent an ASX dividend stock to consider?
Accent could be a solid choice for passive income seekers if youâre looking for long-term growth. This is because the footwear and athleisure focused retailer owns a growing stable of hugely popular retail brands that have significant expansion potential.
Chances are, one of the companyâs growth drivers of the future wonât even exist today. Accent regularly tests the water with new concepts. If they are successful, it will then run with them and take them nationally. Thereâs also the potential for an overseas expansion in time for certain existing brands.
Itâs no wonder then that a host of brokers are bullish on the company and have the equivalent of buy ratings on this ASX dividend stock.
One of those is Bell Potter, which has a buy rating and $2.80 price target on its shares. This compares to the latest Accent share price of $2.54.
But what about the passive income?
Bell Potter is expecting Accent to pay fully franked dividends of approximately 16 cents per share in FY 2023 and then 12 cents per share in FY 2024. This represents dividend yields of 6.3% and 4.7%, respectively.
But what about the future, I hear you ask. Well, over the last 10 years, Accent has generated an average total return of 18% per annum.
If we are conservative and presume that the total returns slow to 9% per annum (not a guarantee) for the next 10 years (and its dividend grows in line with this using FY24 as a baseline), investors would be looking at a fully franked dividend of 28.4 cents per share in FY 2034. This represents a sizeable 11.1% yield based on todayâs price.
If this forecast proves accurate, owning 16,900 shares of this ASX dividend stock would provide you with $4,800 of passive income that year. If you then divide this up and distribute the funds monthly, you would have your $400 of monthly passive income.
At todayâs share price, you would need to make an investment of approximately $43,000 into Accent shares in order to have the required amount.
And while that is a large number, it certainly could prove to be worth it. If you were to reinvest your dividends until 2034 and this ASX dividend stock generates a 9% per annum return, the value of your investment would have more than doubled to approximately $110,000.
So, there you are. In 2034 you could have an investment worth $110,000 that provides you with $400 of passive income each month. Not bad!
The post Buy 16,900 shares in this top ASX dividend stock for $400 per month in passive income appeared first on The Motley Fool Australia.
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More reading
- These ASX dividend shares have big yields
- Get a passive income boost from these ASX dividend shares: analysts
- The Accent share price has soared 100% in 6 months. Is it still a buy?
- Leading brokers name 3 ASX shares to buy today
- Invest in this 6% yielding ASX 300 dividend stock for passive income
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 recommended Accent 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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